Document:

Unassociated Document

    
       Exhibit
4.3

       

      
        THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION
STATEMENT COVERING SUCH SECURITIES UNDER THE SECURITIES ACT AND ANY OTHER
APPLICABLE SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

        

        IN
ADDITION, THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED, OR BE THE SUBJECT OF
ANY HEDGING, SHORT SALE, DERIVATIVE, PUT, OR CALL TRANSACTION THAT WOULD RESULT
IN THE EFFECTIVE ECONOMIC DISPOSITION OF SUCH SECURITIES BY ANY PERSON UNTIL
OCTOBER 21, 2010, EXCEPT IN ACCORDANCE WITH FINRA RULE 5110(G)(2).

        

        NILE
THERAPEUTICS, INC.

        

        REPRESENTATIVE’S
WARRANT

        

        390,000
shares of Common Stock

        

        April
21, 2010

        

        This
REPRESENTATIVE’S WARRANT (this “Warrant”) of Nile
Therapeutics, Inc., a corporation duly organized and validly existing under the
laws of the State of Delaware (the “Company”), is being issued
pursuant to that certain Underwriting Agreement, dated as of April 21, 2010 (the
“Underwriting
Agreement”), by and among the Company and Maxim Group LLC, as the
representative of the underwriters named therein (the “Representative”) relating to a
firm commitment public offering (the “Offering”) of common stock,
$0.001 par value per share, of the Company (the “Common Stock”) and warrants to
the purchase Common Stock underwritten by the Representative and the
underwriters named in the Underwriting Agreement.

        

        FOR VALUE RECEIVED, the
Company hereby grants to Maxim Holdings LLC and its permitted successors and
assigns (collectively, the “Holder”) the right to purchase
from the Company up to THREE HUNDRED NINETY THOUSAND (390,000) shares of Common
Stock (such shares underlying this Warrant, the “Warrant Shares”), at a per
share purchase price equal to $0.94 (the “Exercise Price”), subject to
the terms, conditions and adjustments set forth below in this
Warrant.

        

        1.           Date of Warrant
Exercise.  This Warrant shall become exercisable from and after
October 21, 2010 (the “Exercise
Date”).  Except as otherwise provided for herein or as
permitted by applicable rules of the Financial Industry Regulatory Authority,
Inc. (“FINRA”), this
Warrant shall not be sold, transferred, assigned, pledged or hypothecated prior
to the Exercise Date.  This Warrant and the securities issuable upon
exercise hereof may not be sold, transferred, assigned, pledged, or
hypothecated, or be the subject of any hedging, short sale, derivative, put, or
call transaction that would result in the effective economic disposition of such
securities by any person until October 21, 2010, except in accordance with FINRA
Rule 5110(G)(2).

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
 

        2.           Expiration of
Warrant.  This Warrant shall expire at 5:00 p.m., New York City
time, on April 21, 2015 (the “Expiration
Date”).

        

        3.           Exercise of
Warrant.  This Warrant shall be exercisable pursuant to the
terms of this Section 3.

        

        3.1           Manner of
Exercise.

        

        (a)           This
Warrant may only be exercised by the Holder hereof on or after the Exercise Date
and on or prior to the Expiration Date, in accordance with the terms and
conditions hereof, in whole or in part (but not as to fractional shares) with
respect to any portion of this Warrant, during the Company’s normal business
hours on any day other than a Saturday or a Sunday or a day on which commercial
banking institutions in New York, New York are authorized by law to be closed (a
“Business Day”), by
surrender of this Warrant to the Company at its office maintained pursuant to
Section 10.2(a) hereof, accompanied by a written exercise notice in the form
attached as Exhibit
A to this Warrant (or a reasonable facsimile thereof) duly executed by
the Holder, together with the payment of the aggregate Exercise Price for the
number of Warrant Shares purchased upon exercise of this
Warrant.  Upon surrender of this Warrant, the Company shall cancel
this Warrant document and shall, in the event of partial exercise, replace it
with a new Warrant document in accordance with Section 3.3

        

        (b)           Except
as provided for in Section 3.1(c) below, each exercise of this Warrant must be
accompanied by payment in full of the aggregate Exercise Price in cash by check
or wire transfer in immediately available funds for the number of Warrant Shares
being purchased by the Holder upon such exercise.

        

        (c)           The
aggregate Exercise Price for the number of Warrant Shares being purchased may
also, in the sole discretion of the Holder, be paid in full or in part on a
“cashless basis” at the election of the Holder:

        

        (i)           in
the form of Common Stock owned by the Holder (based on the Fair Market Value (as
defined below) of such Common Stock on the date of exercise);

        

        (ii)           in
the form of Warrant Shares withheld by the Company from the Warrant Shares
otherwise to be received upon exercise of this Warrant having an aggregate Fair
Market Value on the date of exercise equal to the aggregate Exercise Price of
the Warrant Shares being purchased by the Holder; or

        

        (iii)           by
a combination of the foregoing, provided that the combined value of all cash and
the Fair Market Value of any shares surrendered to the Company is at least equal
to the aggregate Exercise Price for the number of Warrant Shares being purchased
by the Holder.

         

        
          
            
            

          

          
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        For
purposes of this Warrant, the term “Fair Market Value” means with
respect to a particular date, the average closing price of the Common Stock for
the five (5) trading days immediately preceding the applicable exercise herein
as officially reported by the principal securities exchange or market on which
the Common Stock is then listed or admitted to trading, or, if the Common Stock
is not listed or admitted to trading on any securities exchange or other market
as determined in good faith by resolution of the Board of Directors of the
Company, based on the best information available to it.

        

        For
purposes of illustration of a cashless exercise of this Warrant under Section
3.1(c)(ii) (or for a portion thereof for which cashless exercise treatment is
requested as contemplated by Section 3.1(c)(iii) hereof), the calculation of
such exercise shall be as follows:

        

        X = Y
(A-B)/A

        

        where:

        

        
          	
                   
      

                	
                  X
      =

                	
                  the
      number of Warrant Shares to be issued to the Holder (rounded to the
      nearest whole share).

                

        

        

        
          	
                   
      

                	
                  Y
      =

                	
                  the
      number of Warrant Shares with respect to which this Warrant is being
      exercised.

                

        

        

        
          	
                   
      

                	
                  A
      =

                	
                  the
      Fair Market Value of the Common
Stock.

                

        

        

        
          	
                   
      

                	
                  B
      =

                	
                  the
      Exercise Price.

                

        

        

        (d)           For
purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood, and acknowledged that the Common Stock issuable upon exercise of
this Warrant in a cashless exercise transaction as described in Section 3.1(c)
above shall be deemed to have been acquired at the time this Warrant was
issued.  Moreover, it is intended, understood, and acknowledged that
the holding period for the Common Stock issuable upon exercise of this Warrant
in a cashless exercise transaction as described in Section 3.1(c) above shall be
deemed to have commenced on the date this Warrant was issued.

        

        3.2           When Exercise
Effective.  Each exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on the Business
Day on which this Warrant shall have been duly surrendered to the Company as
provided in Sections 3.1 and 12 hereof, and, at such time, the Holder in whose
name any certificate or certificates for Warrant Shares shall be issuable upon
exercise as provided in Section 3.3 hereof shall be deemed to have become the
holder or holders of record thereof of the number of Warrant Shares purchased
upon exercise of this Warrant.

         

        
          
            
            

          

          
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        3.3           Delivery of Common Stock
Certificates and New Warrant.  As soon as reasonably
practicable after each exercise of this Warrant, in whole or in part, and in any
event within five (5) Business Days thereafter, the Company, at its expense
(including the payment by it of any applicable issue taxes), will cause to be
issued in the name of and delivered to the Holder hereof or, subject to Sections
9 and 10 hereof, as the Holder (upon payment by the Holder of any applicable
transfer taxes) may direct:

        

        (a)           a
certificate or certificates (with appropriate restrictive legends, as
applicable) for the number of duly authorized, validly issued, fully paid and
nonassessable Warrant Shares to which the Holder shall be entitled upon
exercise; and

        

        (b)           in
case exercise is in part only, a new Warrant document of like tenor, dated the
date hereof, for the remaining number of Warrant Shares issuable upon exercise
of this Warrant after giving effect to the partial exercise of this Warrant
(including the delivery of any Warrant Shares as payment of the Exercise Price
for such partial exercise of this Warrant).

        

        4.           Certain
Adjustments.  For so long as this Warrant is
outstanding:

        

        4.1           Mergers or
Consolidations.  If at any time after the date hereof there
shall be a capital reorganization (other than a combination or subdivision of
Common Stock otherwise provided for herein) resulting in a reclassification to
or change in the terms of securities issuable upon exercise of this Warrant (a
“Reorganization”), or a
merger or consolidation of the Company with another corporation, association,
partnership, organization, business, individual, government or political
subdivision thereof or a governmental agency (a “Person” or the “Persons”) (other than a merger
with another Person in which the Company is a continuing corporation and which
does not result in any reclassification or change in the terms of securities
issuable upon exercise of this Warrant or a merger effected exclusively for the
purpose of changing the domicile of the Company) (a “Merger”), then, as a part of
such Reorganization or Merger, lawful provision and adjustment shall be made so
that the Holder shall thereafter be entitled to receive, upon exercise of this
Warrant, the number of shares of stock or any other equity or debt securities or
cash or other property receivable upon such Reorganization or Merger by a holder
of the number of shares of Common Stock which might have been purchased upon
exercise of this Warrant immediately prior to such Reorganization or
Merger.  In any such case, appropriate adjustment shall be made in the
application of the provisions of this Warrant with respect to the rights and
interests of the Holder after the Reorganization or Merger to the end that the
provisions of this Warrant (including adjustment of the Exercise Price then in
effect and the number of Warrant Shares) shall be applicable after that event,
as near as reasonably may be, in relation to any shares of stock, securities,
property, cash or other property thereafter deliverable upon exercise of this
Warrant.  The provisions of this Section 4.1 shall similarly apply to
successive Reorganizations and/or Mergers.

        

        4.2           Splits and Subdivisions;
Dividends.  In the event the Company should at any time or from
time to time effectuate a split or subdivision of the outstanding shares of
Common Stock or pay a dividend in or make a distribution payable in additional
shares of Common Stock or any capital stock or other security of the Company
that is at any time and under any circumstances directly or indirectly
convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any capital stock or other security of the
Company (including, without limitation, Common Stock) (“Common Stock Equivalents”)
without payment of any consideration by such holder for the additional shares of
Common Stock or Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of the
applicable record date (or the date of such distribution, split or subdivision
if no record date is fixed), the per share Exercise Price shall be appropriately
decreased and the number of Warrant Shares shall be appropriately increased in
proportion to such increase (or potential increase) of outstanding shares;
provided, however, that no adjustment shall be made in the event the split,
subdivision, dividend or distribution is not effectuated.

         

        
          
            
            

          

          
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        4.3           Combination of
Shares.  If the number of shares of Common Stock outstanding at
any time after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, the per share Exercise Price shall be appropriately
increased and the number of shares of Warrant Shares shall be appropriately
decreased in proportion to such decrease in outstanding shares.

        

        4.4           Adjustments for Other
Distributions.  In the event the Company shall declare a
distribution payable in securities of other Persons, evidences of indebtedness
issued by the Company or other Persons, assets (excluding cash dividends or
distributions to the holders of Common Stock paid out of current or retained
earnings and declared by the Company’s board of directors) or options or rights
not referred to in Sections 4.2, 4.3 or 4.4, then, in each such case for the
purpose of this Section 4.5, upon exercise of this Warrant, the Holder shall be
entitled to a proportionate share of any such distribution as though the Holder
was the actual record holder of the number of Warrant Shares as of the record
date fixed for the determination of the holders of Common Stock of the Company
entitled to receive such distribution.

        

        5.           No
Impairment.  The Company will not, by amendment of its articles
of incorporation or by-laws or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all of the terms and in the taking of all actions
necessary or appropriate in order to protect the rights of the Holder against
impairment.

        

        6.           Chief Financial Officer’s
Report as to Adjustments.  With respect to each adjustment
pursuant to Section 4 of this Warrant, the Company, at its expense, will
promptly compute the adjustment or re-adjustment in accordance with the terms of
this Warrant and cause its Chief Financial Officer to certify the computation
(other than any computation of the fair value of property of the Company, as the
case may be) and prepare a report setting forth, in reasonable detail, the event
requiring the adjustment or re-adjustment and the amount of such adjustment or
re-adjustment, the method of calculation thereof and the facts upon which the
adjustment or re-adjustment is based, and the Exercise Price and the number of
Warrant Shares or other securities purchasable hereunder after giving effect to
such adjustment or re-adjustment,  which report shall be mailed by
first class mail, postage prepaid to the Holder.  The Company will
also keep copies of all reports at its office maintained pursuant to Section
10.2(a) hereof and will cause them to be available for inspection at the office
during normal business hours upon reasonable notice by the Holder or any
prospective purchaser of the Warrant designated by the Holder
thereof.

         

        
          
            
            

          

          
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        7.           Reservation of
Shares.  The Company shall, solely for the purpose of effecting
the exercise of this Warrant, at all times during the term of this Warrant,
reserve and keep available out of its authorized shares of Common Stock, free
from all taxes, liens and charges with respect to the issue thereof and not
subject to preemptive rights or other similar rights of shareholders of the
Company, such number of its shares of Common Stock as shall from time to time be
sufficient to effect in full the exercise of this Warrant.  If at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect in full the exercise of this Warrant, in addition to such
other remedies as shall be available to Holder, the Company will promptly take
such corporate action as may, in the opinion of its counsel, be necessary to
increase the number of authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes, including without
limitation, using its Reasonable Best Efforts (as defined in Section 14 hereof)
to obtain the requisite shareholder approval necessary to increase the number of
authorized shares of Common Stock.  The Company hereby represents and
warrants that all shares of Common Stock issuable upon exercise of this Warrant
shall be duly authorized and, when issued and paid for upon exercise, shall be
validly issued, fully paid and nonassessable.

        

        8.           Registration and
Listing.

        

        8.1           Definition of Registrable
Securities; Majority.  As used herein, the term “Registrable Securities” means
any shares of Common Stock (or other securities to the extent issuable following
the adjustments set forth in Section 4 hereof) issuable upon the exercise of
this Warrant, until the date (if any) on which such shares shall have been
transferred or exchanged and new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any similar state law then in
force.  For purposes of this Warrant, the term “Majority”, in reference to the
holders of Registrable Securities, shall mean in excess of fifty percent (50%)
of the then outstanding Warrant Shares (assuming the exercise of the entire
Warrant) that: (i) are not held by the Company, an affiliate, officer, creditor,
employee or agent thereof or any of their respective affiliates, members of
their family, Persons acting as nominees or in conjunction therewith and (ii)
have not be resold to the public pursuant to a registration statement filed
under the Securities Act.

        

        8.2           Required
Registration.

        

        (a)           At
any time on or after the date of commencement of sales pursuant to the final
Prospectus Supplement (as defined in the Underwriting Agreement) and on or
before the Expiration Date, but in no event on more than one (1) occasion at the
Company’s expense and a separate one (1) occasion at the expense of the Majority
of such Registrable Securities, upon the written request of the holders of the
Registrable Securities representing a Majority of such Registrable Securities,
the Company will use its Reasonable Best Efforts to effect the registration of
the respective shares of the holders of Registrable Securities under the
Securities Act to the extent requisite to permit the public disposition thereof
as expeditiously as reasonably possible, but in no event later than 120 days
from the date of such request.

         

        
          
            
            

          

          
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        (b)           Registration
of Registrable Securities under this Section 8.2 shall be on such appropriate
registration form: (i) as shall be selected by the Company, and (ii) as shall
permit the public disposition of such Registrable Securities in accordance with
this Section 8.2.  The Company agrees to include in any such
registration statement all information which the requesting holders of
Registrable Securities shall reasonably request, which is required to be
contained therein.  The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities pursuant to this
Section 8.2.

        

        (c)           A
registration requested pursuant to this Section 8.2 shall not be deemed to have
been effected: (i) unless a registration statement with respect thereto has
become effective or (ii) if, after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Securities and Exchange Commission or other governmental agency or court of
competent jurisdiction for any reason, other than by reason of some act or
omission by a holder of Registrable Securities.

        

        8.3           Incidental Registration
Rights.

        

        (a)           If
the Company, at any time on or after the date of commencement of sales pursuant
to the final Prospectus Supplement and on or before April 21, 2017,
proposes to register any of its securities under the Securities Act (other than
in connection with a registration on Form S-4 or S-8 or any successor forms)
whether for its own account or for the account of any holder or holders of its
shares other than Registrable Securities (any shares of such holder or holders
(but not those of the Company and not Registrable Securities) with respect to
any registration are referred to herein as, “Other Shares”), the Company
shall each such time give prompt (but not less than thirty (30) days prior to
the anticipated effectiveness thereof) written notice to the holders of
Registrable Securities of its intention to do so.  Upon the written
request of any such holder of Registrable Securities made within ten (10) days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder), except as set
forth in Section 8.3(b), the Company will use its Reasonable Best Efforts to
effect the registration under the Securities Act of all of the Registrable
Securities which the Company has been so requested to register by such holder,
to the extent requisite to permit the disposition of the Registrable Securities
so to be registered, by inclusion of such Registrable Securities in the
registration statement which covers the securities which the Company proposes to
register; provided,
however, that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason in its sole discretion either to not register, to
delay or to withdraw registration of such securities, the Company may, at its
election, give written notice of such determination to such holder and,
thereupon: (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), (ii) in the case of a determination to delay
registration, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities (including
the Other Shares), and (iii) in the case of a determination to withdraw
registration, shall be permitted to withdraw registration,  The
Company will pay all Registration Expenses in connection with each registration
of Registrable Securities pursuant to this Section 8.3.

         

        
          
            
            

          

          
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        (b)           If
the Company at any time proposes to register any of its securities under the
Securities Act as contemplated by this Section 8.3 and such securities are to be
distributed by or through one or more underwriters, the Company will, if
requested by a holder of Registrable Securities, use its Reasonable Best Efforts
to arrange for such underwriters to include all the Registrable Securities to be
offered and sold by such holder among the securities to be distributed by such
underwriters, provided that if the managing underwriter of such underwritten
offering shall inform the Company by letter of its belief that inclusion in such
distribution of all or a specified number of such securities proposed to be
distributed by such underwriters would interfere with the successful marketing
of the securities being distributed by such underwriters (such letter to state
the basis of such belief and the approximate number of such Registrable
Securities, such Other Shares and shares held by the Company proposed so to be
registered which may be distributed without such effect), then the Company may,
upon written notice to such holder, the other holders of Registrable Securities,
and holders of such Other Shares, reduce pro rata in accordance with the number
of shares of Common Stock desired to be included in such registration (if and to
the extent stated by such managing underwriter to be necessary to eliminate such
effect) the number of such Registrable Securities and Other Shares the
registration of which shall have been requested by each holder thereof so that
the resulting aggregate number of such Registrable Securities and Other Shares
so included in such registration, together with the number of securities to be
included in such registration for the account of the Company, shall be equal to
the number of shares stated in such managing underwriter’s letter.

        

        8.4           Registration
Procedures.  Whenever the holders of Registrable Securities
have properly requested that any Registrable Securities be registered pursuant
to the terms of this Warrant, the Company shall use its Reasonable Best Efforts
to effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company shall as expeditiously as possible:

        

        (a)           prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its Reasonable Best Efforts to cause such registration
statement to become effective;

        

        (b)           notify
such holders of the effectiveness of each registration statement filed hereunder
and prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to (i) keep such registration statement effective and the prospectus
included therein usable for a period commencing on the date that such
registration statement is initially declared effective by the SEC and ending on
the date when all Registrable Securities covered by such registration statement
have been sold pursuant to the registration statement or cease to be Registrable
Securities, and (ii) comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement;

         

        
          
            
            

          

          
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        (c)           furnish
to such holders such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such holders;

        

        (d)           use
its Reasonable Best Efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such jurisdictions as such
holders reasonably request and do any and all other acts and things which may be
reasonably necessary or advisable to enable such holders to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
holders; provided,
however, that the Company shall not be required to: (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph; (ii) subject itself to taxation in any such
jurisdiction; or (iii) consent to general service of process in any such
jurisdiction;

        

        (e)           notify
such holders, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any material fact necessary to make the
statements therein, in light of the circumstances in which they are made, not
materially misleading, and, at the reasonable request of such holders, the
Company shall prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances in which they are made, not materially
misleading;

        

        (f)           provide
a transfer agent and registrar for all such Registrable Securities not later
than the effective date of such registration statement;

        

        (g)           make
available for inspection by any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or other
agent retained by any such underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company’s officers, directors, managers, employees and independent accountants
to supply all information reasonably requested by any such underwriter,
attorney, accountant or agent in connection with such registration
statement;

        

        (h)           otherwise
use its Reasonable Best Efforts to comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as soon as
reasonably practicable, an earnings statement of the Company, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and, at the option of the Company, Rule 158 thereunder;

        

        (i)           in
the event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use of any
related prospectus or suspending the qualification of any Registrable Securities
included in such registration statement for sale in any jurisdiction, the
Company shall use its Reasonable Best Efforts promptly to obtain the withdrawal
of such order;

         

        
          
            
            

          

          
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        (j)           use
its Reasonable Best Efforts to cause any Registrable Securities covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities;
and

        

        (k)           if
the offering is underwritten, use its Reasonable Best Efforts to furnish on the
date that Registrable Securities are delivered to the underwriters for sale
pursuant to such registration, an opinion dated such date of counsel
representing the Company for the purposes of such registration, addressed to the
underwriters covering such issues as are reasonably required by such
underwriters.

        

        8.5           Listing.  The
Company shall secure the listing of the Common Stock underlying this Warrant
upon each national securities exchange or automated quotation system upon which
shares of Common Stock are then listed or quoted (subject to official notice of
issuance) and shall maintain such listing of shares of Common
Stock.

        

        8.6           Expenses.  The
Company shall pay all Registration Expenses relating to the registration and
listing obligations set forth in this Section 8.  For purposes of this
Warrant, the term “Registration
Expenses” means: (a) all registration, filing and FINRA (as defined
below) fees, (b) all reasonable fees and expenses of complying with securities
or blue sky laws, (c) all word processing, duplicating and printing expenses,
(d) the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits or “cold
comfort” letters required by or incident to such performance and compliance, (e)
premiums and other costs of policies of insurance (if any) against liabilities
arising out of the public offering of the Registrable Securities being
registered if the Company desires such insurance, if any, and (f) fees and
disbursements of one counsel for the selling holders of Registrable Securities;
provided however, that,
in any case where Registration Expenses are not to be borne by the Company, such
expenses shall not include (and such expenses shall be borne by the Company):
(i) salaries of Company personnel or general overhead expenses of the Company,
(ii) auditing fees, (iii) premiums or other expenses relating to liability
insurance required by underwriters of the Company, or (iv) other expenses for
the preparation of financial statements or other data, to the extent that any of
the foregoing either is normally prepared by the Company in the ordinary course
of its business or would have been incurred by the Company had no public
offering taken place.  Registration Expenses shall not include any
underwriting discounts and commissions which may be incurred in the sale of any
Registrable Securities and transfer taxes of the selling holders of Registrable
Securities.

        

        8.7           Information Provided by
Holders.  As a condition to the Company’s obligations to effect
any registration of the Registrable Shares under this Section 8, any holder of
Registrable Securities included in any such registration shall furnish to the
Company such information as the Company may reasonably request in writing to
enable the Company to comply with the provisions hereof in connection with any
registration referred to in this Warrant.

         

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

        
 

        8.8           FINRA Cobradesk
Filings.  In the event that a registration statement covering
the Registrable Securities is filed, within one (1) Business Day of the filing
of such registration statement, the Company will prepare and file the selling
stockholder resale offering described in such registration statement for review
by the Financial Industry Regulatory Authority (“FINRA”) via the FINRA’s
CobraDesk filing system (“CobraDesk Filing”) for the
purpose of having the prospectus contained within such registration statement
treated as a “base prospectus” in connection with such resale
offering.  The Company will use its Reasonable Best Efforts to have
the CobraDesk Filing approved by FINRA within thirty (30) days of such filing
date.  The Company shall bear all expenses of the CobraDesk Filing,
including fees and expenses of counsel or other advisors to the
Holder.  In all circumstances, the Company shall pay for all FINRA
filing fees associated with the CobraDesk Filing.

        

        8.9           Effectiveness
Period.  The Company shall use its Reasonable Best Efforts to
keep each registration statement contemplated hereunder continuously effective
under the Securities Act until the date which is the earlier date of when (i)
all Registrable Securities covered by such Registration Statement have been sold
or (ii) all Registrable Securities covered by such Registration Statement may be
sold immediately without registration under the Securities Act and without
volume restrictions pursuant to Rule 144 under the Securities Act, as determined
by the counsel to the Company pursuant to a written opinion letter to such
effect, addressed and reasonably acceptable to the Company’s transfer agent and
the affected holders of Registrable Securities.

        

        8.10           Net Cash
Settlement.  Notwithstanding anything herein to the contrary,
in no event will the Holder hereof be entitled to receive a net-cash settlement
as liquidated damages in lieu of physical settlement in shares of Common Stock,
regardless of whether the Common Stock underlying this Warrant is registered
pursuant to an effective registration statement; provided, however, that the
foregoing will not preclude the Holder from seeking other remedies at law or
equity for breaches by the Company of its registration obligations
hereunder.

        

        9.           Restrictions on
Transfer.

        

        9.1           Restrictive
Legends.  This Warrant and each Warrant issued upon transfer or
in substitution for this Warrant pursuant to Section 10 hereof, each certificate
for Common Stock issued upon the exercise of the Warrant and each certificate
issued upon the transfer of any such Common Stock shall be transferable only
upon satisfaction of the conditions specified in this Section 9.  Each
of the foregoing securities shall be stamped or otherwise imprinted with a
legend reflecting the restrictions on transfer set forth herein and any
restrictions required under the Securities Act or other applicable securities
laws.

        

        9.2           Notice of Proposed
Transfer.  Prior to any transfer of any securities which are
not registered under an effective registration statement under the Securities
Act (“Restricted
Securities”), which transfer may only occur if there is an exemption from
the registration provisions of the Securities Act and all other applicable
securities laws, the Holder will give written notice to the Company of the
Holder’s intention to effect a transfer (and shall describe the manner and
circumstances of the proposed transfer). The following provisions shall apply to
any proposed transfer of Restricted Securities:

         

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

        
 

        (i)           If
in the opinion of counsel for the Holder reasonably satisfactory to the Company
the proposed transfer may be effected without registration of the Restricted
Securities under the Securities Act (which opinion shall state in detail the
basis of the legal conclusions reached therein), the Holder shall thereupon be
entitled to transfer the Restricted Securities in accordance with the terms of
the notice delivered by the Holder to the Company.  Each certificate
representing the Restricted Securities issued upon or in connection with any
transfer shall bear the restrictive legends required by Section 9.1
hereof.

        

        (ii)           If
the opinion called for in (i) above is not delivered, the Holder shall not be
entitled to transfer the Restricted Securities until either: (x) receipt by the
Company of a further notice from such Holder pursuant to the foregoing
provisions of this Section 9.2 and fulfillment of the provisions of clause (i)
above, or (y) such Restricted Securities have been effectively registered under
the Securities Act.

        

        9.3           Certain Other Transfer
Restrictions.  Notwithstanding any other provision of this
Section 9: (i) prior to the Exercise Date, this Warrant or the Restricted
Securities thereunder may only be transferred or assigned to the persons
permitted under FINRA Rule 5110(g), and (ii) no opinion of counsel shall be
necessary for a transfer of Restricted Securities by the holder thereof to any
Person employed by or owning equity in the Holder, if the transferee agrees in
writing to be subject to the terms hereof to the same extent as if the
transferee were the original purchaser hereof and such transfer is permitted
under applicable securities laws.

        

        9.4           Termination of
Restrictions.  Except as set forth in Section 9.3 hereof, the
restrictions imposed by this Section 9 upon the transferability of Restricted
Securities shall cease and terminate as to any particular Restricted Securities:
(a) which shall have been effectively registered under the Securities Act, or
(b) when, in the opinions of both counsel for the holder thereof and counsel for
the Company, such restrictions are no longer required in order to insure
compliance with the Securities Act or Section 10 hereof.  Whenever
such restrictions shall cease and terminate as to any Restricted Securities, the
Holder thereof shall be entitled to receive from the Company, without expense
(other than applicable transfer taxes, if any), new securities of like tenor not
bearing the applicable legends required by Section 9.1 hereof.

        

        10.           Ownership, Transfer, Sale
and Substitution of Warrant.

        

        10.1           Ownership of
Warrant.  The Company may treat any Person in whose name this
Warrant is registered in the Warrant Register maintained pursuant to Section
10.2(b) hereof as the owner and holder thereof for all purposes, notwithstanding
any notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes, notwithstanding
any notice to the contrary.  Subject to Sections 9 and 10 hereof, this
Warrant, if properly assigned, may be exercised by a new holder without a new
Warrant first having been issued.

        

        10.2           Office; Exchange of
Warrant.

         

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

        
 

        (a)           The
Company will maintain its principal office at the location identified in the
prospectus relating to the Offering or at such other offices as set forth in the
Company’s most current filing (as of the date notice is to be given) under the
Exchange Act or as the Company otherwise notifies the Holder.

        

        (b)           The
Company shall cause to be kept at its office maintained pursuant to Section
10.2(a) hereof a Warrant Register for the registration and transfer of the
Warrant.  The name and address of the holder of the Warrant, the
transfers thereof and the name and address of the transferee of the Warrant
shall be registered in such Warrant Register.  The Person in whose
name the Warrant shall be so registered shall be deemed and treated as the owner
and holder thereof for all purposes of this Warrant, and the Company shall not
be affected by any notice or knowledge to the contrary.

        

        (c)           Upon
the surrender of this Warrant, properly endorsed, for registration of transfer
or for exchange at the office of the Company maintained pursuant to Section
10.2(a) hereof, the Company at its expense will (subject to compliance with
Section 9 hereof, if applicable) execute and deliver to or upon the order of the
Holder thereof a new Warrant of like tenor, in the name of such holder or as
such holder (upon payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face thereof for the number of shares of
Common Stock called for on the face of the Warrant so surrendered (after giving
effect to any previous adjustment(s) to the number of Warrant
Shares).

        

        10.3           Replacement of
Warrant.  Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of any such loss, theft or destruction of this Warrant, upon
delivery of indemnity reasonably satisfactory to the Company in form and amount
or, in the case of any mutilation, upon surrender of this Warrant for
cancellation at the office of the Company maintained pursuant to Section 10.2(a)
hereof, the Company, at its expense, will execute and deliver, in lieu thereof,
a new Warrant of like tenor and dated the date hereof.

        

        10.4           Opinions.  In
connection with the sale of the Warrant Shares by Holder, the Company agrees to
cooperate with the Holder, and at the Company’s expense, have its counsel
provide any legal opinions required to remove the restrictive legends from the
Warrant Shares in connection with a sale, transfer or legend removal request of
Holder.

        

        11.           No Rights or Liabilities as
Stockholder.  No Holder shall be entitled to vote or receive
dividends or be deemed the holder of any shares of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Warrant shall have been
exercised and the shares of Common Stock purchasable upon the exercise hereof
shall have become deliverable, as provided herein.  The Holder will
not be entitled to share in the assets of the Company in the event of a
liquidation, dissolution or the winding up of the Company.

         

        
          
            
            

          

          
            13

            
              

            

          

          
            
            

          

        

        
 

        12.           Notices.  Any
notice or other communication in connection with this Warrant shall be given in
writing and directed to the parties hereto as follows: (a) if to the Holder, to
the address and fax number indicated on the books and records of the Company or
(b) if to the Company, to the attention of its Chief Executive Officer at its
office maintained pursuant to Section 10.2(a) hereof; provided, that the exercise
of the Warrant shall also be effected in the manner provided in Section 3
hereof.  Notices shall be deemed properly delivered and received when
delivered to the notice party (i) if personally delivered, upon receipt or
refusal to accept delivery, (ii) if sent via facsimile, upon mechanical
confirmation of successful transmission thereof generated by the sending fax
machine, (iii) if sent by a commercial overnight courier for delivery on the
next Business Day, on the first Business Day after deposit with such courier
service, or (iv) if sent by registered or certified mail, five (5) Business Days
after deposit thereof in the U.S. mail.

        

        13.           Payment of
Taxes.  The Company will pay all documentary stamp taxes
attributable to the issuance of shares of Common Stock underlying this Warrant
upon exercise of this Warrant; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the transfer or registration of this Warrant or any
certificate for shares of Common Stock underlying this Warrant in a name other
that of the Holder.  The Holder is responsible for all other tax
liability that may arise as a result of holding or transferring this Warrant or
receiving shares of Common Stock underlying this Warrant upon exercise
hereof.

        

        14.           Miscellaneous.  This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought.  This
Warrant shall be construed and enforced in accordance with and governed by the
laws of the State of New York.  The section headings in this Warrant
are for purposes of convenience only and shall not constitute a part
hereof.  When used herein, the term “Reasonable Best Efforts”
means, with respect to the applicable obligation of the Company, reasonable best
efforts for similarly situated, publicly-traded companies.

        

        

        [Signature
Page Follows]

         

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

         

        IN WITNESS WHEREOF, the
Company has caused this Representative’s Warrant to be duly executed as of the
date first above written.

        

        
          
            	 	NILE THERAPEUTICS,
      INC.	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	/s/ 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

          

           

          
            
              
              

            

            
              15

              
                

              

            

            
              
              

            

          

        

        
           Exhibit
4.3

        

        EXHIBIT
A

        FORM
OF EXERCISE NOTICE

        [To be
executed only upon exercise of Warrant]

        

        To NILE THERAPEUTICS,
INC.:

        

        The
undersigned registered holder of the within Warrant hereby irrevocably exercises
the Warrant pursuant to Section 3.1 of the Warrant with respect to
________________________ Warrant Shares, at an exercise price per share of
$[                ],
and requests that the certificates for such Warrant Shares be issued, subject to
Sections 9 and 10, in the name of, and delivered to:

         

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 	 	 
	 	 	 
	 	 	 
	
                                       

                                    	 
      	 
      

                            

                             

                          

                        

                      

                    

                  

                

              

            

          

        

        The
undersigned is hereby making payment for the Warrant Shares in the following
manner: [check one]

        

        [     ]                      by
cash in accordance with Section 3.1(b) of the Warrant

        

        [     ]                      via
cashless exercise in accordance with Section 3.1(c) of the Warrant in the
following manner:

        

        
           

          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	 	 	 
	 	 	 
	 	 	 

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

        

        The
undersigned hereby represents and warrants that it is, and has been since its
acquisition of the Warrant, the record and beneficial owner of the
Warrant.

        

        Dated:
_______________

         

        
           

          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 	 	 
	 	
                                        Print
      or Type Name

                                         

                                      	 
	 	 	 
	 	
                                        (Signature must conform in all respects to name of
      holder as specified on the face of Warrant)

                                      
	 	 	 
	
                                         

                                      	
                                        (Street
      Address)

                                         

                                      	 
      
	 	
                                        (City)          (State)   
         (Zip Code)

                                         

                                      	 

                              

                            
                              
                                
                                

                              

                              
                                
                                

                                
                                  

                                

                              

                              
                                
                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

        EXHIBIT
B

        FORM
OF ASSIGNMENT

        [To be
executed only upon transfer of Warrant]

        

        For value
received, the undersigned registered holder of the within Warrant hereby sells,
assigns and transfers unto _____________________ [include name and addresses]
the rights represented by the Warrant to purchase __________ shares of Common
Stock of NILE THERAPEUTICS,
INC. to which the Warrant relates, and appoints _____________________
Attorney to make such transfer on the books of NILE THERAPEUTICS, INC.
maintained for the purpose, with full power of substitution in the
premises.

         

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    	
                                                                          	
                                                                            Dated: 

                                                                          	
                                                                             

                                                                          	 
	
                                                                             

                                                                          	 
      	
                                                                            (Signature
      must conform in all respects

                                                                            to name of holder as specified on the

                                                                            face of Warrant)

                                                                          	 
	 	 	 	 
	 	 	 	 
	 	 	(Street
      Address)	 
	 	 	 	 
	 	 	 	 
	 	 	(City)        (State)      (Zip
      Code)	 
	 	 	 	 
	 	Signed
      in the presence of:	 
	 	 	 	 
	 	 	 	 
	 	 	(Signature
      of Transferee)	 
	 	 	 	 
	 	 	 	 
	 	 	(Street
      Address)	 
	 	 	 	 
	 	 	 	 
	 	 	(City)        (State)      (Zip
      Code)	 
	 	 	
                                                                            Signed
      in the presence of:EXHIBIT
10.1

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”)
is dated as of April 17, 2010, by and among Kun Run Biotechnology, Inc., a
Nevada corporation (the “Company”),
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser”
and collectively, the “Purchasers”)
and Xueyun Cui (the “Key
Stockholder”).

     

    RECITALS

     

    A.           The
Company, each Purchaser and the Key Stockholder is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 of Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange
Commission (the “Commission”)
under the Securities Act.

     

    B.           The
Company has authorized, upon the terms and conditions stated in this Agreement,
the sale and issuance of up to $8,000,000 of units of the Company (which units
shall be collectively referred to herein as the “Units”),
with each Unit consisting of (A) one share of the Series A Preferred Stock of
the Company, par value $0.001 per share (the “Series A
Preferred”) and (B) one warrant (as amended, modified, restated or
supplemented from time to time, each, a “Net Income
Warrant,” and
collectively, the “Net Income
Warrants”) to purchase 0.30 of a share of Series A Preferred (such
fractional amount being referred to herein as the “Net Income
Warrant Ratio”).

     

    C.           At
the Closing (as hereinafter defined), each Purchaser listed on Annex A hereto,
severally and not jointly, wishes to purchase, and the Company wishes to sell,
upon the terms and conditions stated in this Agreement, the number of Units as
hereafter determined, with each Unit consisting of (i) one share of Series A
Preferred (each a “Unit
Share,” collectively, the “Unit
Shares”) and (ii) one Net Income Warrant to purchase 0.30 of a share of
Series A Preferred in substantially the form attached hereto as Exhibit
A.   The shares of Series A Preferred issuable upon
exercise of the Net Income Warrants, including, without limitation, all shares
issuable as a result of any adjustments pursuant to Section 4 of the Net Income
Warrants or pursuant to Section 8 of the Net Income Warrants, are referred to
herein as the “Net Income
Warrant Shares.”

     

    D.           At
the Closing, the parties hereto shall execute and deliver an Investor Rights
Agreement, substantially in the form attached hereto as Exhibit C (as
amended, modified, restated or supplemented from time to time, the “Investor Rights
Agreement”), pursuant to which, among other things, the Company will
agree to provide certain registration rights with respect to the Shares (as
hereinafter defined) under the Securities Act and the rules and regulations
promulgated thereunder and applicable state securities laws and will agree to
provide certain other rights to the Purchasers.

     

    E.           Concurrently
herewith, the parties shall execute and deliver a Voting Agreement,
substantially in the form attached hereto as Exhibit L (as
amended, modified, restated or supplemented from time to time, the “Voting
Agreement”), pursuant to which, among other things, the Key Stockholder
will agree to vote in favor of the charter amendment and other transactions
contemplated hereby.

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchasers hereby agree as
follows:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
I.

    DEFINITIONS

     

    1.1  Definitions.  In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:

     

    “Action”
means any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or, to the
Company’s Knowledge, threatened in writing against the Company or any of its
Subsidiaries, any of their respective properties or any officer, director or
employee of the Company acting in his or her capacity as an officer, director or
employee before or by any federal, state, county, local or foreign court,
arbitrator, governmental or administrative agency, regulatory authority, stock
market, stock exchange or trading facility.

     

    “Affiliate”
means, with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, Controls, is controlled by or is under
common control with such Person, as such terms are used in and construed under
Rule 144.  With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such
Purchaser.

     

    “Agreement”
shall have the meaning set forth in the Preamble to this Agreement.

     

    “Authorized
Officer” means, with respect to any Person, the chief executive officer,
chief financial officer, president, or executive vice president of such
Person.

     

    “Bankruptcy
Code” has the meaning set forth in Section 3.1(gg).

     

    “Board”
means the Board of Directors of the Company.

     

    “Board
Recommendation” has the meaning set forth in Section
4.13(f).

     

    “Business
Day” means a day, other than a Saturday or Sunday, on which banks in New
York City are open for the general transaction of business.

     

    “Capital
Stock” means (i) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, and (ii) with respect
to any Person that is not a corporation, any and all partnership, membership,
member’s or other equity interests of such Person.

     

    “Closing”
means the closing of the purchase by the Purchasers listed on Annex A hereto and
sale by the Company of Units to such Purchasers pursuant to this Agreement on
the Closing Date as provided in Section 2.1 hereof.

     

    “Closing Bid
Price” means, for any security as of any date, the last closing price for
such security on the Principal Trading Market, as reported by Bloomberg, or, if
the Principal Trading Market begins to operate on an extended hours basis and
does not designate the closing bid price, then the last bid price of such
security prior to 4:00 p.m., New York City time, as reported by Bloomberg,
or, if the Principal Trading Market is not the principal securities exchange or
trading market for such security, the last closing price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price is reported for such security by Bloomberg, the average of the bid prices
of any market makers for such security as reported in the “pink sheets” by Pink
Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid
Price cannot be calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall be
the fair market value as mutually determined by the Company and the holder. If
the Company and the holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to Section 3(b)
of the Warrants. All such determinations shall be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction
during the applicable calculation period.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    “Closing
Date” means the tenth (10th)
Business Day after the Execution Date, unless on such date the conditions set
forth in Sections 2.1, 2.2, 5.1 and 5.2 (other than those to be satisfied at the
Closing) shall not have been satisfied or waived, in which case the Closing Date
shall be on the third (3rd)
Business Day after the date on which the last to be satisfied or waived of the
conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 (other than those to be
satisfied at the Closing) shall have been satisfied or waived.

     

    “Commission”
has the meaning set forth in the Recitals to this Agreement.

     

    “Common
Stock” has the meaning set forth in the Recitals to this Agreement, and
also includes any securities into which the Common Stock may hereafter be
reclassified or changed.

     

    “Common Stock
Equivalents” means any securities of the Company which would entitle the
holder thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common
Stock.

     

    “Company”
shall have the meaning ascribed to such term in the Preamble to this
Agreement.

     

    “Company
Counsel” means Cadwalader, Wickersham & Taft LLP.

    

    “Company PRC
Counsel” means DeHeng Law Offices.

    

    “Company
Deliverables” means, collectively, the documents deliverable by the
Company pursuant to Section 2.2(a).

    

    “Company Patent
Applications” has the meaning set forth in Section 3.1(r).

    

    “Company’s
Knowledge” means with respect to any statement made to the knowledge of
the Company, that the statement is based upon the actual knowledge of the
executive officers of the Company having responsibility for the matter or
matters that are the subject of the statement.

    

    “Consultant”
means KunHe Investment Management Beijing Co., Ltd.

     

    “Consultant
Fees” has the meaning set forth in Section 3.1(w).

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    “Continuing
Director” means (a) any member of the board of directors of the Company
who was a director (or comparable manager) of the Company on the date hereof,
(b) any individual who becomes a member of the board of the directors of the
Company after the date hereof if such individual was appointed or nominated for
election to the board of the directors of the Company by a majority of the
Continuing Directors then in office, but excluding any such individual
originally proposed for election in opposition to the board of directors in
office at the date hereof in an actual or threatened election contest relating
to the election of the directors (or comparable managers) of the Company and
whose initial assumption of office resulted from such contest or the settlement
thereof, and (c) any individual who becomes a member of the board of directors
pursuant to Section 5.1(k).

     

    “Control”
(including the terms “controlling,” “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

     

    “Disclosure
Materials” has the meaning set forth in Section 3.1(h).

     

    “Employee
Transaction Benefit” has the meaning set forth in Section
3.1(n).

     

    “Environmental
Laws” has the meaning set forth in Section 3.1(l).

     

    “Environmental
Permit” means any permit, approval, identification number, license or
other authorization required under any Environmental Law.

     

    “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute of similar import, and regulations thereunder, in each case,
as in effect from time to time.  References to sections of ERISA shall
be construed also to refer to any successor sections.

     

    “ERISA
Affiliate” means, with respect to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which such Person
is a member and which would be deemed to be a “controlled group” within the
meaning of Sections 414(b), (c), (m) and (o) of the IRC.

     

    “Evaluation
Date” has the meaning set forth in Section 3.1(v).

     

    “Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated
thereunder.

     

    “Execution
Date” means the date first set forth above.

     

    “FDA” has
the meaning set forth in Section 3.1(p).

     

    “FDCA” has
the meaning set forth in Section 3.1(hh).

     

    “Fiscal
Year” means the fiscal year of the Company and its Subsidiaries ending on
December 31st of each year.

     

    “GAAP”
means U.S. generally accepted accounting principles.

     

    “Governmental
Authority” means any nation or government (foreign or domestic), any
Federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

     

    “Grant
Date” has the meaning set forth in Section 3.1(g).

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    “Hainan Zhonghe
Pharmaceutical Acquisition” mean the acquisition by Kun Run Biotechnology
Limited (“Kun Run
HK”) of Hainan Zhonghe Pharmaceutical Co., Ltd. (“Hainan
Zhonghe”) and all transactions related to such acquisition, including but
not limited to Ms. Yang Liqiong’s acquisition of the entire issued share capital
of Kun Run HK in February 2008; Kun Run HK’s acquisition of 60.12% of the equity
interests in Hainan Zhonghe April 2008, and of the remaining 39% of the equity
interests in Hainan Zhonghe in May 2008; Mr. Cui Xueyun’s acquisition of 99% of
the issued share capital of Kun Run HK in August 2008; and the Company’s
acquisition of the entire issued share capital of Kun Run HK in August
2008.

     

    “Hazardous
Materials” means (a) any element, compound or chemical that is defined,
listed or otherwise classified as a contaminant, pollutant, toxic pollutant,
toxic or hazardous substance, extremely hazardous substance or chemical,
hazardous waste, special waste, or solid waste under Environmental Laws or that
is likely to cause immediately, or at some future time, harm to or have an
adverse effect on, the environment or risk to human health or safety, including
any pollutant, contaminant, waste, hazardous waste, toxic substance or dangerous
good which is defined or identified in any Environmental Law and which is
present in the environment in such quantity or state that it contravenes any
Environmental Law; (b) petroleum and its refined products; (c) polychlorinated
biphenyls; (d) any substance exhibiting a hazardous waste characteristic,
including corrosivity, ignitability, toxicity or reactivity as well as any
radioactive or explosive materials; and (e) any raw materials, building
components (including asbestos-containing materials) and manufactured products
containing hazardous substances listed or classified as such under Environmental
Laws.

     

    “Intellectual
Property” has the meaning set forth in Section 3.1(r).

     

     “Insolvency
Proceeding” means any proceeding or case commenced by or against any
Person under any provision of the Bankruptcy Code or under any other bankruptcy
or insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, or extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief, including any
proceeding or case seeking to adjudicate such Person a bankrupt or insolvent, or
seeking dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for any such Person or for any
substantial part of its property.

     

    “Investor Rights
Agreement” has the meaning set forth in the Recitals to this
Agreement.

     

    “IRC” means
the Internal Revenue Code of 1986, as amended (or any successor statute thereto)
and the regulations thereunder.

     

    “Irrevocable
Transfer Agent Instructions” has the meaning set forth in Section
4.1(d).

     

    “Lead
Investor” means, collectively, Caduceus Asia Partners, L.P. and any other
Purchasers affiliated with OrbiMed Advisors, LLC.

     

    “Legal
Restraint” has the meaning set forth in Section 5.1(c).

     

    “Lien”
means any mortgage, deed of trust, lien, charge, claim, encumbrance, security
interest, right of first refusal, preemptive right or other restrictions of any
kind.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     
“Material
Adverse Effect” on or with respect to the Company and/or its Subsidiaries
means a material adverse effect on any of (a) the operations, business, assets,
properties, prospects or condition (financial or otherwise) of the Company
and/or its Subsidiaries, (b) the ability of the Company and/or its Subsidiaries
to perform any of its obligations under any Transaction Document to which it is
a party, (c) the legality, validity or enforceability of any Transaction
Document, or (d) the rights and remedies of any of the Purchasers under any
Transaction Document, except that any of the following, either alone or in
combination, shall not be deemed a Material Adverse Effect: (i) effects caused
by changes or circumstances affecting general market conditions in the U.S.
economy, (ii) effects related to regulatory or product development matters that
are generally applicable to the industry in which the Company operate taken as a
whole to the extent that such effects do not disproportionately impact the
Company, (iii) effects resulting from or relating to the announcement or
disclosure of the sale of the Shares or other transactions contemplated by this
Agreement, or (iv) effects caused by any event, occurrence or condition
resulting from or relating to the taking of any action required or contemplated
by this Agreement.

     

    “Material
Contract” means (i) any contract of the Company that has been filed, or
was required to have been filed, as an exhibit to the SEC Reports pursuant to
Item 601(b)(4) or Item 601(b)(10) of Regulation S-K, (ii) any agreement or
contract to which such Loan Party is a party and involving the receipt or
payment of amounts in the aggregate exceeding $100,000 per year and (iii) any
agreement or contract to which such Loan Party is a party, the termination of
which could reasonably be expected to have a Material Adverse
Effect.

    

    “Material
Permits” has the meaning set forth in Section 3.1(p).

     

    “Multiemployer
Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA to which the Company or any of its Subsidiaries or any of their respective
ERISA Affiliates has contributed to, or has been obligated to contribute, at any
time during the preceding six (6) years.

     

    “Net Income
Warrant” and “Net Income
Warrants” have the respective meaning set forth in the Recitals to this
Agreement.

     

    “Net Income
Warrant Ratio” has the meaning set forth in the Recitals to this
Agreement.

     

    “Net Income
Warrant Shares” has the meaning set forth in the Recitals to this
Agreement.

     

    “NRS” means
the Nevada Revised Statutes.

     

    “Person”
means an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.

     

    “Pharmaceutical
Product” has the meaning set forth in Section 3.1(hh).

     

    “PRC” means
the People’s Republic of China.

     

    “Press
Release” has the meaning set forth in Section 4.7.

     

    “Principal Trading
Market” means the Trading Market on which the Common Stock is primarily
listed on and quoted for trading, which, as of the date of this Agreement, shall
be the OTC Bulletin Board.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    “Pro Rata
Share” means, as to any Purchaser, the percentage equivalent of the
aggregate number of Units such Purchaser has the right to purchase at the
Closing hereunder, divided by the aggregate number of Units to be purchased at
the Closing hereunder.

     

    “Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

     

    “PTO” has
the meaning set forth in Section 3.1(r).

     

    “Purchase
Price” means, with respect to the Units sold at the Closing, $1.53 per
Unit (subject to Section 7.15 hereof).

     

    “Purchaser”
and “Purchasers”
have the respective meaning set forth in the Preamble to this
Agreement.

     

    “Purchaser
Deliverables” has the meaning set forth in Section 2.2(b).

     

    “Purchaser
Party” has the meaning set forth in Section 4.9.

     

    “Qualified
Auditor” means KPMG LLP, Ernst & Young LLP, Deloitte LLP or
PricewaterhouseCoopers LLP.

     

    “Registration
Statement” means a registration statement meeting the requirements set
forth in the Investor Rights Agreement and covering the resale by the Purchasers
of the Registrable Securities (as defined in the Investor Rights
Agreement).

     

    “Regulation
D” has the meaning set forth in the Recitals to this
Agreement.

     

     “Required
Approvals” has the meaning set forth in Section 3.1(e).

     

    “Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule.

     

    “SEC
Reports” has the
meaning set forth in Section 3.1(h).

     

    “Secretary’s
Certificate” has the meaning set forth in Section
2.2(a)(viii).

     

    “Securities”
means, collectively, the Units, the Warrants and the Shares.

     

    “Securities
Act” has the meaning set forth in the Recitals to this
Agreement.

     

    “Shares”
means, collectively, the Unit Shares, the Common Stock issuable upon conversion
of the Unit Shares, the Warrant Shares, and the Common Stock issuable upon
conversion of the Warrant Shares.

     

    “Short
Sales” include, without limitation, (i) all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not
against the box, and all types of direct and indirect stock pledges, forward
sale contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar
arrangements (including on a total return basis), and (ii) sales and other
transactions through non-U.S. broker dealers or foreign regulated
brokers.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    “Solvent”
has the meaning set forth in Section 3.1(gg).

     

    “Stock
Certificates” has the meaning set forth in Section
2.2(a)(iv).

     

    “Stockholder
Approval” means the approval from the Company’s stockholders of each of
the Transaction Stockholder Approval Matters by the requisite vote of the
Company’s stockholders at the Stockholders’ Meeting.

     

    “Stockholder
Approval Date” means the date of the Stockholders’ Meeting if at the date
of the Stockholders’ Meeting each of the Transaction Stockholder Approval
Matters have been approved by the requisite vote of the Company’s stockholders
at the Stockholders’ Meeting.

     

     Stockholders’
Meeting” has the meaning set forth in Section 4.13(a).

     

    “Subscription
Amount” means with respect to each Purchaser, the aggregate amount to be
paid for the Units purchased hereunder at the Closing as indicated on such
Purchaser’s signature page to this Agreement next to the heading “Subscription
Amount.”

     

    “Subsidiary”
means, with respect to any Person at any date, any corporation, limited or
general partnership, limited liability company, trust, estate, association,
joint venture or other business entity (i) the accounts of which would be
consolidated with those of such Person in such Person’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP or
(ii) of which more than 50% 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 Person, (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 Person, and “Subsidiaries”
mean, collectively, each Subsidiary with respect to any Person.

     

    “Trading
Affiliates” has the meaning set forth in Section 3.2(h).

     

    “Trading
Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its Principal Trading Market (other than the OTC Bulletin Board), or
(ii) if the Common Stock is not listed on a Trading Market (other than the OTC
Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported in the “pink sheets”
by Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business Day.

     

    “Trading
Market” means whichever of the New York Stock Exchange, the American
Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the
NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is
listed or quoted for trading on the date in question.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    “Transaction
Documents” means this Agreement and the schedules and exhibits attached
hereto, the  Warrants, the Investor Rights Agreement and the schedules
and exhibits attached thereto, the Irrevocable Transfer Agent Instructions and
any other agreement, instrument, and other document executed and delivered
pursuant hereto or thereto.

     

    “Transaction
Stockholder Approval Matters” has the meaning set forth in Section
4.13(a).

     

    “Transfer
Agent” means Securities Transfer Corporation, or any successor transfer
agent for the Company.

     

    “Units” has
the meaning set forth in the Recitals to this Agreement.  Units will
not be issued or certificated. The Unit Shares and Warrants are immediately
separable and will be issued separately.

     

    “Unit
Share” and “Unit
Shares” have the respective meaning set forth in the Recitals to this
Agreement.

     

    “Unrestricted
Securities” has the meaning set forth in Section 4.1(c).

     

    “Voting
Agreement” has the meaning set forth in the Recitals to this
Agreement.

     

    “Warrants”
means the Net Income Warrants.

     

    “Warrant Exercise
Price” means with respect to the Net Income Warrants sold at the Closing,
$1.53 per each Net Income Warrant Share (subject to Section 7.15
hereof).

     

    “Warrant
Shares” means the Net Income Warrant Shares.

     

    ARTICLE
II.

    PURCHASE
AND SALE

     

    2.1 Closing, Delivery and
Payment.

     

    (a)          Purchase and
Sale.  Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to each Purchaser
listed on Annex A hereto, and each Purchaser listed on Annex A hereto shall,
severally and not jointly, purchase from the Company, such number of Units equal
to the quotient resulting from dividing (i) the Subscription Amount for such
Purchaser by (ii) the Purchase Price, rounded down to the nearest whole
Unit.

     

    (b)          Closing.  The
Closing shall take place at the offices of Cooley Godward Kronish LLP, 3175
Hanover Street, Palo Alto, California, on the Closing Date, or at such other
locations or remotely by facsimile transmission or other electronic means as the
parties may mutually agree.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (c)          Forms of
Payment.  On the Closing Date, (i) each Purchaser listed on
Annex A hereto shall pay to the Company its Subscription Amount, in United
States dollars and in immediately available funds, by wire transfer to the
Company’s account, as set forth in instructions previously provided to the
Purchasers, (ii) the Company shall irrevocably instruct the Transfer Agent to
deliver to each Purchaser listed on Annex A hereto one or more stock
certificates, free and clear of all restrictive and other legends except as
expressly provided in Section 4.1(b) hereof, evidencing the number of Unit
Shares such Purchaser is acquiring at the Closing, within five (5) Business Days
after the Closing and (iii) the Company shall issue to each Purchaser
listed on Annex A hereto a Net Income Warrant pursuant to which such Purchaser
shall have the right to acquire such number of Net Income Warrant Shares
determined by multiplying the number of Unit Shares such Purchaser is acquiring
at the Closing by the Net Income Warrant Ratio and rounding down to the nearest
whole number.  The Net Income Warrants issued and sold at the Closing
shall have an exercise price equal to the applicable Warrant Exercise
Price.

     

    2.2 
Closing
Deliveries.

     

    (a)          On
or prior to the Closing, the Company shall issue, deliver or cause to be
delivered to the Purchasers the following:

     

    (i)          this
Agreement, duly executed by the Company;

     

    (ii)         duly
executed Irrevocable Transfer Agent Instructions acceptable to the Lead Investor
acknowledged in writing by the Transfer Agent;

     

    (iii)        the
Investor Rights Agreement, duly executed by the Company;

     

    (iv)      
 one or more stock certificates, free and clear of all restrictive and
other legends except as provided in Section 4.1(b) hereof, evidencing the Shares
subscribed for by each Purchaser listed on Annex A, registered in the name of
such Purchaser as set forth on the Stock Certificate Questionnaire included as
Exhibit D-2
hereto (the “Stock
Certificates”), with the original Stock Certificates delivered within
five (5) Business Days of the Closing;

     

    (v)         a
Net Income Warrant, executed by the Company and registered in the name of each
such Purchaser as set forth on the Stock Certificate Questionnaire included as
Exhibit D-2
hereto, pursuant to which such Purchaser shall have the right to acquire such
number of Net Income Warrant Shares as determined herein;

     

    (vi)        a
legal opinion of Company PRC Counsel – Beijing DeHeng Law Office, dated as of
the Closing Date and in the form attached hereto as Exhibit E-1, which
legal opinion shall include without limitation an opinion that based on the
documents and the factual statements listed provided by Zhonghe Group in the
legal opinion, the Company PRC Counsel cannot find evidence that Kun Run HK had
any affiliated relationships with the Company when Kun Run HK acquired
accumulative 99.12% equity interests in the Company in 2008, and thus the
approval by MOFCOM on the basis of an acquisition between affiliates is not
required under the PRC Interim Provisions on the Merger and Acquisition of
Domestic Enterprises by Foreign Investors in effect from September 8, 2006
(“Circular
10 of 2006”) executed by such counsel and addressed to the Company and a
legal opinion of the Company’s special Nevada counsel and/or Company
counsel  in the form attached hereto as Exhibit
E-2.

     

    (vii)       a
certificate of the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying the
resolutions adopted by the Board or a duly authorized committee thereof
approving the transactions contemplated by this Agreement and the other
Transaction Documents and the issuance of the Securities and that such
resolutions remain in full force and effect, (b) certifying the current versions
of the articles of incorporation, as amended, and by-laws of the Company and (c)
certifying as to the signatures and authority of Persons signing the Transaction
Documents and related documents on behalf of the Company, in the form attached
hereto as Exhibit
G;

     

    (viii)      the
Compliance Certificate referred to in Section 5.1(h);

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (ix)        a
certificate evidencing the formation and good standing of the Company and issued
by the office of the Secretary of State of the State of Nevada, as of a date
within five (5) days of the Closing Date;

     

    (x)         a
certificate evidencing the Company’s qualification as a foreign corporation
issued by each state where the Company is qualified to do business as a foreign
corporation, as of a date within five (5) days of the Closing Date;
and

     

    (xi)        a
certified copy of (i) the Company’s current articles of incorporation, and any
amendments thereto, as certified by the Secretary of State of the State of
Nevada, as of a date within ten (10) days of the Closing Date.

     

    (b)          On
or prior to Closing, each Purchaser shall deliver or cause to be delivered to
the Company the following, as applicable (the “Purchaser
Deliverables”):

     

    (i)          this
Agreement, duly executed by such Purchaser;

     

    (ii)         such
Purchaser’s Subscription Amount in United States dollars and in immediately
available funds by wire transfer to the Company’s account as previously provided
to the Purchasers;

     

    (iii)        the
Investor Rights Agreement, duly executed by such Purchaser; and

     

    (iv)        a
fully completed and duly executed Accredited Investor Questionnaire and Stock
Certificate Questionnaire in the forms attached hereto as Exhibits D-1 and
D-2,
respectively.

     

    ARTICLE
III.

    REPRESENTATIONS
AND WARRANTIES

     

    3.1 Representations and
Warranties of the Company.  The Company hereby represents and
warrants as of the date hereof and as of the Closing Date, as applicable (except
for the representations and warranties that speak as of a specific date, which
shall be made as of such date), to each of the Purchasers that, except as set
forth in the Schedules delivered herewith:

     

    (a)          Subsidiaries.  The
Company has no direct or indirect Subsidiaries other than Kun Run HK and Hainan
Zhonghe. The Company owns, directly or indirectly, all of the equity interests
of each Subsidiary free and clear of any Lien, and all the issued and
outstanding equity interests of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights. Except as
disclosed on Schedule
3.1(a), there are no outstanding obligations of any of the Company’s
Subsidiaries convertible into or exchangeable for, or warrants, options or other
rights for the purchase or acquisition from the Company or any of its
Subsidiaries, or other obligations of any Company Subsidiary to issue, directly
or indirectly, any shares of capital stock or other equity interests of any
Company Subsidiary.  All issuances and transfers of equity interests
in each Subsidiary since their inception were properly made in accordance with
all applicable laws and regulations of the jurisdiction(s) in which such
Subsidiary is or was incorporated, and all filings, registrations, permits and
approvals required from Government Authorities were properly made and obtained
with respect to such issuance or transfer of equity securities.  The
corporate records of each Subsidiary accurately reflect all issuances and
transfers of equity securities by such Subsidiary or, where applicable, its
predecessor.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (b)          Organization and
Qualification. Each of the Company and each Subsidiary is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation (as applicable), with the
requisite corporate power and authority to own and use its properties and assets
and to carry on its business as currently conducted. The Company is not in
violation of any of the provisions of its articles of incorporation or bylaws,
and none of the Subsidiaries is in material violation of any of the provisions
of its respective organizational documents.  Each of the Company and
each Subsidiary is duly qualified to conduct business and is in good standing as
a foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not have a Material Adverse Effect.

     

    (c)          Authorization; Enforcement;
Validity.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents to which it is a party and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of each of
the Transaction Documents to which the Company is a party by the Company, and
the consummation by the Company of the transactions contemplated hereby and
thereby (including, but not limited to, the issuance of, or the reservation for
issuance and the subsequent issuance of, as applicable, the Units, the Warrants
and the Shares) have been duly authorized by all necessary corporate action on
the part of the Company, and no further corporate action is required by the
Company, its Boards of Directors or stockholders in connection therewith other
than in connection with the Required Approvals.  Each of the
Transaction Documents to which the Company is a party has been (or upon delivery
will have been) duly executed by the Company, as applicable, and is, or when
delivered in accordance with the terms hereof, will constitute the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application, and
insofar as indemnification and contribution provisions may be limited by
applicable law. Except as set forth on Schedule 3.1(c)
hereto, there are no stockholder agreements, voting agreements, or other similar
arrangements with respect to the Company’s capital stock to which the Company is
a party or, to the Company’s Knowledge, between or among any of the Company’s
stockholders.

     

    (d)          No
Conflicts.  The execution, delivery and performance by the
Company of this Agreement and each of the other Transaction Documents to which
it is a party and the consummation by the Company of the transactions
contemplated hereby or thereby (including, but not limited to, the issuance of,
or the reservation for issuance and the subsequent issuance of, as applicable,
the Units, the Warrants and the Shares) do not and will not (i) conflict with or
violate any provisions of the Company’s articles of incorporation or bylaws,
(ii) except as set forth on Schedule 3.1(d),
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company, or give to others any
rights of termination, amendment, adjustment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any Material Contract or warrant
or other right to acquire capital stock of the Company or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
any of its Subsidiaries is subject or decree (including federal and state
securities laws and regulations and the rules and regulations, assuming the
correctness of the representations and warranties made by the Purchasers herein,
of any self regulatory organization to which the Company or its securities are
subject, including all applicable Trading Markets), or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected), except in
the case of clause (iii) such as would not, individually or in the aggregate,
have a Material Adverse Effect.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (e)          Filings, Consents and
Approvals.  Neither the Company nor any of its Subsidiaries is
required to obtain any approval, consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including the issuance of the Securities), other than (i)
the filing with the Commission of one or more Registration Statements in
accordance with the requirements of the Investor Rights Agreement, (ii) filings
required by applicable state and federal securities laws, (iii) the filing of a
Notice of Sale of Securities on Form D with the Commission under Regulation D of
the Securities Act, (iv) the filing of any requisite notices and/or
application(s) to the Principal Trading Market for the issuance and sale of the
Securities, and the listing of the Common Stock for trading or quotation, as the
case may be, thereon in the time and manner required thereby, (v) those that
have been made or obtained prior to the date hereof and (vi) the Stockholder
Approval (collectively, the “Required
Approvals”).

     

    (f)          Issuance of the
Securities.  The Units, the Shares and the Warrants have been
duly authorized and, when issued and paid for in accordance with the terms of
the Transaction Documents, will be duly and validly issued, free and clear of
all Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of stockholders. Assuming the accuracy of the
representations and warranties of the Purchasers in this Agreement, the
Securities will be issued in compliance with all applicable federal and state
securities laws.  As of the Closing Date, the Company shall have
reserved from its duly authorized capital stock not less than (i) the aggregate
number of shares of Series A Preferred to be sold and issued hereunder as Unit
Shares, and (ii) the maximum number of shares of Common Stock issuable upon
conversion of such Series A Preferred.  The Company shall, so long as
any of the Warrants are outstanding, take all action necessary to reserve and
keep available out of its authorized and unissued capital stock, solely for the
purpose of effecting the exercise of the Warrants (x) the maximum number of
shares of Series A Preferred issuable upon exercise of the Warrants (without
taking into account any limitations on the exercise of the Warrants set forth in
the Warrants) and (y) the maximum number of shares of Common Stock issuable upon
conversion of the Series A Preferred issuable upon exercise of the
Warrants.

    
      
         

      

      
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    (g)          Capitalization.  The
number of shares and type of all authorized, issued and outstanding capital
stock, options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock of
the Company) has been set forth in the SEC Reports and has changed since the
date of such SEC Reports only to reflect stock option and warrant exercises that
do not, individually or in the aggregate, have a material effect on the issued
and outstanding capital stock, options and other securities.  All of
the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and non-assessable, have been issued in compliance in
all material respects with all applicable federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase any capital stock of the
Company.  Except as set forth on Schedule 3.1(g)(i):
(i) no shares of the Company's capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company; (iii) there are no
material outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing indebtedness
of the Company or by which the Company is or may become bound; (iv) there are no
financing statements securing obligations in any material amounts, either singly
or in the aggregate, filed in connection with the Company; (v) there are no
agreements or arrangements under which the Company is obligated to register the
sale of any of their securities under the Securities Act (except the Investor
Rights Agreement); (vi) there are no outstanding securities or instruments of
the Company which contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company is
or may become bound to redeem a security of the Company; (vii) there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities; (viii) the Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement; and (ix) the Company has no liabilities or
obligations required to be disclosed in the SEC Reports (as defined herein) but
not so disclosed in the SEC Reports, other than those incurred in the ordinary
course of the Company's businesses and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect.  Schedule 3.1(g)(ii)
sets forth a complete and accurate list, as of the date hereof,
(A) with respect to all outstanding options and warrants to acquire capital
stock of the Company, the number and type of capital stock subject to each such
stock option or warrant, the grant date, expiration date, exercise price per
share and vesting schedule thereof and the name of the holder thereof and (B)
with respect to all outstanding shares of Common Stock that are subject to
outstanding Company restricted stock or restricted stock units, the grant date
and vesting schedule and name of the holder thereof.  All outstanding
stock options, restricted stock or restricted stock units are evidenced by stock
option agreements, restricted stock unit agreements or other award agreements,
in each case substantially in the forms filed as exhibits to the SEC Reports,
except that the forms of such agreements differ with respect to the number of
shares covered thereby, the exercise price (if applicable), vesting schedule and
expiration date applicable thereto and other similar terms, provided
that no stock option agreement, restricted stock unit agreement or other award
agreement contains terms that are inconsistent in any material respect with, or
material terms in addition to, such forms.  With respect to the
outstanding stock options, (A) each was duly authorized no later than the
date on which the grant of such stock option was by its terms to be effective
(the “Grant
Date”) by all necessary corporate action, including, as applicable,
approval by the Board of Directors of the Company (or a duly constituted and
authorized committee thereof) and any required stockholder approval by the
necessary number of votes or written consents, and the award agreement governing
such grant (if any) was duly executed and delivered by each party thereto,
(B) each grant was made in accordance with the terms of the applicable
Company equity incentive plan, the Exchange Act and all other applicable Laws,
(C) the per share exercise price was equal to the fair market value (as
defined in the applicable Company equity incentive plan) of a share of Common
Stock on the applicable Grant Date and (D) each grant was properly
accounted for in accordance with GAAP in the financial statements (including the
related notes) of the Company and disclosed in the SEC Reports in accordance
with the Exchange Act and all other applicable laws.  The Company has
not knowingly granted, and there is no and has been no Company policy or
practice to knowingly grant, stock options prior to, or otherwise knowingly
coordinate the grant of stock options with, the release or other public
announcement of material information regarding the Company or its Subsidiaries
or their financial results or prospects.

     

    (h)          SEC
Reports.  The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for two (2) years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC
Reports” and together with this Agreement and the Schedules to this
Agreement (if any), the “Disclosure
Materials”), on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of any
such extension.  As of the date hereof, the Company is not aware of
any event occurring on or prior to the Closing Date (other than the transactions
contemplated by the Transaction Documents) that requires the filing of a Current
Report on Form 8-K after the Closing.  As of their respective filing
dates, or to the extent corrected by a subsequent restatement, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted 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.

    
      
         

      

      
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    (i)           Financial
Statements.  The financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing (or to the extent corrected by a
subsequent restatement).  Such financial statements have been prepared
in accordance with GAAP applied on a consistent basis during the periods
involved, except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries taken as a
whole as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements,
to normal, year-end audit adjustments.  Each of the Material Contracts
to which the Company or any of its Subsidiaries is a party or to which the
property or assets of the Company or any of its Subsidiaries is subject has been
filed as an exhibit to the SEC Reports.

     

    (j)           Tax
Matters.  The Company and each of its Subsidiaries (i) has
prepared and filed all foreign, federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those that are being contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves or other appropriate provisions are maintained on the books of the
Company in accordance with GAAP, and (iii) has set aside on their books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply,
except, in the case of clauses (i) and (ii) above, where the failure to so pay
or file any such tax, assessment, charge or return would not have a Material
Adverse Effect.

     

    (k)          Material
Changes.  Since the date of the latest financial statements
included within the SEC Reports, except as specifically disclosed in the SEC
Reports, (i) there have been no events, occurrences or developments that have
had or would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, (ii) neither the Company nor any of its
Subsidiaries has incurred any material liabilities (contingent or otherwise)
other than (A) trade payables, accrued expenses and other liabilities incurred
in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s financial statements
pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not materially altered its method of
accounting or the manner in which it keeps its accounting books and records,
(iv) the Company has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock (other than in
connection with repurchases of unvested stock issued to employees of the
Company), (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except Common Stock issued in the ordinary course
pursuant to existing Company stock option or stock purchase plans or executive
and director compensation arrangements disclosed in the SEC Reports and (vi)
there has not been any material change or amendment to, or any waiver of any
material right under, any Material Contract under which the Company or any of
its Subsidiaries or their respective assets are bound or
subject.  Except for the issuance of the Securities contemplated by
this Agreement, no event, liability or development has occurred or exists with
respect to the Company, its Subsidiaries or their respective businesses,
properties, operations or financial condition that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made that has not been publicly disclosed at least one Trading
Day prior to the date that this representation is made.

    
      
         

      

      
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    (l)           Environmental
Matters.  To the Company’s Knowledge, neither the Company nor
any of its Subsidiaries (i) is in violation of any statute, rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) owns or operates any real property contaminated with any
substance that is in violation of any Environmental Laws, (iii) is liable for
any off-site disposal or contamination pursuant to any Environmental Laws, or
(iv) is subject to any claim relating to any Environmental Laws; which
violation, contamination, liability or claim has had or would have, individually
or in the aggregate, a Material Adverse Effect; and there is no pending or, to
the Company’s Knowledge, threatened investigation that might lead to such a
claim.

     

    (m)         Litigation.  There
is no Action which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities, (ii)
involves a claim of material violation of or material liability under any
federal, state, local or foreign laws governing the Company's or any of its
Subsidiaries’ operations, including without limiting the generality of the
foregoing, laws regulating the protection of human health, including without
limiting the generality of the foregoing, laws relating to the manufacture,
processing, packaging, labeling, marketing, distribution, use, inspection,
treatment, storage, disposal, transport or handling of the Company's product,
and regulated or hazardous substances, as well as all authorizations, codes,
decrees, demands or demand letters, injunctions, judgments, licenses, notices or
notice letters, orders, permits, plans or regulations issued, entered,
promulgated or approved thereunder, all as may be in effect from time to time
and all successors, replacements and expansions thereof, (iii) involves material
injury to or death of any person arising from or relating to any of the
Company's product, or (iv) could, if there were an unfavorable decision,
individually or in the aggregate, have a Material Adverse Effect.  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the
Exchange Act or the Securities Act.

     

    (n)          Employment
Matters.  No material labor dispute exists or, to the Knowledge
of the Company, is imminent with respect to any of the employees of the Company
or any of its Subsidiaries which could reasonably be expected to result in a
Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is
a member of a union that relates to such employee’s relationship with the
Company or such Subsidiary, and neither the Company nor any of its Subsidiaries
is a party to a collective bargaining agreement, and the Company and its
Subsidiaries believe that their relationships with their employees are good. No
executive officer, to the Knowledge of the Company, is, or is now expected to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance would not, individually or in the aggregate, have a Material Adverse
Effect.  Except as set forth on Schedule 3.1(n), none
of the execution, delivery and performance by the Company of this Agreement and
each of the other Transaction Documents to which it is a party and the
consummation by the Company of the transactions contemplated hereby or thereby
(including, but not limited to, the issuance of, or the reservation for issuance
and the subsequent issuance of, as applicable, the Units, the Warrants and the
Shares) (alone or in conjunction with any other event, including any termination
of employment) will (A) entitle any of the Company’s or its Subsidiaries’
employees to any compensation or benefit, except as required by any statute,
rule or regulation of any governmental authority applicable to the Company,
(B) accelerate the time of payment or vesting, or trigger any payment or
funding, of any compensation or benefit, including any stock options, restricted
stock, or restricted stock units, or trigger any other material obligation or
(C) result in any material breach or violation of, or default under, or limit
the Company’s right to amend, modify or terminate, any Company employee
compensation or benefit plan, program, policy, agreement or arrangement (each,
an “Employee
Transaction Benefit”).  Each Company benefit plan or
arrangement that is a “nonqualified deferred compensation plan” within the
meaning of Section 409A(d)(1) of the IRC subject to Section 409A of
the IRC has been in operational compliance with Section 409A of the IRC
since January 1, 2005, and has been in documentary compliance with Section 409A
of the IRC since January 1, 2009, based upon a good faith, reasonable
interpretation of Section 409A of the IRC and the final Treasury
Regulations and other guidance issued by the Internal Revenue Service
thereunder.  Except as set forth on Schedule 3.1(n)
attached hereto, neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated by this Agreement will (either
alone or upon the occurrence of termination of employment) constitute an event
that may result in (either alone or in connection with any other circumstance or
event) or give rise directly or indirectly to any “parachute payment” within the
meaning of Section 280G(b)(2) of the IRC.  The Company is not a party
to any agreement to compensate any Person for excise taxes payable pursuant to
Section 4999 of the IRC.

    
      
         

      

      
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    (o)          Compliance.  The
Company (i) is not in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company), nor has the Company received written
notice of a claim that it is in default under or that it is in violation of, any
Material Contract (whether or not such default or violation has been waived),
(ii) is not in violation of any order of any court, arbitrator or governmental
body having jurisdiction over the Company or its properties or assets, or (iii)
is not or has not been in violation of, or in receipt of notice that it is in
violation of, any statute, rule or regulation of any governmental authority
applicable to the Company, except in each case as would not, individually or in
the aggregate, have a Material Adverse Effect.

     

    (p)          Regulatory
Permits.  The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, including without
limitation the PRC State Food and Drug Authority (“PRC
SFDA”), except where the failure to possess such permits, individually or
in the aggregate, has not and would not have, individually or in the aggregate,
a Material Adverse Effect (“Material
Permits”), and (i) neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or material
adverse modification of any such Material Permits and (ii) the Company is
unaware of any facts or circumstances that the Company would reasonably expect
to give rise to the revocation or material adverse modification of any Material
Permits.

     

    (q)          Title to
Assets.  Except as set forth on Schedule 3.1(q), the
Company and each of its Subsidiaries have good and marketable title or valid
land use rights granted by relevant Governmental Authorities in the People’s
Republic of China to all real property  used in the conduct of their
respective businesses as now conducted and proposed to be conducted, in each
case free and clear of all liens, encumbrances and defects except such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
Subsidiaries..  Except as set forth on Schedule 3.1(q), the
Company and each of its Subsidiaries have good and marketable title to all
tangible personal property owned by them which is material to the business of
the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company and its Subsidiaries.  Any real property
and facilities held under lease by the Company or any of its Subsidiaries are
held by it under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
Subsidiaries.

    
      
         

      

      
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    (r)          Patents and
Trademarks.  The Company and its Subsidiaries own, possess,
license or have other rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets, technology and
other proprietary rights and processes (collectively, the “Intellectual
Property”) necessary for the conduct of their respective businesses as
now conducted and proposed to be conducted.  Except  where
such violations or infringements would not have, either individually or in the
aggregate, a Material Adverse Effect, to the Company’s Knowledge (a) there
are no rights of third parties to any such Intellectual Property; (b) there is
no infringement by third parties of any such Intellectual Property; (c) there is
no pending or threatened action, suit, proceeding or claim by others challenging
the Company’s rights in or to any such Intellectual Property; (d) there is no
pending or threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property; and (e) there is no
pending or threatened action, suit, proceeding or claim by others that the
Company or any Company Subsidiary infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of
others.  The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties, except where failure to do so would not have,
either individually or in the aggregate, a Material Adverse
Effect.  The Company has duly and properly filed or caused to be filed
with applicable foreign patent authorities all patent applications owned by the
Company (the “Company Patent
Applications”). To the knowledge of the Company, the Company has made no
material misrepresentation in the Company Patent Applications. The Company is
not aware of any information material to a determination of patentability
regarding the Company Patent Applications not called to the attention of the
foreign patent authority. The Company is not aware of any information not called
to the attention of the foreign patent authority that would preclude the grant
of a patent for the Company Patent Applications. The Company has no knowledge of
any information that would preclude the Company from having clear title to the
Company Patent Applications.

     

    (s)          Insurance.  Neither
the Company nor any Company Subsidiary has received any notice of cancellation
of any insurance, nor, to the Company’s Knowledge, will it or any Subsidiary be
unable to renew its respective existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue their respective businesses without a significant increase
in cost.

     

    (t)          Transactions With Affiliates
and Employees.  Except as set forth in the SEC Reports and
other than the grant of stock options or other equity awards that are not
individually or in the aggregate material in amount, none of the officers or
directors of the Company and, to the Company’s Knowledge, none of the employees
of the Company, is presently a party to any transaction with the Company or to a
presently contemplated transaction (other than for services as employees,
officers and directors) that would be required to be disclosed pursuant to Item
404 of Regulation S-K promulgated under the Securities Act.

     

    (u)          Internal Accounting
Controls.  The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any differences. Since
the Evaluation Date, there have been no changes in the Company’s internal
control over financial reporting (as such term is defined in the Exchange Act)
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.

    
      
         

      

      
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    (v)         Sarbanes-Oxley; Disclosure
Controls.  The Company is in compliance in all material
respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it, except where such noncompliance would not have, individually
or in the aggregate, a Material Adverse Effect.  The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls
and procedures to ensure that information required to be disclosed by the
Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s certifying officers have evaluated
the effectiveness of the Company’s disclosure controls and procedures as of the
end of the period covered by the Company’s most recently filed periodic report
under the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report
under the Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.

     

    (w)         Certain
Fees.  Except for the fees to the Consultant in an amount equal
to 5% of the gross cash proceeds to the Company resulting from the sale of Units
at the Closing pursuant to this Agreement (the “Consultant
Fees”) (which Consultant  Fees are being paid by the Company),
no Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or a
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Company. The Company shall indemnify, pay, and hold each Purchaser harmless
against, any liability, loss or expense (including, without limitation,
attorneys’ fees and out-of-pocket expenses) arising in connection with any such
right, interest or claim.

     

    (x)          Private
Placement.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 of this Agreement and
the accuracy of the information disclosed in the Accredited Investor
Questionnaires, no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Purchasers under the
Transaction Documents.

     

    (y)         Registration
Rights.  Other than each of the Purchasers or as set forth in
Schedule 3.1(y)
hereto, no Person has any right to cause the Company to effect the registration
under the Securities Act of any securities of the Company other than those
securities which are currently registered on an effective registration statement
on file with the Commission.

     

    (z)          No Directed Selling Efforts
or General Solicitation.  Neither the Company nor any Person
acting on its or its behalf has conducted any “general solicitation” or “general
advertising” (as those terms are used in Regulation D) in connection with the
offer or sale of any of the Securities.

     

    (aa)       No Integrated
Offering.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 of this Agreement,
neither the Company nor any Person acting on its behalf has, directly or
indirectly, at any time within the past six months, made any offers or sales of
any Company security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale by the Company of the Securities as contemplated hereby or (ii)
cause the offering of the Securities pursuant to the Transaction Documents to be
integrated with prior offerings by the Company for purposes of any applicable
law, regulation or stockholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market on which any
of the securities of the Company are listed or designated.

    
      
         

      

      
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    (bb)       Listing and Maintenance
Requirements.  The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to terminate the registration of the Common Stock under
the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration.  The
Company has not, in the 12 months preceding the date hereof, received written
notice  from any Trading Market on which the Common Stock is or has
been listed or quoted to the effect that the Company is not in compliance with
the listing or maintenance requirements of such Trading Market except as set
forth on Schedule
3.1(bb).  The Company is in compliance in all material respects
with the listing and maintenance requirements for continued trading of the
Common Stock on the Principal Trading Market, except as set forth on Schedule
3.1(bb).

     

    (cc)       Investment
Company.  The Company is not required to be registered as, and
is not an Affiliate of, and immediately following the Closing, will not be
required to register as, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

     

    (dd)       Application of Takeover
Protections; Rights Agreements.  The Company and the Board have
taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company's charter documents or the laws of the State of Nevada that is or could
reasonably be expected to become applicable to any of the Purchasers as a result
of the Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including, without limitation, the
Company's issuance of the Securities and the Purchasers' ownership of the
Securities. The Company has not adopted a stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock or
a change in control of the Company.

     

    (ee)       Off Balance Sheet
Arrangements.  There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance
sheet entity that is required to be disclosed by the Company in its Exchange Act
filings and is not so disclosed or that otherwise would have a Material Adverse
Effect.

     

    (ff)         Acknowledgment Regarding
Purchasers’ Purchase of Securities.  The Company acknowledges and
agrees that each of the Purchasers is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby.  The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to the Purchasers’ purchase of the Securities.

     

    (gg)       Solvency.  As
of the Closing Date, each of the Company and its Subsidiaries is and will be
Solvent.  As used herein, “Solvent”
means, with respect to the Company on a particular date, that on such date, in
each case including the fair value of the Company’s Intellectual Property, (a)
the fair value of the property of the Company is greater than the total amount
of liabilities, including contingent liabilities, of the Company; (b) the
present fair salable value of the assets of the Company is not less than the
amount that will be required to pay the probable liability of the Company on its
debts as they become absolute and matured; (c) the Company does not intend to,
and does not believe that it will, incur debts or liabilities beyond the
Company’s ability to pay as such debts and liabilities mature; (d) the Company
is not engaged in a business or transaction, and is not about to engage in a
business or transaction, for which the Company’s property would constitute an
unreasonably small capital; and (e) as of the date hereof, the Company is not
“insolvent” within the meaning of Section 101(32) of the United States
Bankruptcy Code (11 U.S.C. § 101, et. seq), as amended from time to time (the
“Bankruptcy
Code”).  The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.  The Company does not intend
to incur debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in respect of its
debt).  The Company has no Knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year
from the Closing Date.  The SEC Reports set forth as of the date
thereof all outstanding secured and unsecured indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments, which
are required to be disclosed in such SEC Reports.

    
      
         

      

      
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    (hh)          PRC
SFDA.  As to each product subject to the jurisdiction of the
PRC SFDA and applicable PRC laws and regulations, that is manufactured,
packaged, labeled, tested, distributed, sold, and/or marketed by the Company or
any of its Subsidiaries (each such product, a “Pharmaceutical
Product”), such Pharmaceutical Product is being manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by the Company in compliance
with all applicable requirements applicable PRC laws, rules and regulations
relating to registration, investigational use, premarket clearance, licensure,
or application approval, good manufacturing practices, good laboratory
practices, good clinical practices, product listing, quotas, labeling,
advertising, record keeping and filing of reports, except where the failure to
be in compliance would not, individually or in the aggregate, have a Material
Adverse Effect. There is no pending, completed or, to the Company’s Knowledge,
threatened, action (including any lawsuit, arbitration, or legal or
administrative or regulatory proceeding, charge, complaint, or investigation)
against the Company or any of its Subsidiaries, and none of the Company or any
of its Subsidiaries has received any notice, warning letter or other
communication from the PRC SFDA or any other governmental entity, which (i)
contests the premarket clearance, licensure, registration, or approval of, the
uses of, the distribution of, the manufacturing or packaging of, the testing of,
the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii)
withdraws its approval of, requests the recall, suspension, or seizure of, or
withdraws or orders the withdrawal of advertising or sales promotional materials
relating to, any Pharmaceutical Product, (iii) imposes a clinical hold on any
clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins
production at any facility of the Company or any of its Subsidiaries, (v) enters
or proposes to enter into a consent decree of permanent injunction with the
Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of
any laws, rules or regulations by the Company or any of its Subsidiaries, and
which, either individually or in the aggregate, would have a Material Adverse
Effect. The properties, business and operations of the Company have been and are
being conducted in all material respects in accordance with all applicable laws,
rules and regulations of the PRC SFDA. The Company has not been informed by the
PRC SFDA that it either will prohibit the marketing, sale, license or use in the
PRC of any product proposed to be developed, produced or marketed by the Company
nor has the PRC SFDA expressed any concern as to approving or clearing for
marketing any product being developed or proposed to be developed by the
Company.

     

    (ii)            No Additional
Agreements.  The Company does not have any agreement or
understanding with any Purchaser with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents. 

     

    (jj)            MOC
Approval.  Based on the legal opinion of the Company PRC
Counsel, Kun Run HK’s acquisition of accumulative 99.12% equity interests in the
Company in 2008 will not be deemed as a transaction between affiliates under
Circular 10 of 2006, and the aforesaid acquisition did not require approval by
the PRC Ministry of Commerce on the basis of being a transaction between
affiliates.

     

    
      
        
        

      

      
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    3.2  Representations and
Warranties of the Purchasers.  Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows:

     

    (a)            Organization;
Authority.  Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution, delivery and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or, if such Purchaser is not a corporation, such
partnership, limited liability company or other applicable like action, on the
part of such Purchaser.  Each of this Agreement and the Investor
Rights Agreement has been duly executed by such Purchaser, and when delivered by
such Purchaser in accordance with the terms hereof, will constitute the valid
and legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.

     

    (b)            No
Conflicts.  The execution, delivery and performance by such
Purchaser of this Agreement and the Investor Rights Agreement and the
consummation by such Purchaser of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents of
such Purchaser, (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which such Purchaser is a party, or
(iii) result in a violation of any law, rule, regulation, order,
judgment  or decree (including federal and state securities laws)
applicable to such Purchaser, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the ability of such Purchaser to perform its obligations
hereunder.

     

    (c)            Investment
Intent.  Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to, or for distributing or reselling
such Securities or any part thereof in violation of the Securities Act or any
applicable state securities laws, provided, however, that by making the
representations herein, such Purchaser does not agree to hold any of the
Securities for any minimum period of time and reserves the right, subject to the
provisions of this Agreement and the Investor Rights Agreement, at all times to
sell or otherwise dispose of all or any part of the Warrants or the Shares
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration and in compliance with applicable
federal and state securities laws.  Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its business. Such Purchaser does
not presently have any agreement, plan or understanding, directly or indirectly,
with any Person to distribute or effect any distribution of any of the
Securities (or any securities which are derivatives thereof) to or through any
Person; such Purchaser is not a registered broker-dealer under Section 15 of the
Exchange Act or an entity engaged in a business that would require it to be so
registered as a broker-dealer.

     

    (d)            Purchaser
Status.  At the time such Purchaser was offered the Securities,
it was, and at the date hereof it is an “accredited investor” as defined in Rule
501(a) under the Securities Act.

     

    (e)            General
Solicitation.  Such Purchaser is not purchasing the Securities
as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general advertisement.

     

    
      
        
        

      

      
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    (f)            Experience of Such
Purchaser.  Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  Such Purchaser is able to bear the
economic risk of an investment in the Securities and, at the present time, is
able to afford a complete loss of such investment.

     

    (g)           Access to
Information.  Such Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and its respective
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect such
Purchaser's right to rely on the truth, accuracy and completeness of the
Disclosure Materials and the Company's representations and warranties contained
in the Transaction Documents.  Such Purchaser has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed decision with respect to its acquisition of the
Securities.

     

    (h)           Certain Trading
Activities. Other than with respect to the transactions contemplated
herein, since the time that such Purchaser was first contacted by the Company,
the Consultant or any other Person regarding the transactions contemplated
hereby until the date hereof, neither the Purchaser nor any Affiliate of such
Purchaser which (x) had knowledge of the transactions contemplated hereby, (y)
has or shares discretion relating to such Purchaser’s investments or trading or
information concerning such Purchaser’s investments, including in respect of the
Securities, and (z) is subject to such Purchaser’s review or input concerning
such Affiliate’s investments or trading (collectively, “Trading
Affiliates”) has
directly or indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser or Trading Affiliate, effected or agreed
to effect any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities). Notwithstanding
the foregoing, in the case of a Purchaser and/or Trading Affiliate that is,
individually or collectively, a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser's or
Trading Affiliate’s assets and the portfolio managers have no direct knowledge
of the investment decisions made by the portfolio managers managing other
portions of such Purchaser's or Trading Affiliate’s assets, the representation
set forth above shall apply only with respect to the portion of assets managed
by the portfolio manager that has knowledge about the transactions contemplated
by this Agreement.  Other than to other Persons who are parties to
this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, and
except as otherwise provided in Section 4.12 of this Agreement, no Purchaser
makes any representation, warranty or covenant hereby that it will not engage in
Short Sales in the securities of the Company after the effectiveness of any
Registration Statement filed pursuant to the Investor Rights
Agreement.

     

    (i)            Brokers and
Finders.  Except for the Consultant Fees, no Person will have,
as a result of the transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company or any Purchaser for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Purchaser.

     

    
      
        
        

      

      
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    (j)            Independent Investment
Decision.  Such Purchaser has independently evaluated the
merits of its decision to purchase Securities pursuant to the Transaction
Documents, and such Purchaser confirms that it has not relied on the advice of
any other Purchaser’s business and/or legal counsel in making such
decision.  Such Purchaser understands that nothing in this Agreement
or any other materials presented by or on behalf of the Company to the Purchaser
in connection with the purchase of the Securities constitutes legal, tax or
investment advice.  Such Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Securities.

     

    (k)            Reliance on
Exemptions.  Such Purchaser understands that the Securities
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Securities.

     

    (l)             No Governmental
Review.  Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

     

    (m)           Regulation
M. Such Purchaser is aware that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of Series A Preferred and
Common Stock and other activities with respect to the Series A Preferred and
Common Stock by the Purchasers.

     

    (n)            Residency.  Such
Purchaser’s principal executive offices are in the jurisdiction set forth
immediately below Purchaser’s name on the applicable signature page attached
hereto.

     

    The
Company and each of the Purchasers acknowledge and agree that no party to this
Agreement has made or makes any representations or warranties with respect to
the transactions contemplated hereby other than those specifically set forth in
this Article III and the Transaction Documents.

     

    ARTICLE
IV.

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1 
Transfer
Restrictions.

     

    (a)            Compliance with
Laws.  Notwithstanding any other provision of this Article IV,
each Purchaser covenants that the Securities may be disposed of only pursuant to
an effective registration statement under, and in compliance with the
requirements of, the Securities Act, or pursuant to an available exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act, and in compliance with any applicable state and federal
securities laws.  In connection with any transfer of the Securities
other than (i) pursuant to an effective registration statement, (ii) to the
Company (including pursuant to the Lead Investor’s exercise of the Put Right),
(iii) to an Affiliate of a Purchaser, (iv) pursuant to Rule 144 (provided that the Purchaser
provides the Company with reasonable assurances (in the form of seller and
broker representation letters) that the securities may be sold pursuant to such
rule) or Rule 144A, (v) pursuant to Rule 144 following the applicable holding
period or (vi) in connection with a bona fide pledge, the Company may require
the transferor thereof to provide to the Company an opinion of counsel selected
by the transferor and reasonably acceptable to the Company, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
Securities under the Securities Act.  As a condition of transfer of
any Securities other than Unrestricted Securities (as defined below), any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of a Purchaser under this Agreement and the Investor
Rights Agreement.

     

    
      
        
        

      

      
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    (b)            Legends.  Each
of the Warrants and the certificates evidencing the Shares shall bear any legend
as required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form, as applicable, until such time as they are not
required under Section 4.1(c) (and a stock transfer order may be placed against
transfer of the certificates for the Shares):

     

    NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION OF
THESE SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED EXCEPT AS PROVIDED BY ARTICLE IV OF THAT CERTAIN SECURITIES PURCHASE
AGREEMENT, DATED AS OF APRIL 17, 2010, BY AND AMONG KUN RUN BIOTECHNOLOGY, INC.
AND THE PURCHASERS IDENTIFIED ON THE SIGNATURE PAGES THERETO.

     

    In
addition, if any Purchaser is an Affiliate of the Company, the Warrants and the
certificates evidencing the Shares issued to such Purchaser shall bear a
customary “affiliates” legend.

     

    (c)       
    Removal of
Legends.  The legend set forth in Section 4.1(b) above shall be
removed and the Company shall issue a certificate without such legend or any
other legend to the holder of the applicable Securities upon which it is stamped
or issue to such holder by electronic delivery at the applicable balance account
at DTC, if (i) a Registration Statement covering the resale of such Securities
by the Purchasers is effective, (ii) such Securities are sold or transferred
pursuant to Rule 144 (if the transferor is not an Affiliate of the Company), or
(iii) such Securities are eligible for sale under Rule 144 (any Securities
meeting any of such criteria being referred to as “Unrestricted
Securities”).  Fees with respect to the Transfer Agent and
Company Counsel associated with the removal of such legend shall be borne by the
Company.  Following such time as a legend is no longer required for
certain Securities, the Company will no later than five (5) Trading Days
following the delivery by a Purchaser to the Company or the Transfer Agent (with
notice to the Company) of a legended certificate representing such Securities
(endorsed or with stock powers attached, signatures guaranteed, and otherwise in
form necessary to affect the reissuance and/or transfer), deliver or cause to be
delivered to the transferee of such Purchaser or such Purchaser, as applicable,
a certificate representing such Securities that is free from all restrictive and
other legends.  The Company may not make any notation on its records
or give instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in this Section 4.1.  In lieu of delivering
physical certificates, upon the written request of any Purchaser, the Company
shall use its best efforts to transmit certificates for Securities subject to
legend removal hereunder to such Purchaser by crediting the account of the
transferee’s Purchaser’s prime broker with DTC through its Deposit Withdrawal
Agent Commission (DWAC) system.  The time periods for delivery and
penalties described herein shall apply to the electronic transmittals described
herein.  Any delivery not effected by electronic transmission shall be
effected by delivery of physical certificates.  Each Purchaser agrees
that the removal of the restrictive legend from any certificates representing
Securities as set forth in this Section 4.1(c) above is predicated upon the
Company’s reliance that such Purchaser would sell, transfer, assign, pledge,
hypothecate or otherwise dispose of such Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if such
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein.

     

    
      
        
        

      

      
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    (d)         
  Irrevocable Transfer Agent
Instructions.  The Company shall execute and deliver
irrevocable instructions to its Transfer Agent, which irrevocable instructions
shall be acknowledged in writing by the Transfer Agent (the “Irrevocable
Transfer Agent Instructions”). The Company represents and warrants that
no instruction other than the Irrevocable Transfer Agent Instructions or
instructions consistent therewith referred to in this Section 4.1(d) will be
given by the Company to its transfer agent in connection with this Agreement,
and that the Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement, the
other Transaction Documents and applicable law. The Company acknowledges that a
breach by it of its obligations under this Section 4.1(d) will cause irreparable
harm to a Purchaser. Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section 4.1(d) will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 4.1(d), that a Purchaser shall be entitled, in
addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.

    

    (e)           
Acknowledgement.  Each
Purchaser hereunder acknowledges its primary responsibilities under the
Securities Act and accordingly will not sell or otherwise transfer any of the
Securities or any interest therein without complying with the requirements of
the Securities Act.  While any Registration Statement remains
effective, each Purchaser hereunder may sell the Shares in accordance with the
plan of distribution contained in such Registration Statement and, if it does
so, it will comply therewith and with the related prospectus delivery
requirements unless an exemption therefrom is available.  Each
Purchaser, severally and not jointly with the other Purchasers, agrees that if
it is notified by the Company in writing at any time that a Registration
Statement registering the resale of any of the Shares is not effective or that
the prospectus included in such Registration Statement no longer complies with
the requirements of Section 10 of the Securities Act, the Purchaser will refrain
from selling such Shares until such time as the Purchaser is notified by the
Company that such Registration Statement is effective or such prospectus is
compliant with Section 10 of the Exchange Act, unless such Purchaser is able to,
and does, sell such Shares pursuant to an available exemption from the
registration requirements of Section 5 of the Securities Act.  Both
the Company and its Transfer Agent, and their respective directors, officers,
employees and agents, may rely on this subsection (e), and each Purchaser
hereunder will indemnify and hold harmless each of such persons from any
breaches or violations of this paragraph.

    

    4.2  Acknowledgment of
Dilution.  The Company acknowledges that the issuance of the
Securities may result in dilution of the outstanding shares of Series A
Preferred and Common Stock.  The Company further acknowledges that its
obligations under the Transaction Documents, including without limitation its
obligation to issue the Shares pursuant to the Transaction Documents, are
unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Company may have against any Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the other
stockholders of the Company.

     

    4.3  Reservation of Series A
Preferred Stock and Common Stock.  As of the Closing Date, the
Company shall have taken all action necessary to authorize and reserve no less
than (i) the aggregate number of shares of Series A Preferred to be sold and
issued hereunder as Unit Shares, and (ii) the maximum number of shares of Common
Stock issuable upon conversion of such Series A Preferred.  The
Company shall, so long as any of the Warrants are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued
capital stock, solely for the purpose of effecting the exercise of the Warrants
(x) the maximum number of shares of Series A Preferred issuable upon exercise of
the Warrants (without taking into account any limitations on the exercise of the
Warrants set forth in the Warrants) and (y) the maximum number of shares of
Common Stock issuable upon conversion of the Series A Preferred issuable upon
exercise of the Warrants.

     

    
      
        
        

      

      
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    4.4  Furnishing of
Information.  In order to enable the Purchasers to sell the
Securities under Rule 144 of the Securities Act, commencing on the date hereof
and ending at such time as all Purchasers can freely sell Securities without
restriction under the Securities Act, the Company shall use its commercially
reasonable efforts to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act.  During
such period, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Purchasers and make publicly available
in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Shares under Rule 144.

     

    4.5  Form D and Blue
Sky.  The Company agrees to timely file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to each Purchaser who requests a copy in writing promptly after such
filing.  The Company, on or before the Closing Date, shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to the Purchasers at each
Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Purchasers who request in writing such evidence on or prior to the Closing
Date.  The Company shall make all filings and reports relating to the
offer and sale of the Securities required under applicable securities or “Blue
Sky” laws of the states of the United States following the Closing
Date.

     

    4.6  No
Integration.  The Company shall not, and shall use its
commercially reasonable efforts to ensure that no Affiliate of the Company shall
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in Section 2 of the Securities Act) that will be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Purchasers, or that will be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such
that it would require stockholder approval prior to the closing of such other
transaction unless stockholder approval is obtained before the closing of such
subsequent transaction.

     

    4.7  Securities Laws Disclosure;
Publicity. By 9:00 a.m., New York City time, on the Trading Day
immediately following the execution of this Agreement, the Company shall issue a
press release (the “Press
Release”) reasonably acceptable to the Lead Investor disclosing all
material terms of the transactions contemplated hereby.  On or before
9:00 a.m., New York City time, on the fourth Trading Day following the execution
of this Agreement (or such earlier time as required by law), the Company will
file a Current Report on Form 8-K with the Commission describing the terms of
the Transaction Documents (and including as exhibits to such Current Report on
Form 8-K the material Transaction Documents (including, without limitation, this
Agreement, the forms of Net Income Warrant and the Investor Rights Agreement)).
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser or an Affiliate of any Purchaser, or include the name of any
Purchaser or an Affiliate of any Purchaser in any press release or filing with
the Commission (other than the Registration Statement) or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
(i) as required by federal securities law in connection with (A)  any
Registration Statement contemplated by the Investor Rights Agreement and (B) the
filing of final Transaction Documents (including signature pages thereto) with
the Commission and (ii) to the extent such disclosure is required by law,
request of the Staff of the Commission or Trading Market regulations, in which
case the Company shall provide the Purchasers with prior written notice of such
disclosure permitted under this subclause (ii).  Each Purchaser,
severally and not jointly with the other Purchasers, covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed
by the Company as described in this Section 4.7, such Purchaser will maintain
the confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction), except that
such Purchaser may disclose the terms to its financial, accounting, legal and
other advisors.

     

    
      
        
        

      

      
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    4.8  Indemnification.  In
addition to the indemnity provided in the Investor Rights Agreement, the Company
agrees to indemnify and hold each Purchaser and all of their respective
directors, officers, stockholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls a Purchaser (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling person (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation (collectively, “Losses”)
that any such Purchaser Party may suffer or incur whether direct, indirect or
consequential, as a result of or arising from or relating to or in connection
with (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction
Documents, provided
that such a claim for indemnification relating to any breach of any of the
representations or warranties made by the Company in this Agreement is made
within two years from the Closing or (b) any action instituted against a
Purchaser, or any of their respective Affiliates, by any Person who is not an
Affiliate of such Purchaser, with respect to any of transactions contemplated by
the Transaction Documents (unless such action is based upon any agreements or
understanding such Purchaser may have with any such Person or any violations by
the Purchaser of state or federal securities laws or any conduct by such
Purchaser which constitutes fraud, gross negligence or willful
misconduct).   Notwithstanding anything to the contrary contained
herein, the Company and the Key Stockholder agree to jointly and severally
indemnify and hold each Purchaser Party harmless from any and all Losses that
any such Purchaser Party may suffer or incur whether direct, indirect or
consequential, as a result of or arising from or relating to or in connection
with (w) the failure by the Company, Kun Run HK, Hainan Zhonghe or any PRC
resident (if so required by PRC law) to secure, according to the PRC Notice on
Relevant Issues concerning Foreign Exchange Administration for Domestic
Residents to Engage in Financing and in Round-trip Investment via Overseas
Special Purpose Companies which was issued on October 21, 2005 (“Circular
75”), registration with the PRC State Administration of Foreign Exchange
(“SAFE
Registration”) for the Hainan Zhonghe Pharmaceutical Acquisition, (x) any
action by the PRC Ministry of Commerce against the Company, Kun Run HK or Hainan
Zhonghe in relation to any failure or alleged failure to have obtained approvals
under Circular 10 of 2006 for the entire Hainan Zhonghe Pharmaceutical
Acquisition or any part of it, (y) any claim against the Company or any of its
Subsidiaries relating to a breach of Section 3.1(a) in relation to the issue or
transfer of securities by any of the Subsidiaries, and (z) the failure by the
Company to fulfill its obligations to the Lead Investor under the Put Right,
including without limitation payment of the Put Amount upon the Lead Investor’s
exercise of the Put Right.  Notwithstanding anything to the contrary
herein, all indemnification provided for hereunder shall not exceed the maximum
Put Amount, assuming the Lead Investor exercises the Put Right for all Shares
(including all Warrant Shares actually issued upon exercise of the Warrants)
then held by the Lead Investor and its affiliates.  To the extent that
the undertaking to indemnify, pay and hold harmless set forth in this Section
4.9 may be unenforceable because it is violative of any law or public policy,
the Company and Key Stockholder, as applicable, shall, contribute the maximum
amount which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all indemnified matters incurred by the Purchaser
Parties.

     

    
      
        
        

      

      
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    4.9  Listing of
Securities.  In the time and manner required by the Principal
Trading Market, the Company shall prepare and file with such Trading Market an
additional shares listing application covering all of the Shares and shall use
its commercially reasonable efforts to take all steps necessary to maintain, so
long as any other shares of Common Stock shall be so listed, such
listing.

     

    4.10        Use of
Proceeds.  The Company shall use the proceeds from the sale of
the Units for (i) potential acquisitions of drug products and pipeline assets,
(ii) working capital, (iii) payment of the Consultant Fee, (iv) reimbursement of
Investor Fees, and (v) repayment of certain outstanding obligations of the
Company or its Subsidiaries.

     

    4.11        Dispositions and
Confidentiality After the Date Hereof.  Each Purchaser,
severally and not jointly with the other Purchasers, covenants that neither it,
nor any Affiliate acting on its behalf or pursuant to any understanding with it,
will engage in any transactions in the Company’s securities (including, without
limitation, any Short Sales involving the Company’s securities) during the
period from the date hereof until the earlier of such time as (i) the
transactions contemplated by this Agreement are first publicly announced as
described in Section 4.7 or (ii) this Agreement is terminated in full pursuant
to Section 6.1 hereof.  Notwithstanding the foregoing, in the case of
a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser's assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser's assets, the
covenants set forth above shall apply only with respect to the portion of assets
managed by the portfolio manager that has knowledge about the transactions
contemplated by this Agreement.  Each Purchaser understands and
acknowledges, severally and not jointly with any other Purchaser, that the
Commission currently takes the position that covering a short position
established prior to effectiveness of a resale registration statement with
shares included in such registration statement would be a violation of Section 5
of the Securities Act, as set forth in Item 65, Section 5 under Section A, of
the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation
Finance.

     

    4.12        No Shop
Agreement.  Until the earlier to occur of (i) the Closing or
(ii) a valid termination pursuant to Section 6.1 hereof, the effect of which
results in the Closing failing to occur, the Company will not, and will not
cause nor permit any of its Affiliates or any of its or their officers,
directors, stockholders, employees, agents or representatives to, directly or
indirectly:

     

    (a)            negotiate,
authorize, recommend, enter into or propose to enter into, with any Person other
than Persons designated by mutual agreement of the Company and the Lead
Investor, any transaction involving (directly or indirectly) an issuance, sale
or acquisition of any Capital Stock of the Company (other than (i) the issuance
of Securities pursuant to the Transaction Documents, (ii) employee, director and
consultant stock option grants consistent with past custom and practice and
(iii) shares of Common Stock issued upon the exercise of (A) warrants in
existence as of the date hereof or (B) stock options granted to employees,
directors or consultants of the Company and its Subsidiaries and that are either
in existence as of the date hereof or that have been granted consistent with
past custom and practice), a sale, lease or other conveyance of a substantial
portion of the business or assets of the Company and its Subsidiaries, or any
merger, recapitalization, business combination, strategic alliance, joint
venture or similar transaction involving the Company (a “Competing
Transaction”);

     

    (b)            continue
to engage in any pending discussions or negotiations with any third party
concerning any previously proposed Competing Transaction;

     

    (c)            knowingly
encourage, solicit or initiate discussions, negotiations or submissions of
proposals, indications of interest or offers in respect of a Competing
Transaction;

     

    
      
        
        

      

      
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    (d)            knowingly
furnish or cause to be furnished to any person any information in furtherance of
a Competing Transaction.

     

    4.13        Schedule
14F-1.  If necessary, the Company shall file with the
Commission a Schedule 14f-1 at least 10 days prior to the Closing
Date.

     

    4.14        Access to Information and
Properties.  Prior to the Closing, the Company shall, and shall
cause each of its Subsidiaries to, (a) afford the Lead Investor and its
personnel, accountants, counsel and other representatives reasonable access
during normal business hours and on reasonable advance notice to the Company’s
and each of such Subsidiary’s premises and other properties, books and records
and all other existing information concerning the business, properties and
personnel of the Company and such Subsidiary as the Lead Investor may reasonably
request, (b) make available at reasonable times and to a reasonable extent
officers and employees of the Company and such Subsidiary to discuss the
business and affairs of the Company and such Subsidiary and (c) furnish promptly
during normal business hours to personnel, accountants, counsel and other
representatives of the Lead Investor such additional financial and operating
data and other information regarding the assets, properties and business of the
Company and each Subsidiary as the Lead Investor may from time to time
reasonably request in order to assist the Lead Investor in fulfilling its
obligations under this Agreement and to facilitate the consummation of the
transactions contemplated by this Agreement.

     

    4.15        SAFE Registration; Put
Right.  Promptly following the Closing Date, the Company shall
and shall cause Kun Run HK, Hainan Zhonghe and any PRC resident (if so required
by PRC law) to use all commercially reasonable efforts to register with SAFE for
the Hainan Zhonghe Pharmaceutical Acquisition (the “SAFE Registration
Undertaking”).  In the event any time during the three (3) year
period following the Closing Date of any action by the PRC Ministry of Commerce
against the Company, Kun Run HK or Hainan Zhonghe in relation to any failure or
alleged failure to have obtained approvals under Circular 10 of 2006 for the
entire Hainan Zhonghe Pharmaceutical Acquisition or any part of it, or in the
event any time during the three (3) year period following the Closing Date of
either the failure to promptly initiate the SAFE Registration Undertaking or the
refusal of the PRC State Administration of Foreign Exchange to grant or approve
the SAFE Registration, and so long as a Lead Investor owns not less than fifty
percent (50%) of the Unit Shares (or shares of Common Stock issued or issuable
upon conversion of such Unit Shares) purchased under this Agreement by such Lead
Investor as of the time of a determination under this Section the Lead Investor
shall have the right in its sole discretion and without obligation (the “Put
Right”), by delivery of written notice to the Company (the “Put
Notice”) to require the Company to purchase from the Lead Investor and
its Affiliates for cash all, or at its election a portion of the Shares
(including any Warrant Shares actually issued upon exercise of the Warrants)
then held by the Lead Investor and its affiliates at an aggregate purchase price
(“Put
Amount”) equal to (a) the number of Shares specified in the Put Notice
multiplied by (b) $1.53 per Share (subject to Section 7.15 hereof) plus accrued
interest on such amount equal to 8% per annum, compounded monthly from the
applicable issuance date of such Share. The Put Right shall expire the later of
(a) three (3) years following the Closing Date and (b) six (6) months following
the discovery by, or notice to, the Lead Investor of the event giving rise to
the Put Right.  The closing of a sale of Shares to the Company under
the Put Right will occur within five (5) Business Days after the date of the
Lead Investor’s Put Notice to the Company.

     

    4.16        Equity Incentive
Plan.  By the date one (1) year after the Closing Date, the
Company shall have duly adopted and received all requisite approvals for an
employee equity incentive or similar employee benefit plan (“Equity Incentive
Plan”), establishing a reserve of 4,411,765 shares of Common Stock
thereunder.

     

    
      
        
        

      

      
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    4.17        Real Property
Matters.

     

    (a)            By
July 31, 2010, the Company shall provide evidence to Lead Investor that RMB
29,000,000 bank loan the company borrowed from Haikou Chengjiao Rural Credit
Cooperatives Union (the “Bank Loan”
) and secured by real properties described in ownership certificates Hai Fang Zi
HK047825, Hai Fang Zi HK047826, Hai Fang Zi HK047827, Hai Fang Zi HK047828, Hai
Fang Zi HK047829, Hai Fang Zi HK047830, Hai Fang Zi HK047831 and land
certificate Hai Kou Shi Guo Yong (Ji) Zi No. 000139 (the “Mortgaged
Properties”) shall have been repaid in full.

     

    (b)            By
August 15, 2010, the Company
shall provide evidence to Lead Investor that all Liens including, without
limitation, the mortgage securing the Bank Loan, have been released from the
Mortgaged Properties.

     

    (c)            By
December 31, 2010, the Mortgaged Properties shall have been transferred by Zhonghe Group to
Hainan Zhonghe, free and clear of all Liens.

     

    (d)            By
May 31, 2010, the Company shall have provided evidence to the reasonable
satisfaction of Lead Investor of the original acquisition by Zhonghe Group of
real property currently held or occupied, or being transferred as described in
this Agreement, to Hainan Zhonghe.

     

    4.18        Labor
Reserves.  By May 31, 2010, the Company shall procure the
establishment by Hainan Zhonghe of a housing reserve and social insurance
reserves of at least CNY 1 million with respect to liabilities incurred on or
before the Closing Date with respect to its current and former
employees.

     

    4.19        Warrant
Exercise.  Upon receipt of an Exercise Notice (as defined in
the Warrants) and payment of the applicable Warrant Exercise Price, the Company
shall issue and sell the relevant Warrant Shares in accordance with the terms
and conditions set forth in the Warrants.

     

    4.20        Miscellaneous
Covenants.

     

    (a)            By
April 30, 2010, all existing new drug certificates in the names of R&D Co.
and/or Zhonghe Group for the followng drugs/drug candidates shall have been
transferred to Hainan Zhonghe: (i) Diammonium Glycyrrhizinate for Injection,
(ii) Propylgallate Injection, (iii) Thymopentin Injection, (iv) Levofloxacin
Mesylate for Injection, and (v) Thymosin α1
for Injection, and each of R&D Co. and Zhonghe Group shall have provided
written confirmation acceptable to Lead Investor that neither Zhonghe Group nor
R&D Co. have any rights to, in or over such drugs/drug candidates and all
Intellectual Property relating thereto, and that Hainan Zhonghe is the sole and
exclusive owner thereof.

     

    (b)            By
May 31, 2010, the Company shall have demonstrated to the reasonable satisfaction
of Lead Investor that the GMP certificate covers all operations of Hainan
Zonghe.

     

    (c)            By
August 31, 2010, the Company shall have demonstrated to the reasonable
satisfaction of Lead Investor that the Hainan Zhonghe’s distributors possess
requisite Pharmaceutical Trading Licenses and GSP certificates as required under
the laws of the PRC.

     

    (d)          
By May 31, 2010, the Company shall have demonstrated to the reasonable
satisfaction of Lead Investor that  all activities and payments
related to Hainan Zhonghe’s individual agents have been properly arranged
according to PRC laws and regulations.

     

    (e)            By
August 31, 2010, the Company shall have demonstrated to the reasonable
satisfaction of Lead Investor that Hainan Zhonghe’s distribution agreements for
distributors representing at least 80% of sales in the latest financial year are
in writing, are currently in force and comply with all relevant PRC laws and
regulations.

     

    
      
        
        

      

      
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    (f)            By
December 31, 2010, the Company shall have demonstrated to the reasonable
satisfaction of Lead Investor that Hainan Zhonghe has obtained a Pollution
Discharge Permit.

     

    (g)           By
May 31, 2010, Zonghe Group shall have entered into license agreements granting a
perpetual and royalty free license to Hainan Zonghe to use certain trademarks
and such license agreements shall have been filed with PRC State Administration
of Industry and Commerce on or before July 10, 2010.  The said
trademarks include 和宜,和文, 和力 and 和方.

     

    (h)           From
and after the Closing Date, the Company shall work with the Lead Investor to
ensure that the Company, Hainan Zhonghe and their respective Affiliates develop
and implement appropriate compliance policies and procedures suitable for
similarly situated publicly held groups, and shall dedicate sufficient resources
to such compliance programs in order to facilitate a possible listing of the
Company’s securities on a Trading Market.

     

    (i)            By
May 31, 2010, the Company shall have demonstrated to the reasonable satisfaction
of Lead Investor that Kun Run HK’s 2009 Annual Return shall have been corrected
and refiled to show the Company as the sole shareholder of Kun Run
HK.

     

    ARTICLE
V.

    CONDITIONS
PRECEDENT TO CLOSING

    

    5.1  Conditions Precedent to the
Obligations of the Purchasers to Purchase Units at the
Closing.  The obligation of each Purchaser listed on Annex A
hereto to purchase Units at the Closing is subject to the fulfillment to such
Purchaser’s satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by such Purchaser (as to itself
only):

     

    (a)            Representations and
Warranties.  The representations and warranties of the Company
contained herein shall be true and correct in all respects as of the date when
made and as of the Closing Date, as though made on and as of such
date.

     

    (b)            Performance.  The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to the
Closing.

     

    (c)            No Legal
Restraint.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction
(collectively, a “Legal
Restraint”) that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.  The Company shall not be
subject to any Insolvency Proceedings.

     

    (d)            Consents and
Approvals.  The Company shall have obtained in a timely fashion
any and all consents, permits, approvals, registrations and waivers necessary
for consummation of the purchase and sale of the Units at the
Closing  (including, without limitation, all Required Approvals and
any other necessary regulatory and third party consents and approvals), all of
which shall be and remain so long as necessary in full force and
effect.

     

    (e)            No Material Adverse
Effect.  There shall have been no Material Adverse Effect on
the Company between the date hereof and the Closing.

     

    
      
        
        

      

      
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    (f)            No Suspensions of Trading in
Common Stock; Listing.  The Common Stock (i) shall be
designated for quotation or listed on the Principal Trading Market and (ii)
shall not have been suspended, as of the Closing Date, by the Commission or the
Principal Trading Market from trading on the Principal Trading Market nor shall
suspension by the Commission or the Principal Trading Market have been
threatened, as of the Closing Date, either (A) in writing by the Commission or
the Principal Trading Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Trading Market.

     

    (g)            Company
Deliverables.  The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a).

     

    (h)            Compliance
Certificate.  The Company shall have delivered to each
Purchaser a certificate, dated as of the Closing Date and signed by its Chief
Executive Officer or its Chief Financial Officer, dated as of the Closing Date,
certifying to the fulfillment of the conditions specified in Sections 5.1(a),
(b) and (d) in the form attached hereto as Exhibit
H.

     

    (i)         
   Filing of Certificate of
Amendment.  The Certificate of Designation attached hereto as
Exhibit I of the Company shall have been duly filed with the Secretary of State
of the State of Nevada in accordance with the NRS, and the Purchasers shall have
received evidence of such filing in form and substance reasonably satisfactory
to the Purchasers.

     

    (j)       
     Termination. This
Agreement shall not have been terminated as to such Purchaser in accordance with
Section 6.1 herein.

     

    (k)            Board of
Directors.  Upon the Closing, the authorized size of the Board
shall be three (3) members, of which one (1) member shall be designated by the
Lead Investor, and one (1) member shall be an individual with no prior
affiliation with the Company or the Company’s existing stockholders as of the
Closing, which individual will be acceptable to the Lead Investor (the
“Independent Designee”), pursuant to the Investor Rights Agreement and the
Voting Agreement.  As of the Closing, the Board shall be comprised of
Xueyun Cui and Nancy
Chang, and the Independent Designee shall be appointed to the Board following
Closing.

     

    (l)   
         Indemnification
Agreements.  The Company shall have entered into
indemnification agreements with all members of the Board in a form satisfactory
to the Lead Investor.

     

    (m)           Management Rights
Agreement.  The Company shall have entered into a management
rights agreement with the Lead Investor in a form satisfactory to the Lead
Investor.

     

    (n)            Closing Bid
Price.  The Common Stock shall have sustained a Closing Bid
Price of greater than one $1.50 per share for each of the five (5) trading days
immediately preceding the Closing Date.

     

    (o)            Reimbursement of
Expenses.  The Company shall have tendered payment for
reimbursement of all reasonable fees and expenses incurred by the Lead Investor
in accordance with Section 7.1.

     

    (p)            Employee Transaction
Benefit.  The Company shall have delivered to the Lead Investor
documentation reasonably acceptable to the Lead Investor providing that no
executive officers of the Company shall be entitled to any Employee Transaction
Benefit.

     

    
      
        
        

      

      
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    (q)            Auditor
Engagement.  The Company shall have engaged a Qualified Auditor
to conduct the Company’s 2010 fiscal year audit pursuant to a written engagement
letter executed by the Company and such Qualified Auditor.

     

    (r)            R&D Co.
Transaction.  Hainan Zhonghe shall have acquired all assets
related to pharmaceutical products, excluding real-estate, office equipment and
any assets not related to pharmaceutical products held by Hainan Zhonghe Peptide
Drugs Research & Development Co., Ltd (“R&D
Co.”) and all technology assets related to drug candidates and drugs
developed or owned by Zhonghe Group for an aggregate consideration of
$1,000,000.  R&D Co. and its officers and directors shall have
executed noncompetition agreements in a form satisfactory to the Lead
Investor.

     

    (s)            Noncompetition
Agreements.  The Key Stockholder shall have delivered a
noncompetition side letter to the Lead Investor in a form satisfactory to the
Lead Investor.  Hainan Zhonghe shall have entered into noncompetition
agreements with all of its key employees in a form satisfactory to the Lead
Investor.

     

    (t)   Loan
Extension.  On or prior to the Closing Date, the Company shall
have repaid the aggregate outstanding balance of RMB 9,637,800 of loans owed by
the Company .

     

    (u)  Distribution
Arrangements.  The Company shall have entered into distribution
arrangements with Hainan Heyi Pharmaceutical Co., Ltd that are satisfactory to
the Lead Investor.

     

    5.2  Conditions Precedent to the
Obligations of the Company to Sell Securities at the
Closing.  The Company's obligation to sell and issue the Units
to each Purchaser listed on Annex A hereto at the Closing is subject to the
fulfillment to the satisfaction of the Company on or prior to the Closing Date
of the following conditions, any of which may be waived by the
Company:

     

    (a)            Representations and
Warranties.  The representations and warranties made by such
Purchaser in Section 3.2 hereof shall be true and correct in all material
respects as of the date when made, and as of the Closing Date as though made on
and as of such date, except for representations and warranties that speak as of
a specific date.

     

    (b)            Performance.  Such
Purchaser shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Purchaser at or
prior to the Closing Date.

     

    (c)            No Legal
Restraint.  No Legal Restraint shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction Documents.  The Company
shall not be subject to any Insolvency Proceedings.

     

    (d)            Consents and
Approvals.  The Company shall have obtained in a timely fashion
any and all consents, permits, approvals, registrations and waivers necessary
for consummation of the purchase and sale of the Units (including, without
limitation, all Required Approvals and any other necessary regulatory and third
party consents and approvals), all of which shall be and remain so long as
necessary in full force and effect.

     

    (e)            Purchasers
Deliverables.  Such Purchaser shall have delivered its
Purchaser Deliverables in accordance with Section 2.2(b).

     

    
      
        
        

      

      
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    (f)            Termination.    This
Agreement shall not have been terminated as to such Purchaser in accordance with
Section 6.1 herein.

     

    ARTICLE
VI.

    TERMINATION

    

    6.1 
Termination Prior to
the Closing. This Agreement and the purchase and sale of the Units at the
Closing may be terminated at any time prior to the Closing:

     

    (a)            by
mutual written consent of the Company and each of the Purchasers listed on Annex
A hereto; or

     

    (b)            by
any Purchaser listed on Annex A hereto (as to such Purchaser’s obligations
hereunder only and without any effect whatsoever on the obligations between the
Company and the other Purchasers), or the Company, if (i) the Closing shall not
have been consummated on or prior to September 30, 2010 unless (A) the Closing
shall not have occurred due to the failure of the conditions set forth in
Sections 5.1(d) or 5.2(d) hereof;  or (ii) any Legal Restraint (which
Legal Restraint the parties hereto shall have used all commercially reasonable
efforts to resist, resolve or lift, as applicable) permanently restraining,
enjoining or otherwise prohibiting consummation of the Closing shall become
final and non-appealable; provided that the right to
terminate this Agreement pursuant to this Section 6.1(b) shall not be available
to any party hereto whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, with respect to clause (i) the failure of
the Closing to be consummated or, with respect to clause (ii) above, such Legal
Restraint having been issued.

     

    6.2  Effect of
Termination.

     

    (a)            In
the event that this Agreement is validly terminated as provided herein, then the
Company and the terminating Purchaser(s) shall not have any further obligation
or liability (including arising from such termination) to the other, and no
Purchaser will have any liability to any other Purchaser under the Transaction
Documents as a result therefrom; provided, however, that nothing in this
Section 6.2 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or the other
Transaction Documents or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement or the
other Transaction Documents.  In the event that this Agreement is
validly terminated as provided herein, the Company shall promptly notify all
non-terminating Purchasers.

     

    (b)            The
provisions of Article I (Definitions), Section 4.9 (Indemnification), Section
4.15 (Injunctive Relief), this Section 6.2, and Article VII (Miscellaneous)
shall survive any termination of this Agreement pursuant to Section 6.1
hereof.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    ARTICLE
VII.

    MISCELLANEOUS

     

    7.1  Fees and
Expenses.  If the Closing is consummated, the Company shall
reimburse the Lead Investor for all reasonable fees and expenses of the Lead
Investor (“Investor
Fees”), including, without limitation, legal, intellectual property,
corporate and other due diligence costs (including, without limitation, fees and
expenses for the GMP facility review and review of the Company’s financial
statements by a Qualified Auditor) and legal fees and expenses incurred in
connection with investigating a possible investment in the Company, and the
preparation, negotiation, execution, delivery and performance of this Agreement
and the other Transaction Documents (and any amendments, modifications or
waivers thereto), provided that such fees and
expenses shall not exceed $200,000.  Notwithstanding anything to the
contrary contained herein, the Company shall reimburse the Lead Investor for all
Investor Fees (a) if the Company fails to consummate the Closing (other than
pursuant to a valid termination pursuant to Section 6.1 hereof), or (b) in the
event of a Financial Discrepancy, provided that such fees and
expenses shall not exceed $200,000.  “Financial Discrepancy” shall
mean the determination by the Lead Investor, with the assistance of its
accounting advisors, of a discrepancy of more than 10% for any of the following
financial measures from what was reported in any of the Company’s financial
statements for the 2007 fiscal year, the 2008 fiscal year or the 6 months ended
June 30, 2009 delivered or made available to the Lead Investors prior to the
Closing: (i) revenue, (ii) gross profit, (iii) earnings before interest and tax,
(iv) earnings before interest, tax, depreciation and amortization, and (v) net
income.  Notwithstanding anything to the contrary contained herein,
the Company shall not be required to reimburse the Lead Investor for Investor
Fees if the Lead Investor fails to consummate the Closing (other than pursuant
to a valid termination pursuant to Section 6.1 hereof).  The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the sale and issuance of the Securities to the Purchasers,
and shall pay the Consultant Fees due to the Consultant in connection with the
transactions contemplated by this Agreement.

     

    7.2  Entire
Agreement.  The Transaction Documents, together with the
Exhibits and Schedules hereto and thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior
agreements, understandings, discussions and representations, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.

     

    7.3  Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section 7.3 prior to 5:00 p.m., New York City time, on
a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 5:00
p.m., New York City time, on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier service
with next day delivery specified, or (d) upon actual receipt by the party to
whom such notice is required to be given.  The address for such
notices and communications shall be as follows:

     

    
      
        
          	 
      	
                  (a)

                	
                  If
      to the Company:

                
	 
      	 
      	 
      
	 
      	 
      	
                  Kun
      Run Biotechnology, Inc.

                
	 
      	 
      	
                  Free
      Trade Zone

                
	 
      	 
      	
                  168
      Nanhai Avenue, Haikou City

                
	 
      	 
      	
                  Hainan
      Province, China 570216

                
	 
      	 
      	
                  Telephone
      No.: 86-898-6680-2207

                
	 
      	 
      	
                  Facsimile
      No.:  0-898-6680-2833

                
	 
      	 
      	
                  Attention:  President

                
	 
      	 
      	 
      
	 
      	 
      	
                  With
      a copy to (which shall not constitute notice):

                
	 
      	 
      	 
      
	 
      	 
      	
                  Cadwalader,
      Wickersham & Taft LLP

                
	 
      	 
      	
                  2301
      China Central Place

                
	 
      	 
      	
                  Tower
      2,

                
	 
      	 
      	
                  No.
      79 Jianguo Road

                
	 
      	 
      	
                  Beijing,
      China 100025

                

        

      

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	
              Telephone
      No.:  86-10-6599-7200

            
	 
      	 
      	
              Facsimile
      No.:  86-10-6599-7300

            
	 
      	 
      	
              Attention:  Jiannan
      Zhang, Esq.

            

    

     

    
      
        	 
      	
                (b)

              	
                If
      to a Purchaser:

              

      

    

     

    
      
        
          	 
      	
                  To
      the address set forth under such Purchaser’s name on the signature page
      hereof.

                
	 	 
	 
      	
                  With
      a copy to (which shall not constitute notice):

                
	 
      	 
      
	 
      	
                  Cooley
      Godward Kronish LLP

                
	 
      	
                  Five
      Palo Alto Square

                
	 
      	
                  3000
      El Camino Real

                
	 
      	
                  Palo
      Alto, California  94306-2155

                
	 
      	
                  Telephone
      No.:  (650) 843-5636

                
	 
      	
                  Facsimile
      No.: (650) 849-7400

                
	 
      	
                  Attention:  Michael
      E. Tenta, Esq.

                

        

      

    

    

    or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.

    

    7.4  Amendments; Waivers; No
Additional Consideration.  No provision of this Agreement may
be waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Purchaser or Purchasers holding or having the
right to acquire, at the time of such amendment, at least a majority of the
total Unit Shares and Warrant Shares (on a fully-diluted basis) then issued and
held by, or remaining issuable to, all Purchasers or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought; provided that if any
provision of this Agreement states that such provision can only be waived as to
a Purchaser with the consent of such Purchaser, then the consent of such
Purchaser shall be required to waive such provision with respect to such
Purchaser. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right.  No consideration shall be offered or paid to any Purchaser to
amend or consent to a waiver or modification of any other provision of this
Agreement, the Warrants or the Investor Rights Agreement unless the same
consideration is also offered to all Purchasers.

     

    7.5  Construction.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.  This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.

     

    7.6  Successors and
Assigns.  The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns.  This Agreement, or any rights or obligations hereunder, may
not be assigned by the Company without the prior written consent of the
Purchasers.  Any Purchaser may assign its rights hereunder in whole or
in part to any Person to whom such Purchaser assigns or transfers any Securities
in compliance with the Transaction Documents and applicable law, provided such transferee
shall agree in writing to be bound, with respect to the transferred Securities,
by the terms and conditions of this Agreement that apply to the
“Purchasers”.  In addition, any Purchaser may assign its rights or
obligations to purchase the Units that the Purchaser has agreed to purchase at
the Closing, in whole or part, to any other Person (including in the event that
the conditions to such Purchaser’s obligation to acquire the Units at the
Closing as set forth in Section 5.1 hereof are not satisfied or waived by such
Purchaser), subject to the written consent of the Company and Purchasers
(including the assigning Purchaser) who have agreed to purchase a majority of
the aggregate number of Units to be sold at the Closing, which consent shall not
be unreasonably withheld.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    7.7  No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

     

    7.8  Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law thereof.  Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the courts of
the State of New York sitting in New York County or in the United States of
America for the Southern District of New York (the “New York
Courts”).  Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum.  Each party hereto
hereby irrevocably waives personal service of process and consents to process
being served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY HEREBY ACKNOWLEDGES THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASERS ENTERING INTO THIS
AGREEMENT.

     

    7.9           Survival.  The
representations and warranties contained herein shall survive the Closing and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of the Company or the Purchasers or any person controlling any of
them and shall survive delivery of and payment for the Securities for two (2)
years following each the Closing.  The agreements and covenants
contained herein shall survive for the applicable statute of
limitations.

     

    7.10         Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile signature page were an original thereof.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    7.11         Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

     

    7.12         Replacement of
Securities.  If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon the execution by the holder thereof of a customary
lost certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and, with respect to Shares, the Transfer Agent for any
losses in connection therewith or, if required by the Transfer Agent, a bond in
such form and amount as is required by the Transfer Agent.  If a
replacement certificate or instrument evidencing any Securities is requested due
to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.

     

    7.13         Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation (other than in connection
with any action for a temporary restraining order) the defense that a remedy at
law would be adequate.

     

    7.14         Adjustments in Share Numbers
and Prices. In the event of any stock split, subdivision, dividend or
distribution payable in shares of Series A Preferred or Common Stock (or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly shares of Series A Preferred or Common Stock, as
applicable), combination or other similar recapitalization or event occurring
after the date hereof, each reference in any Transaction Document to a number of
shares or a price per share shall be deemed to be amended to appropriately
account for such event.

     

    7.15         Independent Nature of
Purchasers' Obligations and Rights.  The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document.  The decision of each Purchaser to purchase
and/or acquire Securities pursuant to the Transaction Documents has been made by
such Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or
given by any other Purchaser or by any agent or employee of any other Purchaser,
and no Purchaser and any of its agents or employees shall have any liability to
any other Purchaser (or any other Person) relating to or arising from any such
information, materials, statement or opinions.  Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser acknowledges that no other
Purchaser has acted as agent for such Purchaser in connection with making its
investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Securities or
enforcing its rights under the Transaction Documents.  Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose.  The Company acknowledges that each of the Purchasers has
been provided with the same Transaction Documents for the purpose of closing a
transaction with multiple Purchasers and not because it was required or
requested to do so by any Purchaser. The Company’s obligations to each Purchaser
under this Agreement are identical to its obligations to each other Purchaser
other than such differences resulting solely from the number of Securities
purchased by such Purchaser, but regardless of whether such obligations are
memorialized herein or in another agreement between the Company and a
Purchaser.

     

    [Signature
Pages Follow]

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

     

    
      
        
          
            
              	 
      	
                      COMPANY:

                    
	 
      	 
      	 
	 
      	
                      Kun
      Run Biotechnology, Inc.

                    
	 
      	 
      	 
	 
      	
                      By:

                    	 

            

          

        

      

    

    
      
        
          
            
              
                	 
      	 
      	 
	 
      	
                        Printed Name:

                      	 

              

            

          

        

      

    

    
      
        
          	 
      	 
      	 
	 
      	
                  Title:

                	 

        

      

    

    
      
        
          
            
              
                	 	 
	 
      	
                        KEY
      STOCKHOLDER:

                      
	 
      	 
      	 
	 
      	
                        Xueyun
      Cui

                      
	 
      	 
      	 
	 
      	
                        By:

                      	 

              

            

          

        

      

    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    [SIGNATURE
PAGES FOR PURCHASERS FOLLOW]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties hereto
have caused this Securities Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated
above.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  NAME OF
      PURCHASER:

                                	 
	 
      	 
	
                                  Caduceus
      Asia Partners, LP

                                	 
	 
      	 
      	 
	
                                  By:

                                	 
      	 
	
                                  Name:

                                	 
      	 
	
                                  Title:

                                	 
      	 

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
          
            
              
                
                  
                    	
                            Subscription
      Amount:    $8,000,000

                          
	 
	
                            Tax
      ID No.: _____________________________

                          
	 
	
                            Address
      for Notice:

                          
	 
	
                            __________________________________

                          
	
                            __________________________________

                          
	
                            __________________________________

                          
	 
      
	
                            Telephone
      No.: _____________________

                          
	 
      
	
                            Facsimile
      No.: ______________________

                          
	 
      
	
                            Attention:
      __________________________

                          

                  

                

              

            

          

        

      

    

    

    Delivery
Instructions:

    (if
different than above)

    

    c/o  _______________________________

    

    Street:   ____________________________

    

    City/State/Zip:
______________________

    

    Attention:
__________________________

    

    Telephone
No.: _____________________

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX A

    

    Purchasers

    

    Caduceus
Asia Partners, LP

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
3.1(a)

     

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
3.1(c)

     

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
3.1(d)

     

    The Company has orally extended its
loan agreement for RMB 29,000,000,000 with Hainan Rural Credit Cooperative, but
it has neither entered into any extension agreement with the Hainan Rural Credit
Cooperative, nor has the pledged property being seized by Hainan Rural Credit
Cooperative.  As of April 13, 2010, the outstanding balance of loan
amounts were RMB 9,637,800.

     

    The Company has entered into agreements
with agencies for the sale of the new product “Entecavir.” However, the approval
for the production of such new product has not yet been obtained, which lack of
approval may affect the execution and performance of the agency
agreements.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
3.1(g)(i)

     

    As of
March 31, 2010:

     

    Other
payables exceeding RMB 1 million include:

     

    
      	
               
      

            	
              ·

            	
              Coland:
      RMB 3,000,000 (deposit of agent)

            

    

     

    
      	
               
      

            	
              ·

            	
              Huadong
      Medicine: RMB 1,100,000 (deposit of
agent)

            

    

     

    
      	
               
      

            	
              ·

            	
              Tong
      Wentao: RMB 1,000,000 (deposit of
agent)

            

    

     

    Long-term
bank loan:

     

    
      	
               
      

            	
              ·

            	
              the
      Bureau of Finance of Ledong Li Autonomous County: RMB
      2,250,000

            

    

     

    Short-term
bank loan:

     

    
      	
               
      

            	
              ·

            	
              the
      Bureau of Finance of Ledong Li Autonomous County: RMB
      2,250,000

            

    

     

    
      	
               
      

            	
              ·

            	
              Hainan
      Rural Credit Cooperative: RMB
18,571,559

            

    

     

    As of
April 13, the outstanding balance of the loan were RMB
9,637,800

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
3.1(g)(ii)

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
3.1(n)

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
3.1(q)

     

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
3.1(y)

     

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
3.1(bb)

     

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBITS:

     

    
      
        	
                Exhibit
      A:

              	 
      	
                Form
      of Net Income Warrant

              
	
                Exhibit
      B:

              	 
      	
                [reserved]

              
	
                Exhibit
      C:

              	 
      	
                Form
      of Investor Rights Agreement

              
	
                Exhibit
      D-1:

              	 
      	
                Accredited
      Investor Questionnaire

              
	
                Exhibit
      D-2:

              	 
      	
                Stock
      Certificate Questionnaire

              
	
                Exhibit
      E-1:

              	 
      	
                Form
      of Opinion of Company Counsel (PRC)

              
	
                Exhibit
      E-2:

              	 
      	
                 Form
      of Opinion of Company Counsel (USA)

              
	
                Exhibit
      F:

              	 
      	
                [reserved]

              
	
                Exhibit
      G:

              	 
      	
                Form
      of Secretary’s Certificate

              
	
                Exhibit
      H:

              	 
      	
                Form
      of Compliance Certificate

              
	
                Exhibit
      I:

              	 
      	
                Certificate
      of Designation

              
	
                Exhibit
      J:

              	 
      	
                [reserved]

              
	
                Exhibit
      K:

              	 
      	
                [reserved]

              
	
                Exhibit
      L:

              	
                  

              	
                Form
      of Voting Agreement

              

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION OF
THESE SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED EXCEPT AS PROVIDED BY ARTICLE IV OF THAT CERTAIN SECURITIES PURCHASE
AGREEMENT, DATED AS OF APRIL  17, 2010, BY AND AMONG KUN RUN
BIOTECHNOLOGY, INC. AND THE PURCHASERS IDENTIFIED ON THE SIGNATURE PAGES
THERETO.

     

    NET
INCOME WARRANT TO PURCHASE SERIES A PREFERRED STOCK

     

    Warrant
No. [___]

    
      
        	
                [_________
      __], 2010

              	
                Warrant
      to Purchase 1,568,627 Shares

              

      

    

     

    THIS CERTIFIES THAT, Caduceus Asia
Partners, LP, or its registered assigns (in each case, the “Holder”),
has the right to purchase from KUN RUN BIOTECHNOLOGY, INC., a Nevada corporation
(the “Company”),
1,568,627 fully paid and nonassessable shares of the Company’s Series A
Preferred Stock, $0.001 par value per share (“Series A
Preferred”), subject to adjustment as provided herein, at a price equal
to the Exercise Price as defined in Section 3 below, at any time during the
Exercise Period (as defined below).

     

    This Net Income Warrant to Purchase
Series A Preferred (this “Warrant”)
is being issued pursuant to that certain Securities Purchase Agreement, dated as
of April 17, 2010, by and between the Company and purchasers identified on the
signature pages thereto (as amended, modified, restated or supplemented from
time to time, the “Purchase
Agreement”).

     

    Section
1.            Certain Defined
Terms.  Capitalized terms used herein and not otherwise defined
will have the meanings set forth in the Purchase Agreement, which definitions
are incorporated herein in full.  For purposes of this Warrant, the
following terms will have the following meanings:

     

    “Commencement
Date” means [___________], 2010.

     

    “Convertible
Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exchangeable or exercisable for shares of
Common Stock.

     

     “Exercise
Period” means the period beginning on April 15, 2011 and ending at 5:00
p.m., New York City time, on the Expiration Date.

     

    “Expiration
Date” means the earlier of (i) April 15, 2016 and (ii) the date of the
Company’s achievement of the 2010 Net Income Milestone.

     

    “Issuance
Date” means the original date of issuance of this Warrant pursuant to the
Purchase Agreement, which date is [___________ __], 2010, regardless of any
exchange or replacement of this Warrant in whole or in part.

     

     “Market
Price” means the average of the daily Weighted Average Price per share of
Common Stock for the 20 consecutive Trading Days immediately prior to the date
of determination.

     

    “Milestone
Threshold” means (i) $9,000,000, in the event the Company obtains PRC
State Food and Drug Authority (“PRC SFDA”)
approval for Entecavir on or prior to September 30, 2010; or (ii) $7,150,000, in
the event the Company does not obtain PRC SFDA approval for Entecavir on or
prior to September 30, 2010.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Options”
means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

     

    “Required
Warrantholders” means the holders of outstanding Warrants representing at
least a [majority] of the unexercised Warrant Shares.

     

    “Series A
Price” means the product of (i) the Market Price and (ii) the number of
shares Common Stock issuable upon conversion of one share of Series A
Preferred.

     

    “Subscription
Date” means [___________ __], 2010.

     

    “Term”
means the period beginning on the Commencement Date and ending at 5:00 p.m., New
York City time, on the Expiration Date.

     

    “2010 Net Income
Milestone” shall be deemed to have been achieved by the Company if (i) a
Qualified Auditor (as defined in the Purchase Agreement) has completed its 2010
fiscal year audit of the Company, (ii) such Qualified Auditor has issued a
report with respect to the Company’s 2010 financial statements on or before
March 30, 2011 or on or before the last day of any extension period pursuant to
Rule 12b-25 promulgated under the Securities Exchange Act of 1934, and (iii)
such 2010 audited financial statements indicate that in the 2010 fiscal year,
the Company recorded net income (before non-cash expenses, expense associated
with the listing transfer to NASDAQ, expense associated with business
development relating to the Company’s product candidates, business acquisitions
or in-licenses of intellectual property rights for products or product
candidates, provided that such acquisitions are approved by a majority of the
Board) attributable to the Company’s equity holders of at least the Milestone
Threshold.

     

     “Warrantholder”
shall mean any holder of an outstanding Warrant.

     

    “Warrant
Value” means greater of (i) the aggregate Exercise Price of the then
unexercised portion of this Warrant and (ii) the product of (a) the Series A
Price and (b) the number of shares of Series A Preferred issuable upon exercise
of the then unexercised portion of this Warrant.

     

    “Weighted Average
Price” means, for any security as of any date, the dollar volume-weighted
average price for such security on the Trading Market during the period
beginning at 9:30 a.m. New York time (or such other time as the Principal Market
publicly announces is the official open of trading), and ending at 4:00 p.m. New
York time (or such other time as the Trading Market publicly announces is the
official close of trading) as reported by Bloomberg Financial Markets (“Bloomberg”)
through its “Volume at Price” functions (ignoring any trade by the Company or
its Affiliates (subject to adjustment for stock splits, stock dividends, stock
combinations and other similar transactions involving such security after the
Issuance Date)), or, if the foregoing does not apply, the dollar volume-weighted
average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30 a.m. New
York time (or such other time as the Trading Market publicly announces is the
official open of trading), and ending at 4:00 p.m. New York time (or such other
time as the Trading Market publicly announces is the official close of trading)
as reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported by Pink OTC Markets, Inc.  If the
Weighted Average Price cannot be calculated for such security on such date on
any of the foregoing bases, the Weighted Average Price of such security on such
date will be the fair market value as mutually determined by the Company and the
holders of a majority in interest of the Warrants involved in the transaction
(whether an Exercise, redemption or otherwise) for which the calculation of the
Market Price is required.  All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar
transaction during any period during which the Weighted Average Price is being
determined.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
2.        
     Exercise.

     

    (a)           Manner of
Exercise.  During the
Exercise Period, this Warrant may be exercised as to all or any lesser number of
full shares of Series A Preferred covered hereby upon surrender of this Warrant,
with the Exercise Form attached hereto as Exhibit A (the “Exercise
Form”) duly completed and executed, together with the full Exercise Price
(as defined below, which may be satisfied by a Cash Exercise or a Cashless
Exercise, as each is defined below) for each share of Series A Preferred as to
which this Warrant is Exercised, at the office of the Company, Kun Run
Biotechnology, Inc., Free Trade Zone, 168 Nanhai Avenue, Haikou City, Hainan
Province, China 570216, Fax: [____], or at such other office or agency as the
Company may designate in writing, by overnight mail, with an advance copy of the
Exercise Form sent to the Company and the transfer agent for the Series A
Preferred (“Transfer
Agent”) by facsimile (such surrender and payment of the Exercise Price
hereinafter called the “Exercise”
of this Warrant).

     

    (b)           Date of Exercise. The “Date of
Exercise” of the Warrant shall be defined as the date that the Exercise
Form, completed and executed, is sent by facsimile to the Company, provided that
the original Warrant and Exercise Form are received by the Company and the
Exercise Price is satisfied, each as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.

     

    (c)           Confirmation; Delivery of
Series A Preferred Upon Exercise.  Upon receipt by the Company
of an Exercise Form, the Company will promptly send, but in no event later than
three (3) Trading Days following such receipt, via facsimile or other electronic
means, a confirmation of receipt of such Exercise Form to the Holder and the
Transfer Agent.  Within five (5) Trading Days after any Date of
Exercise (the “Delivery
Period”), the Company shall issue and deliver (or cause its Transfer
Agent to so issue and deliver) in accordance with the terms hereof to or upon
the order of the Holder that number of shares of Series A Preferred (“Exercise
Shares”) for the portion of this Warrant Exercised. Upon the Exercise of
this Warrant or any part thereof, the Company shall, at its own cost and
expense, take all necessary steps, including obtaining and delivering, an
opinion of counsel to assure that the Transfer Agent shall issue stock
certificates in the name of Holder (or its nominee) or such other persons as
designated by Holder and in such denominations to be specified at Exercise
representing the Exercise Shares issuable upon such Exercise.

     

    (d)           Delivery Failure. In
addition to any other remedies which may be available to the Holder, in the
event that the Company fails for any reason to effect delivery of the Exercise
Shares by the end of the Delivery Period (a “Delivery
Failure”), the Holder will be entitled to revoke all or part of the
relevant Exercise Form by delivery of a notice to such effect to the Company
whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to the delivery of such notice.

     

    (e)           Cancellation of
Warrant. 
This Warrant shall be canceled upon the full Exercise of this Warrant or upon
full redemption of this Warrant.  If this Warrant is not Exercised in
full, Holder shall be entitled to receive a new Warrant (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant
in addition to any Exercise Shares.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f)           Holder of Record.  Each person in
whose name any Warrant for shares of Series A Preferred is issued shall, for all
purposes, be deemed to be the Holder of record of such shares on the Date of
Exercise of this Warrant, irrespective of the date of delivery of the Series A
Preferred purchased upon the Exercise of this Warrant or the date such Series A
Preferred is credited to the Holder’s DTC account, as the case may be. Nothing
in this Warrant shall be construed as conferring upon Holder any rights as a
stockholder of the Company.

     

    (g)          Delivery of Electronic
Shares.  In lieu of delivering physical certificates
representing the Series A Preferred issuable upon Exercise or redemption, upon
the written request of any Holder, the Company shall use its best efforts to
transmit certificates for such shares of Series A Preferred to such Purchaser by
crediting the account of the transferee’s Purchaser’s prime broker with DTC
through its Deposit Withdrawal Agent Commission (DWAC) system.  Any
delivery not effected by electronic transmission shall be effected by delivery
of physical certificates.

     

    Section
3.            
 Payment of
Warrant Exercise Price.

     

    (a)           Exercise Price. The
Exercise Price (“Exercise
Price”) shall initially equal $1.53 per share subject to adjustment
pursuant to the terms hereof, including but not limited to Section 4
below.  Payment of the Exercise Price may be made by either of the
following, or a combination thereof, at the election of Holder:

     

    (i)         Cash Exercise: The Holder may exercise
this Warrant in cash, bank or cashier’s check or wire transfer (a “Cash
Exercise”); or

     

    (ii)        Cashless
Exercise. The Holder, at its
option, may exercise this Warrant in a cashless exercise transaction. In order
to effect a Cashless Exercise, the Holder shall surrender this Warrant at the
principal office of the Company together with the Exercise Form attached hereto
as Exhibit A indicating that the Holder is exercising the Warrant pursuant to a
cashless election, in which event the Company shall issue Holder a number of
shares of Series A Preferred computed using the following formula (a “Cashless
Exercise”):

     

    X = Y
(A-B)/A

     

                           where:         X
= the number of shares of Series A Preferred to be issued to
Holder.

     

    Y = the
number of shares of Series A Preferred for which this Warrant is being
Exercised.

     

    A = the
Series A Price of one (1) share of Series A Preferred.

     

    B = the
Exercise Price.

     

    For
purposes of Rule 144 and subsection (d)(3)(ii) thereof, it is intended,
understood and acknowledged that any Exercise Shares issued in a Cashless
Exercise transaction and/or any shares issued in a redemption pursuant to
Section 4(b)(ii) shall be deemed to have been acquired at the time this Warrant
was issued. Moreover, it is intended, understood and acknowledged that the
holding period for any Exercise Shares issued in a Cashless Exercise transaction
and/or any shares issued in a redemption pursuant to Section 4(b)(ii) shall be
deemed to have commenced on the date this Warrant was issued.

     

    Notwithstanding
anything herein to the contrary, on the Expiration Date, any outstanding portion
of this Warrant shall be automatically exercised via a Cashless
Exercise.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)          Dispute
Resolution.  In the case of a dispute as to the determination
of any closing price, trading price or any other stock price or the arithmetic
calculation of the Exercise Price, Market Price, any Redemption Price or any
similar calculation, the Company will issue or instruct the Transfer Agent to
issue to the Holder the Shares representing the number of Shares that is not
disputed or pay to the Holder the amount that is not disputed and will transmit
an explanation of the disputed determinations or arithmetic calculations to the
Holder via facsimile within one Business Day of receipt, or deemed receipt, of
the Exercise Notice or Change of Control Redemption Notice, or other event
giving rise to such dispute, as the case may be.  If the Holder and
the Company are unable to agree upon such determination or calculation within
one Business Day of such disputed determination or arithmetic calculation being
transmitted to the Holder, then the Company will within two Business Days submit
via facsimile or by other electronic means (A) the disputed determination of the
closing price, the trading price or such other stock price to an independent,
reputable investment bank agreed to by the Company and the holders of a majority
in interest of the Warrants involved in the transaction (whether an Exercise,
redemption or otherwise) for which such determination is required, or (B) the
disputed arithmetic calculation of the Exercise Price, Market Price, any Change
of Control Redemption Price or any similar calculation to the Company’s
independent, outside accountant or such other independent accountants agreed to
by the Company and the holders of a majority in interest of the Warrants
involved in the transaction (whether an Exercise, redemption or otherwise) for
which such calculation is required.  The Company, at its expense, will
cause the investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the Holders of the
results no later than three Business Days from the time it receives the disputed
determinations or calculations.  Such investment bank’s or
accountant’s determination or calculation, as the case may be, will be binding
upon all parties absent demonstrable error.

     

    Section
4.             Adjustments Upon Certain
Events.

     

    (a)          Subdivisions, Splits and
Combinations of Stock.  If the outstanding shares of Series A
Preferred will be subdivided into a greater number of such shares or will be
combined into a smaller number of such shares, then upon the effective date
thereof, the number of shares of Series A Preferred which Holder shall be
entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Series A Preferred by reason of such subdivision or
combination, and the
Exercise Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of shares,
proportionally increased.

     

    (b)          Reorganization,
Reclassification, Consolidation, Merger or Sale.

     

    (i)           Reorganization,
Reclassification, Consolidation, Merger or Sale.  If any (i)
capital reorganization; (ii) reclassification of the capital stock of the
Company; (iii) merger, consolidation or reorganization or other similar
transaction or series of related transactions which results in the voting
securities of the Company outstanding immediately prior thereto representing
immediately thereafter (either by remaining outstanding or by being converted
into voting securities of the surviving or acquiring entity) less than 50% of
the combined voting power of the voting securities of the Company or such
surviving or acquiring entity outstanding immediately after such merger,
consolidation or reorganization; or (iv) sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company; (each of
(i) – (iv) above a “Corporate
Reorganization”) shall be effected, then the Company shall use its best
efforts to ensure that lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter continue to have the right to purchase and
receive upon the basis and upon the terms and conditions herein specified and in
lieu of the Exercise Shares issuable upon exercise of the Warrants held by such
Warrantholder, shares of stock in the surviving or acquiring entity (“Acquirer”),
receivable upon such Corporate Reorganization by a Warrantholder of the number
of shares of Series A Preferred which might have been purchased by the
Warrantholder immediately prior to such Corporate Reorganization, and in any
such case appropriate provisions shall be made with respect to the rights and
interest of the Warrantholder to the end that the provisions hereof (including
without limitation, provisions for the adjustment of the Exercise Price and the
number of shares issuable hereunder and the provisions relating to the Cashless
Exercise) shall thereafter be applicable in relation to any shares of stock or
other securities and property thereafter deliverable upon exercise
hereof.  For the avoidance of doubt, if the surviving or acquiring
entity, as the case may be, is a member of a consolidated group for financial
reporting purposes, the “Acquirer” shall be deemed to be the parent of such
consolidated group for purposes of this Section 4(b)(i) and Appendix A
hereto.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Moreover,
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock thereafter deliverable upon the exercise thereof. The Company shall not
effect any such Corporate Reorganization unless prior to or simultaneously with
the consummation thereof the successor corporation resulting from such
consolidation or merger, or the corporation purchasing or otherwise acquiring
such assets or other appropriate corporation or entity shall assume by written
instrument, reasonably deemed by the Board of Directors of the Company and the
Required Warrantholders to be satisfactory in form and substance, the obligation
to deliver to the Warrantholders, at the last address of such holder appearing
on the books of the Company, such shares of stock, as, in accordance with the
foregoing provisions, such holder may be entitled to purchase, and the other
obligations under these Warrants. The provisions of this Section 4(b)(i) shall
similarly apply to successive Corporate Reorganizations. If the Company, in
spite of using its best efforts, is unable to cause these Warrants to continue
in full force and effect during the entire Term in connection with any Corporate
Reorganization, then such Corporate Reorganization shall be treated as a change
of control of the Company (“Change of
Control”) hereunder, the Holder shall be deemed to have delivered a
Change of Control Notice with respect to this Warrant and the Holder shall be
entitled to receive a Change of Control Redemption Price equal to the Warrant
Value in accordance with Sections 4(b)(ii) – (iv) hereunder.

    

    (ii)          Optional Redemption Upon
Change of Control.  In addition to the rights of the Holder
under Section 4(b)(i), upon a Change of Control the Holder will have the right,
at the Holder’s option, to require the Company to redeem (a “Redemption Upon
Change of Control”) all or a portion of this Warrant. At least fifteen
(15) days prior to the consummation of any Change of Control, but, in any event,
on the first to occur of (x) the date of the public announcement of such Change
of Control if such announcement is made before 4:00 p.m., New York City time, or
(y) the day following the public announcement of such Change of Control if such
announcement is made on and after 4:00 p.m., New York City time, the Company
shall deliver written notice thereof via facsimile and overnight courier to the
Holder (a “Change of Control
Notice”). At any time during the period beginning after the Holder’s
receipt of a Change of Control Notice and ending five (5) Trading Days prior to
the consummation of such Change of Control, the Holder may exercise its
redemption rights hereunder by delivering written notice thereof (“Change of Control
Redemption Notice”) to the Company, which Change of Control Redemption
Notice shall indicate the portion of the Warrant (the “Redeemed
Shares”) that the Holder is electing to have redeemed.  The
Redeemed Shares shall be redeemed by the Company at a price (the “Change of Control
Redemption Price”) equal to the Warrant Value therefor.  The
Change of Control Redemption Price shall be payable no later than the date of
the consummation of the Change of Control.  The Change of Control
Redemption Price shall be paid in cash in the event that the Change of Control
results in the stockholders of the Company receiving cash from the Acquirer at
the closing of the transaction, and shall be made in shares of Series A
Preferred (with the value of each share of Series A Preferred equal to the
Series A Price) in the event that the Change of Control results in the
stockholders of the Company receiving shares in the Acquirer or other entity at
the closing of the transaction. In the event that the stockholders of the
Company receive both cash and shares at the closing of the transaction, such
payment to the Warrantholders shall be also be made in both cash and shares in
the same proportion as the consideration received by the
stockholders.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iii)         Escrow; Payment of Change of
Control Redemption Price.  If the Company is required to redeem
a Warrant from any Warrantholder, the Company shall not effect a Change of
Control, unless it either obtains the written agreement of the acquiring entity
that payment of the Change of Control Redemption Price shall be made to the
Warrantholder (either in cash or shares, as the case may be) upon consummation
of such Change of Control or it shall first place into an escrow account with an
independent escrow agent, at least three (3) Trading Days prior to the closing
date of the Change of Control (the “Change of Control
Escrow Deadline”), an amount (in cash or shares, as applicable) equal to
the Change of Control Redemption Price. Concurrently upon closing of such Change
of Control, the Company shall pay or deliver or shall instruct the escrow agent
to pay or deliver the Change of Control Redemption Price to the
Warrantholder.  For purposes of determining the amount required to be
placed in escrow pursuant to the provisions of this subsection (iii) and without
affecting the amount of the actual Change of Control Redemption Price, the
Warrant Value of the Warrant shall be calculated as of the Trading Day
immediately preceding the date that the funds and/or shares, as applicable, are
deposited with the escrow agent.

     

    (iv)     
   Injunction.  If
the Company is required to redeem a Warrant from any Warrantholder, in the event
that the Company attempts to consummate a Change of Control without placing the
Change of Control Redemption Price in escrow in accordance with subsection
(iii) above or without payment of the Change of Control Redemption Price to
the Holder upon consummation of such Change of Control, the Holder shall have
the right to apply for an injunction in any state or federal courts sitting in
the City of San Francisco to prevent the closing of such Change of Control until
the Change of Control Redemption Price is paid to the Holder, in
full.

     

    To the
extent redemptions required by Section 4(b)(ii) are deemed or determined by a
court of competent jurisdiction to be prepayments of the Warrant by the Company,
such redemptions shall be deemed to be voluntary prepayments. Notwithstanding
anything to the contrary in this Section 4, until the Change of Control
Redemption Price is paid in full, this Warrant may be exercised, in whole or in
part, by the Holder into shares of Series A Preferred, or in the event the
Exercise Date is after the consummation of the Change of Control, shares of
Series A Preferred (or their equivalent) of the Acquirer pursuant to Section
4(b)(i).  The parties hereto agree that in the event of the Company’s
redemption of any portion of the Warrant under Section 4(b)(ii), the Holder’s
damages would be uncertain and difficult to estimate because of the parties’
inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the Holder.
Accordingly, any premium due under Section 4(b)(ii) is intended by the parties
to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of
its investment opportunity and not as a penalty.

     

    (c)          Antidilution
Protection.  The conversion price of the Series A Preferred
issuable upon exercise of this Warrant is subject to full ratchet antidilution
protection as set forth in [Section 3(d) of the Company’s Certificate of
Designation of the Preferences, Rights, Limitations, Qualifications and
Restrictions of the Series A Convertible Preferred Stock], as amended from time
to time.

     

    (d)          Record
Date.  If the Company takes a record of the holders of Series A
Preferred for the purpose of entitling them (A) to receive a dividend or other
distribution payable in Series A Preferred, Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Series A Preferred,
Common Stock, Options or Convertible Securities, then such record date will be
deemed to be the date of the issue or sale of the Series A Preferred, Common
Stock, Options or Convertible Securities deemed to have been issued or sold upon
the declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (e)          Other
Events.  If any event occurs of the type contemplated by the
provisions of this Section 4 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company's
Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of Exercise Shares issuable hereunder so as to protect the rights of
the Holder under this Warrant; provided that no such adjustment will increase
the Exercise Price or decrease the number of Exercise Shares issuable hereunder
as otherwise determined pursuant to this Section 4.

     

    (f)          This Warrant Deemed
Outstanding.  If during the period beginning on and including
the Subscription Date and ending on the date immediately preceding the Issuance
Date, the Company enters into or undertakes any action described in this Section
4, then solely for purposes of determining any adjustment under this Section 4
as a result of such action, this Warrant shall be deemed to have been
outstanding at the time of each such action.

     

    (g)         Exercise Price
Adjusted.  As used in this Warrant, the term “Exercise
Price” shall mean the purchase price per share specified in
Section 3(a) of this Warrant, until the occurrence of an event stated in
this Section 4 or otherwise set forth in this Warrant, and thereafter shall
mean said price as adjusted from time to time in accordance with the provisions
of this Section 4.

     

    (h)         Adjustments: Additional
Shares, Securities or Assets.  In the event that at any time,
as a result of an adjustment made pursuant to this Section 4 or otherwise,
Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than Series A Preferred) then, wherever
appropriate, all references herein to shares of Series A Preferred shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 4.

     

    (i)          Notice of
Adjustments.   Whenever the Exercise Price is adjusted
pursuant to the terms of this Warrant, the Company shall promptly mail to the
Holder a notice (an “Exercise Price
Adjustment Notice”) setting forth the Exercise Price after such
adjustment and setting forth a statement of the facts requiring such adjustment.
The Company shall, upon the written request at any time of the Holder, furnish
to such Holder a like Warrant setting forth (i) such adjustment or
readjustment, (ii) the Exercise Price at the time in effect and
(iii) the number of shares of Series A Preferred and the amount, if any, of
other securities or property which at the time would be received upon Exercise
of the Warrant. For purposes of clarification, whether or not the Company
provides an Exercise Price Adjustment Notice pursuant to this Section 4(i),
upon the occurrence of any event that leads to an adjustment of the Exercise
Price, the Holder would be entitled to receive a number of Exercise Shares based
upon the new Exercise Price, as adjusted, for exercises occurring on or after
the date of such adjustment, regardless of whether a Holder accurately refers to
the adjusted Exercise Price in the Exercise Form.

     

    Section
5.            Fractional Interests.
No fractional shares or scrip representing fractional shares shall be issuable
upon the Exercise of this Warrant, but on Exercise of this Warrant, Holder may
purchase only a whole number of shares of Series A Preferred. If, on Exercise of
this Warrant, Holder would be entitled to a fractional share of Series A
Preferred or a right to acquire a fractional share of Series A Preferred, such
fractional share shall be disregarded and the Company shall pay for such
fractional shares in cash.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
6.            Reservation of
Shares.

     

    (a)          Reservation.  From
and after the date hereof, the Company shall at all times reserve for issuance
such number of authorized and unissued shares of (i) Series A Preferred (or
other securities substituted therefor as herein above provided) as is equal to
the number of shares of Series A Preferred issuable upon the Exercise of this
Warrant (the “Series A Reserve
Amount”) and (ii) Common Stock issuable upon conversion of such Series A
Preferred issuable upon Exercise of this Warrants  (the “Common Stock
Reserve Amount” and together with the Series A Reserve Amount, the “Required Reserve
Amounts”)  The Company covenants and agrees that upon the
Exercise of this Warrant, all shares of Series A Preferred issuable upon such
Exercise and all shares of Common Stock issuable upon conversion of such Series
A Preferred shall be duly and validly issued, fully paid and nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.

     

    (b)          Insufficient Authorized
Shares.  If at any time the Company does not have a sufficient
number of authorized and unreserved shares of Series A Preferred or Common Stock
equal to at least the Series A Reserve Amount or Common Stock Reserve Amount,
respectively (in each case, an “Authorized Share
Failure”), then the Company will immediately take all action necessary to
increase the Company’s authorized shares of Series A Preferred or Common Stock,
as applicable, to an amount sufficient to allow the Company to reserve the
applicable Required Reserve Amount.  Without limiting the generality
of the foregoing sentence, as soon as practicable after the date of the
occurrence of an Authorized Share Failure, but in no event later than 90 days
after the occurrence of such Authorized Share Failure, the Company will hold a
meeting of its stockholders for the authorization of an increase in the number
of authorized shares of Series A Preferred or Common Stock, as
applicable.  In connection with such meeting, the Company will provide
each stockholder with a proxy statement and will use its commercially reasonable
best efforts to solicit its stockholders’ approval of such increase in
authorized shares and to cause its board of directors to recommend to the
stockholders that they approve such proposal.

     

    Section
7.           Noncircumvention.   The
Company hereby covenants and agrees that the Company will not, by amendment of
its articles of incorporation, bylaws or through any reorganization, transfer of
assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at all
times in good faith carry out all the provisions of this Warrant and take all
action as may be required to protect the rights of the Holder. Without limiting
the generality of the foregoing, the Company (i) shall not increase the par
value of any shares of Series A Preferred receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) shall take all
such actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Series A
Preferred upon the exercise of this Warrant.

     

    Section
8.             Default and
Redemption.

     

    (a)          Events Of
Default.  Each of the following events shall be considered to
be an “Event of
Default,” unless waived by the Holder:

     

    (i)           Failure To Deliver Series A
Preferred.  A Delivery Failure occurs and remains uncured for a
period of more than twenty (20) days; or at any time, the Company announces
or states in writing that it will not honor its obligations to issue Exercise
Shares upon Exercise by the Holder of this Warrant; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii)          Corporate Reorganization;
Change of Control. (A) with respect to an Corporate Reorganization, the
Company has failed to meet the requirements of Section 4(b)(i) prior to
effecting such Corporate Reorganization or (B) the Company has effected a Change
of Control without paying the Change of Control Redemption Price, if applicable,
to the Holder pursuant to Section 4(b)(ii).

     

    (b)         Remedies, Other Obligations,
Breaches And Injunctive Relief. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available under this
Warrant, the Purchase Agreement and the Investor Rights Agreement, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), and nothing herein shall limit the right of the Holder to pursue actual
damages for any failure by the Company to comply with the terms of this Warrant.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder and that the remedy at law for any such
breach may be inadequate. The Company therefore agrees that, in the event of any
such breach or threatened breach, the holder of this Warrant shall be entitled
to an injunction restraining any breach.  The parties further
acknowledge that (A) the amount of loss or damages likely to be incurred by the
Holder is incapable or is difficult to precisely estimate and (B) the parties
are sophisticated business parties and have been represented by sophisticated
and able legal and financial counsel and negotiated this Agreement at arm’s
length.

     

    Section
9.            Mechanics of Holder’s
Redemptions.   In the event that the Holder has sent a
Change of Control Redemption Notice to the Company pursuant to Section 4(b)(ii),
the Holder shall promptly submit this Warrant to the Company. If the Holder has
submitted a Change of Control Redemption Notice in accordance with Section
4(b)(ii), the Company shall deliver the applicable Change of Control Redemption
Price to the Holder concurrently with the consummation of such Change of
Control.

     

    Section
10.          No Obligation to Net Cash
Settle this Warrant.  Notwithstanding anything to the contrary
herein, in the event that the Company is not permitted to issue shares of Series
A Preferred to Holder pursuant to this Warrant because the Company has
insufficient shares authorized under its Restated Articles of Incorporation, the
Company shall not be required to net cash settle or otherwise make any cash
payment to Holder to settle this Warrant by virtue of such
limitation.

     

    Section
11.          Benefits of this
Warrant.   Nothing in this Warrant shall be construed to
confer upon any person other than the Company and Holder any legal or equitable
right, remedy or claim under this Warrant and this Warrant shall be for the sole
and exclusive benefit of the Company and Holder.

     

    Section
12.           Reserved.

     

    Section
13.          Transfer of this Warrant;
Legends and Legend Removal.  The Holder may assign or transfer
some or all of its rights hereunder at any time and from time to time, subject
to compliance with the Securities Act, without the consent of the Company,
provided that such assignment or transfer complies with Section 4.1 of the
Purchase Agreement.  The Warrant and the Warrant Shares shall be
subject to the legend requirements and legend removal procedures and penalties
described in Section 4.1 of the Purchase Agreement.  Holder shall
deliver a written notice to Company, substantially in the form of the Assignment
attached hereto as Exhibit B, indicating
the person or persons to whom the Warrant shall be assigned and the respective
number of warrants to be assigned to each assignee. The Company shall effect the
assignment within fifteen (15) Trading Days of its receipt of a properly
completed and executed form of Assignment (the “Transfer Delivery
Period”) and any other documents required by Company Counsel, and shall
deliver to the assignee(s) designated by Holder a Warrant or Warrants of like
tenor and terms for the appropriate number of shares.  This Warrant
and the rights evidenced hereby shall inure to the benefit of and be binding
upon the successors and assigns of the Holder. The provisions of this Warrant
are intended to be for the benefit of all Holders from time to time of this
Warrant, and shall be enforceable by any such Holder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
14.          Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law thereof.  Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Warrant (whether brought
against a party hereto or its respective Affiliates, employees or agents) shall
be commenced exclusively in the courts of the State of New York sitting in New
York County or in the United States of America for the Southern District of New
York (the “New York Courts”).  Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such New York Court, or that such
Proceeding has been commenced in an improper or inconvenient
forum.  Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such Proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.  EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY HEREBY ACKNOWLEDGES THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASERS ENTERING INTO THE
PURCHASE AGREEMENT.

     

    Section
15.          Replacement of
Warrant.  If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new Warrant, but only upon execution by the Holder of a customary
lost certificate affidavit and an agreement to indemnify and hold harmless the
Company for any losses in connection therewith, the fees and expenses of which
shall be borne by the Holder.  If a replacement certificate or
instrument evidencing this Warrant is requested due to a mutilation thereof, the
Company may require delivery of such mutilated certificate or instrument as a
condition precedent to any issuance of a replacement.

     

    Section
16.          Reissuance of
Warrant.  In the event of a partial exercise of this Warrant,
the Company will promptly cause to be issued and delivered to the Holder, upon
tender by the Holder of this Warrant, a new Warrant of like tenor representing
the remaining unexercised Shares.  The “Issuance Date” will not change
as a result of such reissuance.

     

    Section
17.          Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section 17 prior to 5:00 p.m., New York City time, on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 5:00
p.m., New York City time, on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier service
with next day delivery specified, or (d) upon actual receipt by the party to
whom such notice is required to be given.  Until another address is
designated in writing by the Company, any notice to Company shall be sent to the
address set forth in Section 7.3 of the Purchase Agreement, and until
another address is designated in writing by the Holder, any notice to Holder
shall be sent to the address set forth in Section 7.3 of the Purchase
Agreement.

     

    [Signature
Pages Follow]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, the undersigned has
executed this Warrant as of the _____ day of _________, 2010.

     

    
      
        
          	
                  KUN
      RUN BIOTECHNOLOGY, INC.

                
	 
	
                  By:

                	
                     

                
	 
      	
                  Print
      Name:

                
	 
      	
                  Title:

                

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    EXERCISE
FORM FOR WARRANT

     

    TO:  KUN
RUN BIOTECHNOLOGY, INC.

     

    CHECK
THE APPLICABLE BOX:

     

    
      
        	
                 ̈

              	
                Cash
      Exercise

              

      

       

      The
undersigned hereby irrevocably exercises the attached warrant (the “Warrant”) with respect to
________ shares of Series A Preferred, par value $0.001 per share (the “Common Stock”), of Kun Run
Biotechnology, Inc., a Nevada corporation (the “Company”).

      

      
        	
                 ̈

              	
                Cashless
      Exercise

              

      

       

      The
undersigned hereby irrevocably exercises the Warrant with respect to _______
shares of Series A Preferred of the Company and herewith makes payment of the
Exercise Price with respect to such shares in full, all in accordance with the
conditions and provisions of said Warrant.

    

     

    
      	
              1.

            	
              The
      undersigned agrees not to sell, transfer, assign, pledge, hypothecate or
      otherwise dispose of any of the Series A Preferred obtained on Exercise of
      the Warrant, except in accordance with applicable securities laws and the
      provisions of Section 4.1 of the Purchase
  Agreement.

            

    

     

    
      	
              2.

            	
              The
      undersigned requests that a warrant representing any unexercised portion
      hereof be issued, pursuant to the Warrant in the name of the undersigned
      and delivered to the undersigned at the address set forth
      below.

            

    

     

    
      	
              3.

            	
              Capitalized
      terms used but not otherwise defined in this Exercise Form shall have the
      meaning ascribed thereto in the
Warrant.

            

    

     

    
      	
              4.

            	
              In
      the event of any conflict between the term of this Exercise Form and any
      provisions of this Warrant, the terms of the Warrant shall
      govern.

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              5.

            	
              Please
      issue the Series A Preferred to be issued upon Exercise of this Warrant in
      the following name and to the following
address:

            

    

     

    Issue
to: ___________________________________________________________________________________

     

    Facsimile
Number:___________________________________________________________________________

    

    DTC
Participant Number and Name (if electronic book entry
transfer):_________________________

    

    Account
Number  (if electronic book entry
transfer):______________________________________

     

    Dated:
______________________

     

    
      
        
          	 
      
	 
      
	
                  Signature

                
	 
	 
      
	 
      
	
                  Print
      Name

                
	 
	 
      
	 
      
	
                  Address

                

        

      

    

     

    NOTICE

     

    The
signature to the foregoing Exercise Form must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ACKNOWLEDGEMENT

     

                    The
Company hereby acknowledges this Exercise Form and receipt of the appropriate
exercise price and hereby directs Securities Transfer Corporation to issue the
above indicated number of shares of Series A Preferred in accordance with the
Irrevocable Transfer Agent Instructions dated [_____________], 2010, from the
Company and acknowledged and agreed to by Securities Transfer
Corporation.

    

    
      
        
          	
                  KUN
      RUN BIOTECHNOLOGY, INC.

                
	 
	
                  By:

                	
                     

                
	
                  Name:

                	
                     

                
	
                  Title:

                	
                     

                

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

     

    ASSIGNMENT

     

    (To be
executed by the registered holder

     

    desiring
to transfer the Warrant)

     

    FOR VALUE
RECEIVED, the undersigned holder of the attached warrant (the “Warrant”)
hereby sells, assigns and transfers unto the person or persons below named the
right to purchase                     
shares of the Series A Preferred of Kun Run Biotechnology, Inc., a Nevada
corporation, evidenced by the attached Warrant and does hereby irrevocably
constitute and appoint                     
attorney to transfer the said Warrant on the books of the Company, with full
power of substitution in the premises.

     

    The
undersigned hereby certifies that the Warrant is being sold, assigned or
transferred in accordance with all applicable securities laws.

     

    
      
        	
                Dated:

              	
                   

              	 
      	 
      
	 
      	 
      
	
                  

              	
                Signature

              

      

    

    Fill in
for new registration of Warrant:

     

    
      
        
          
            
              
                
                  
                    	 
      
	 
      
	
                            Name

                          
	 
	 
      
	 
	
                            Address

                          
	 
	 
      
	 
	
                            Please
      print name and address of assignee

                            (including
      zip code
number)

                          

                  

                

              

            

          

        

      

    

     

    NOTICE

     

    The
signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
C

     

    INVESTOR
RIGHTS AGREEMENT

     

    This
Investor Rights Agreement (this “Agreement”)
is made and entered into as of April 17, 2010, by and among Kun Run
Biotechnology, Inc., a Nevada corporation (the “Company”),
the purchasers signatory hereto (including any successor or assign of any
purchaser signatory hereto, each a “Purchaser”
and, collectively, the “Purchasers”)
and the holders of Capital Stock signatory hereto (each a “Key
Holder” and, collectively, the “Key
Holders”).  Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement.

     

    This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof between the Company and each Purchaser (the “Purchase
Agreement”).

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and each of the Purchasers agree as
follows:

     

    1.           Definitions.  As
used in this Agreement, the following terms shall have the following
meanings:

     

    “Advice”
shall have the meaning set forth in Section 4(b).

     

    “Affiliate”
means, with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, Controls, is controlled by or is under
common control with such Person, as such terms are used in and construed under
Rule 144, provided that
for purposes of Section 8(d), “Affiliate”
means, with respect to the Company or any Subsidiary of the Company, (a) each
person that, directly or indirectly, owns or controls 5% or more of the stock or
membership interests having ordinary voting power in the election of directors
or managers of the Company or such Subsidiary, and (b) each person that
controls, is controlled by or is under common control with the Company or such
Subsidiary.  With respect to a Purchaser, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Purchaser will be deemed to be an Affiliate of such
Purchaser.

     

    “Effective
Date” means the date that a Registration Statement filed pursuant to
Section 2(a) is first declared effective by the Commission.

     

    “Effectiveness
Deadline” means, with respect to each Initial Registration Statement or
New Registration Statement, the earlier of: (i) the 60th
calendar day following the applicable Filing Deadline; provided, that, if the
Commission reviews and has written comments to a filed Registration Statement,
then the Effectiveness Deadline under this clause (i) shall be the 90th
calendar day following the applicable Filing Deadline, and (ii) fifth (5th)
Business Day following the date on which the Company is notified by the
Commission that the applicable Registration Statement will not be reviewed or is
no longer subject to further review and comments and the effectiveness of such
Registration Statement may be accelerated; provided, however, that if
the Effectiveness Deadline falls on a Saturday, Sunday or other day that the
Commission is closed for business, the Effectiveness Deadline shall be extended
to the next Business Day on which the Commission is open for
business.

     

    “Effectiveness
Period” shall have the meaning set forth in Section 2(b).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Excluded
Securities” means any issuance of (a) securities to employees, officers
or directors of the Company pursuant to any duly-adopted equity incentive or
equity compensation plan, to the extent approved by a majority of the
non-employee members of the Board or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise, exchange or conversion of any securities issued or issuable under the
Purchase Agreement and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise, exchange or conversion price of such securities, (c) securities
issued pursuant to acquisitions or strategic transactions approved by a majority
of the disinterested directors of the Company, provided that any such issuance
shall only be to a Person which is, itself or through its subsidiaries, an
operating company in a business synergistic with the business of the Company and
in which the Company receives benefits in addition to the investment of funds,
but shall not include any transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities or (d) securities issued in an underwritten
public offering of the Company’s securities.

     

    “Filing
Deadline” means, with respect to each of the Registration Statements
required to be filed pursuant to Section 2(a), the 60th
calendar day following the Closing Date; provided, however, that if
the Filing Deadline falls on a Saturday, Sunday or other day that the Commission
is closed for business, the Filing Deadline shall be extended to the next
Business Day on which the Commission is open for business.

     

    “FINRA”
means the Financial Industry Regulatory Authority, Inc. or any successor entity
or entities.

     

    “Holder” or
“Holders”
means the holder or holders, as the case may be, from time to time of
Registrable Securities.

     

    “Indemnified
Party” shall have the meaning set forth in Section 6(c).

     

    “Indemnifying
Party” shall have the meaning set forth in Section 6(c).

     

    “Initial
Registration Statement” shall have the meaning set forth in Section
2(a).

     

    “Issuer
Filing” shall have the meaning set forth in Section 3(p).

     

    “OrbiMed
Designee” shall have the meaning set forth in Section
8(b)(2).

     

    “Losses”
shall have the meaning set forth in Section 6(a).

     

    “New Registration
Statement” shall have the meaning set forth in Section 2(a).

     

    “Observer
Rights” shall have the meaning set forth in Section 8(b)(1).

     

    “OrbiMed”
means Caduceus Asia Partners, LP and its Affiliates.

     

    “Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Register,”
“registered”
and “registration”
refer to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the Securities Act and pursuant to Rule 415,
and the declaration or ordering of effectiveness of such Registration Statement
or document.

     

    “Registrable
Securities” means all of (i) the Shares and (ii) any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the Shares, provided, that the Shares
shall cease to be Registrable Securities upon the earliest to occur of the
following:  (A) sale pursuant to a Registration Statement or Rule 144
under the Securities Act (in which case, only such security sold shall cease to
be a Registrable Security); or (B) to the extent Shares may be immediately sold
to the public without registration or restriction (including without limitation
as to volume by each holder thereof) under the Securities Act, including
pursuant to Rule 144.

     

    “Registration
Statements” means any one or more registration statements of the Company
filed under the Securities Act that covers the resale of any of the Registrable
Securities pursuant to the provisions of this Agreement (including without
limitation any Initial Registration Statements, New Registration Statements and
Remainder Registration Statements), amendments and supplements to such
Registration Statements, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
in such Registration Statements.

     

    “Remainder
Registration Statements” shall have the meaning set forth in Section
2(a).

     

    “Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule.

     

    “Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule.

     

    “SEC
Guidance” means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the Commission staff and (ii) the
Securities Act.

     

    “Selling
Stockholder Questionnaire” means a questionnaire in the form attached as
Annex A hereto,
or such other form of questionnaire as may reasonably be adopted by the Company
from time to time.

     

    “Special
Registration Statement” shall mean a registration statement relating to
any employee benefit plan under Form S-8 or similar form or with respect to any
corporate reorganization or other transaction under Rule 145 of the
Securities Act.

     

    “Suspension
Certificate” shall have the meaning set forth in Section
4(a).

     

    “Suspension
Period” shall have the meaning set forth in Section 4(a).

     

    “Violations”
shall have the meaning set forth in Section 6(a).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.  
         Registration.

     

    (a)           On
or prior to each Filing Deadline, the Company shall prepare and file with the
Commission a “shelf” Registration Statement covering the resale of all of the
then outstanding Registrable Securities or Registrable Securities issuable upon
exercise of then outstanding Warrants not already covered by an existing and
effective Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 or, if Rule 415 is not available for offers and sales
of the Registrable Securities, by such other means of distribution of
Registrable Securities as the Holders may reasonably specify (each, an “Initial
Registration Statement”).  Each Initial Registration Statement
shall be on Form S-3 (except if the Company is then ineligible to register for
resale the Registrable Securities on Form S-3, in which case such registration
shall be on Form S-1) subject to the provisions of Section 2(e) and shall
contain (except if otherwise required pursuant to written comments received from
the Commission upon a review of such Registration Statement) the “Plan of
Distribution” section approved by a majority of the
Holders.  Notwithstanding the registration obligations set forth in
this subsection (a) and subsections (b) and (c) of this Section 2, in the event
the Commission informs the Company that all of the Registrable Securities
required to be included in an Initial Registration Statement cannot, as a result
of the application of Rule 415, be registered for resale as a secondary offering
on a single registration statement, the Company agrees to promptly (i) inform
each of the Holders thereof and file amendments to the applicable Initial
Registration Statement as required by the Commission and/or (ii) withdraw such
Initial Registration Statement and file a new registration statement (a “New Registration
Statement”), in either case covering the maximum number of Registrable
Securities required to be included in an Initial Registration Statement and
permitted to be registered by the Commission, on Form S-3 or such other form
available to register for resale the Registrable Securities as a secondary
offering; provided,
however, that prior to filing such amendment or New Registration
Statement, the Company shall be obligated to use its commercially reasonable
efforts to advocate with the Commission for the registration of all of the
Registrable Securities in accordance with SEC Guidance, including without
limitation, the Manual of Publicly Available Telephone Interpretations
D.29.  Notwithstanding any other provision of this Agreement, if any
SEC Guidance sets forth a limitation of the number of Registrable Securities
permitted to be registered on a particular Registration Statement as a secondary
offering (and notwithstanding that the Company used commercially reasonable
efforts to advocate with the Commission for the registration of all or a greater
number of Registrable Securities), unless otherwise directed in writing by a
Holder as to its Registrable Securities, the number of Registrable Securities to
be registered on such Registration Statement will (A) if applicable, first be
reduced by Registrable Securities not acquired pursuant to the Purchase
Agreement (whether pursuant to registration rights or otherwise), and (B) second
by Registrable Securities represented by holders of Shares (applied, in the case
that some Shares may be registered, to the Holders on a pro rata basis based on
the total number of unregistered Shares held by such Holders).  In the
event the Company amends an Initial Registration Statement or files a New
Registration Statement, as the case may be, under clauses (i) or (ii) above, the
Company will file with the Commission, as promptly as allowed by Commission or
SEC Guidance provided to the Company or to registrants of securities in general,
one or more registration statements on Form S-3 or such other form available to
register for resale those Registrable Securities that were not registered for
resale on the Initial Registration Statement, as amended, or the New
Registration Statement (the “Remainder
Registration Statements”).

     

    (b)           The
Company shall use its best efforts to cause each Registration Statement to be
declared effective by the Commission as soon as practicable and, with respect to
each Initial Registration Statement or New Registration Statement, as
applicable, shall use commercially reasonable efforts to cause each Registration
Statement to be declared effective by the Commission no later than the
Effectiveness Deadline (including filing with the Commission a request for
acceleration of effectiveness in accordance with Rule 461 promulgated under the
Securities Act within five (5) Business Days after the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that
such Registration Statement will not be “reviewed,” or will not be subject to
further review and that the effectiveness of such Registration Statement may be
accelerated) and shall, subject to Section 3(c) hereof, keep each such
Registration Statement continuously effective under the Securities Act until the
earlier of (i) such time as all of the Shares (including any securities issued
or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing) shall cease to
be Registrable Securities hereunder, (ii) the date on which the Purchasers shall
have sold all of the Registrable Securities covered by such Registration
Statement or (iii) the date four years after the Effective Date (the “Effectiveness
Period”).  The Company shall ensure that each Registration
Statement (including any amendments or supplements thereto and Prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of Prospectuses, in the light of the
circumstances in which they were made) not misleading.  Each
Registration Statement shall also cover, to the extent allowable under the
Securities Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities.  The Company shall promptly notify the Holders via
facsimile or e-mail of the effectiveness of a Registration Statement within two
(2) Business Days of the date on which the Company telephonically confirms
effectiveness with the Commission, which confirmation shall initially be the
date requested for effectiveness of a Registration Statement.  The
Company shall, by 9:30 a.m. New York City Time on the third Business Day after
the Effective Date, file a Rule 424(b) prospectus with the
Commission.

     

    
      
        
        

      

      
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    (c)           The
Company shall not, prior to the Effective Date of the Registration Statements
covering the resale of the Registrable Securities issued or issuable at, or upon
exercise or conversion of securities issued at, the Closing, prepare and file
with the Commission any registration statement under the Securities Act covering
any of its securities other than a registration statement on Form
S-8.

     

    (d)           Each
Holder agrees to furnish to the Company a completed Selling Stockholder
Questionnaire not more than ten (10) Business Days following the date of this
Agreement. Each Holder further agrees that it shall not be entitled to be named
as a selling securityholder in a Registration Statement or use the Prospectus
for offers and resales of Registrable Securities at any time, unless such Holder
has returned to the Company a completed and signed Selling Stockholder
Questionnaire. If a Holder of Registrable Securities returns a Selling
Stockholder Questionnaire after the deadline specified in the previous sentence,
the Company shall take such actions as are required to name such Holder as a
selling security holder in the applicable Registration Statement or any
pre-effective or post-effective amendment thereto and to include (to the extent
not theretofore included) in such Registration Statement the Registrable
Securities identified in such late Selling Stockholder Questionnaire. Each
Holder acknowledges and agrees that the information in the Selling Stockholder
Questionnaire will be used by the Company in the preparation of one or more
Registration Statements covering such Holder’s Registrable Securities and hereby
consents to the inclusion of such information in such Registration
Statements.

     

    (e)           In
the event that Form S-3 is not available for the registration of the resale
of Registrable Securities hereunder, the Company shall
register the resale of the Registrable Securities on another appropriate form
reasonably acceptable to the Holders, including a registration statement on
Form S-1 and maintain the effectiveness of such Registration Statement that
is on a form other than Form S-3 during the Effectiveness
Period.

     

    3.    
       Registration
Procedures

     

    In
connection with the Company’s registration obligations hereunder, the Company
shall:

     

    (a)           Not
less than five (5) Business Days prior to the filing of a Registration Statement
and not less than three (3) Business Days prior to the filing of any related
Prospectus or any amendment or supplement thereto (except for annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and
any similar or successor reports), the Company shall furnish to the Holder
copies of such Registration Statement, Prospectus or amendment or supplement
thereto, as proposed to be filed, which documents will be subject to the review
of such Holder (it being acknowledged and agreed that if a Holder does not
object to or comment on the aforementioned documents within such five (5)
Business Day or three (3) Business Day period, as the case may be, then the
Holder shall be deemed to have consented to and approved the use of such
documents).  The Company shall not file any Registration Statement or
amendment or supplement thereto in a form to which a Holder reasonably objects
in good faith, provided that, the Company is notified of such objection in
writing within the five (5) Business Day or three (3) Business Day period
described above, as applicable.  The Company shall permit a single
firm of counsel designated by the Holders to review such Registration Statement
and all amendments and supplements thereto (as well as all requests for
acceleration or effectiveness thereof) and use commercially reasonable efforts
to reflect in such documents any comments as such counsel may reasonably propose
(so long as such comments are provided to the Company at least  three
(3) Business Day prior to the expected filing date) and will not request
acceleration of such Registration Statement without prior notice to such
counsel.

     

    
      
        
        

      

      
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    (b)           (i)  Prepare
and file with the Commission such amendments (including post-effective
amendments) and supplements to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement continuously effective as to the applicable Registrable Securities for
its Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement
(subject to the terms of this Agreement), and, as so supplemented or amended, to
be filed pursuant to Rule 424; (iii) respond as promptly as reasonably
practicable to any comments received from the Commission with respect to each
Registration Statement or any amendment thereto and, as promptly as reasonably
possible, provide the Holders true and complete copies of all correspondence
from and to the Commission relating to such Registration Statement but, except
as agreed by a Holder, not any comments that would result in the disclosure to
the Holders of material and non-public information concerning the Company; and
(iv) comply with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by a
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of (subject to the terms of this Agreement) in
accordance with the intended methods of disposition by the Holders thereof as
set forth in such Registration Statement as so amended or in such Prospectus as
so supplemented; provided,
however, that each Purchaser shall be responsible for the delivery of the
Prospectus to the Persons to whom such Purchaser sells any of the Shares
(including in accordance with Rule 172 under the Securities Act), and each
Purchaser agrees to dispose of Registrable Securities in compliance with the
plan of distribution described in the applicable Registration Statement and
otherwise in compliance with applicable federal and state securities laws. In
the case of amendments and supplements to a Registration Statement which are
required to be filed pursuant to this Agreement (including pursuant to this
Section 3(b)) by reason of the Company filing a report on Form 10-K, Form 10-Q
or Form 8-K or any analogous report under the Exchange Act, the Company shall
have incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the Commission on
the same day on which the Exchange Act report which created the requirement for
the Company to amend or supplement such Registration Statement was
filed.

     

    
      
        
        

      

      
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    (c)           Notify
the Holders (which notice shall, pursuant to clauses (iii) through (v) hereof,
be accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made) as promptly as reasonably possible (and, in
the case of (i)(A) below, not less than three Business Days prior to such
filing, in the case of (iii) and (iv) below, not more than one Business Day
after such issuance or receipt, and in the case of (v) below, not less than one
Business Day after a determination by the Company that the financial statements
in any Registration Statement have become ineligible for inclusion therein) and
(if requested by any such Person) confirm such notice in writing no later than
one Business Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a “review” of such Registration Statement and whenever the Commission comments
in writing on any Registration Statement (in which case the Company shall
provide to each of the Holders true and complete copies of all comments that
pertain to the Holders as a “Selling Stockholder” or to the “Plan of
Distribution” and all written responses thereto, but not information that the
Company believes would constitute material and non-public information); and (C)
with respect to each Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information that pertains
to the Holders as “Selling Stockholders” or the “Plan of Distribution”; (iii) of
the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus, form of prospectus or supplement thereto, in
light of the circumstances under which they were made), not misleading; provided that any and all of
such information shall remain confidential to each Holder until such information
otherwise becomes public, unless disclosure by a Holder is required by law;
provided, further, that notwithstanding
each Holder’s agreement to keep such information confidential, the Holders make
no acknowledgement that any such information is material, non-public
information.

     

    (d)           Use
commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, as soon as practicable.

     

    (e)           Prior
to any resale of Registrable Securities by a Holder, register or qualify, or
cooperate with the selling Holders in connection with the registration or
qualification, unless an exemption from registration and qualification applies,
the Registrable Securities for offer and sale under the securities or Blue Sky
laws of such jurisdictions within the United States as any Holder reasonably
requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during any Effectiveness Period and to do any and
all other acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statements; provided,
that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action that would subject the Company to general service of process in any
jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so
subject.

     

    (f)           If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to any Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement
and under law, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such
Holders may reasonably request.  In connection therewith, if required
by the Company’s transfer agent, the Company shall promptly after the
effectiveness of the applicable Registration Statement cause an opinion of
counsel as to the effectiveness of such Registration Statement to be delivered
to and maintained with its transfer agent, together with any other
authorizations, certificates and directions required by the transfer agent,
which authorize and direct the transfer agent to issue such Registrable
Securities without legend upon sale by the holder of such shares of Registrable
Securities under such Registration Statement.

     

    
      
        
        

      

      
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    (g)           Following
the occurrence of any event contemplated by Section 3(c)(iii) through (v), as
promptly as reasonably practicable, prepare a supplement or amendment, including
a post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, form of prospectus or supplement thereto, in light
of the circumstances under which they were made), not misleading.

     

    (h)           In
the time and manner required by the Principal Trading Market, prepare and file
with such Trading Market an additional shares listing application covering all
of the Registrable Securities, (ii) use commercially reasonable efforts to take
all steps necessary to cause such Registrable Securities to be approved for
listing on the Principal Trading Market as soon as possible thereafter, (iii) if
requested by any Holder, provide such Holder evidence of such listing, and (iv)
during each Effectiveness Period, use commercially reasonable efforts to
maintain the listing of such Registrable Securities on the Principal Trading
Market.

     

    (i)           In
order to enable the Holders to sell Shares under Rule 144, for a period
commencing on the date hereof until five years of the later of the date hereof,
and the Closing, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act. During such period, if the Company is not
required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act,
it will prepare and furnish to the Holders and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act annual and
quarterly financial statements, together with a discussion and analysis of such
financial statements in form and substance substantially similar to those that
would otherwise be required to be included in reports required by Section 13(a)
or 15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Person to sell Shares without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 promulgated under the Securities Act.  The Company agrees to
furnish to the Holders so long as the Holders own Registrable Securities,
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting requirements of the Securities Act and the Exchange
Act as required for applicable provisions of Rule 144, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Holders to sell such securities pursuant to
Rule 144 without registration.

     

    (j)           The
Company may require each selling Holder to furnish to the Company a certified
statement as to (i) the number of shares of Common Stock beneficially owned by
such Holder and any Affiliate thereof, (ii) any FINRA affiliations, (iii) any
natural persons who have the power to vote or dispose of the Common Stock and
(iv) any other information as may be requested by the Commission, FINRA or any
state securities commission.

     

    
      
        
        

      

      
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    (k)           The
Company shall hold in confidence and not make any disclosure of information
concerning a Holder provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws or the
rules of any securities exchange or trading market on which the Company’s
securities are then listed or traded, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such information
concerning a Holder is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Holder prior to
making such disclosure, and allow such Holder, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.

     

    (l)           The
Company shall cooperate with each Holder who holds Registrable Securities being
offered and the managing underwriter or underwriters as reasonably requested by
them with respect to an applicable Registration Statement, if any, to facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be offered pursuant to such
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the managing underwriter or underwriters, if
any, or a Holder may reasonably request and registered in such names as the
managing underwriter or underwriters, if any, or a Holder may request, and,
within three (3) Business Days after a Registration Statement which includes
Registrable Securities is ordered effective by the Commission, the Company shall
deliver, and shall cause legal counsel selected by the Company to deliver, to
the transfer agent for the Registrable Securities (with copies to each Holder)
an appropriate instruction and an opinion of such counsel in the form required
by the transfer agent in order to issue such Registrable Securities free of
restrictive legends upon the resale of such Registrable Securities pursuant to
such Registration Statement.

     

    (m)           At
the reasonable request of a Holder, the Company shall prepare and file with the
Commission such amendments (including post-effective amendments) and supplements
to a Registration Statement and any prospectus used in connection with the
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.  The Company
shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Holders of Registrable Securities pursuant to a Registration
Statement.

     

    (n)           The
Company shall use commercially reasonable efforts to comply with all applicable
laws related to a Registration Statement and offering and sale of securities and
all applicable rules and regulations of governmental authorities in connection
therewith (including without limitation the Securities Act and the Exchange Act
and the rules and regulations promulgated by the Commission).

     

    (o)           If
required by the FINRA Corporate Financing Department or any similar entity, the
Purchasers shall promptly effect a filing with FINRA pursuant to FINRA Rule 2710
with respect to the public offering contemplated by resales of securities under
the Registration Statement (an “Issuer
Filing”), and the Company shall pay the filing fee required by such
Issuer Filing. The Purchasers shall use commercially reasonable efforts to
pursue the Issuer Filing until FINRA issues a letter confirming that it does not
object to the terms of the offering contemplated by the Registration
Statement.

     

    4.         
  Holder
Covenants.

     

    (a)           Suspension of
Trading. At any time after the Registrable Securities are covered by an
effective Registration Statement, the Company may deliver to the Holders of such
Registrable Securities a certificate (the “Suspension
Certificate”) approved by the Chief Executive Officer or Chief Financial
Officer of the Company and signed by an officer of the Company stating that the
effectiveness of and sales of Registrable Securities under the applicable
Registration Statement would:

     

    
      
        
        

      

      
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    1.           materially
interfere with any transaction that would require the Company to prepare
financial statements under the Securities Act that the Company would otherwise
not be required to prepare in order to comply with its obligations under the
Exchange Act, or

     

    2.           require
public disclosure of a material transaction or event prior to the time such
disclosure might otherwise be required.

     

    Upon
receipt of a Suspension Certificate by Holders of Registrable Securities, such
Holders of Registrable Securities shall refrain from selling or otherwise
transferring or disposing of any Registrable Securities then held by such
Holders for a specified period of time (a “Suspension
Period”) that is customary under the circumstances (not to exceed ten
(10) Trading Days). Notwithstanding the foregoing sentence, the Company shall be
permitted to cause Holders of Registrable Securities to so refrain from selling
or otherwise transferring or disposing of any Registrable Securities on only one
(1) occasion during each six (6) consecutive month period that such Registration
Statement remains effective. The Company may impose stop transfer instructions
to enforce any required agreement of the Holders under this Section
4(a).

     

    (b)           Discontinued
Disposition.  Each Holder agrees by its acquisition of
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c)(iii)-(v), such
Holder will forthwith discontinue disposition of such Registrable Securities
under the applicable Registration Statement until it is advised in writing (the
“Advice”)
by the Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed.  The Company may provide
appropriate stop orders to enforce the provisions of this Section
4(b).

     

    5.   
        Registration
Expenses.  All fees and expenses incident to the Company’s
performance of or compliance with its obligations under this Agreement shall be
borne by the Company whether or not any Registrable Securities are sold pursuant
to a Registration Statement.  The fees and expenses to be borne by the
Company referred to in the foregoing sentence shall include, without limitation,
(i) all registration and filing fees (including, without limitation, fees and
expenses (A) with respect to filings required to be made with any Trading Market
on which the Common Stock of the Company is then listed for trading, (B) with
respect to compliance with applicable state securities or Blue Sky laws
(including, without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as requested by
the Holders) and (C) with respect to any filing that may be required to be made
by any broker through which a Holder intends to make sales of Registrable
Securities with FINRA pursuant to FINRA Rule 2710 or similar rules, (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the Holders of a majority of
the Registrable Securities included in the applicable Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In no event shall the Company be responsible for
any underwriting, broker or similar fees or commissions of any Holder or, except
to the extent provided above or otherwise in any Transaction Document, any legal
fees or other costs of the Holders.

     

    
      
        
        

      

      
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    6.    
       Indemnification.

     

    (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify, defend and hold harmless each Holder, the officers,
directors, agents, partners, members, managers, stockholders, Affiliates and
employees of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, partners, members, managers, stockholders, agents
and employees of each such controlling Person, to the fullest extent permitted
by applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable costs of
preparation and investigation and reasonable attorneys’ fees) and expenses
(collectively, “Losses”),
as incurred, that arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in a Registration Statement or the
omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary Prospectus if used prior to the effective date of such Registration
Statement, or contained in the final Prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the
Commission) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law, any “blue sky” laws of any
jurisdiction in which Registrable Securities are offered, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, “Violations”),
except to the extent, but only to the extent, that (A) such untrue statements,
alleged untrue statements, omissions or alleged omissions are based upon
information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information relates
to such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was consented to and approved by such Holder for use in the
applicable Registration Statement, such Prospectus or such form of Prospectus or
in any amendment or supplement thereto, or (B) in the case of an occurrence of
an event of the type specified in Section 3(c)(iii)-(v), related to the use by a
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior to
the receipt by such Holder of the Advice, but only if and to the extent that
following the receipt of the Advice the misstatement or omission giving rise to
such Loss would have been corrected.  The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding
arising from or in connection with the transactions contemplated by this
Agreement of which the Company is aware.  Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
an Indemnified Party (as defined in Section 6(c)) and shall survive the transfer
of the Registrable Securities by the Holders.

     

    (b)           Indemnification by
Holders. Each Holder shall, notwithstanding any termination of this
Agreement, severally and not jointly, indemnify and hold harmless the Company,
its directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses, as incurred, arising out of or are based upon any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus, or any form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading (i) to the extent, but
only to the extent that, such untrue statements or omissions are based solely
upon information regarding such Holder furnished in writing to the Company by
such Holder expressly for use therein, (ii) to the extent that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and approved by such Holder expressly
for use in the applicable Registration Statement, such Prospectus or such form
of Prospectus or in any amendment or supplement thereto or (iii) in the case of
an occurrence of an event of the type specified in Section 3(c)(iii)-(v), to the
extent related to the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the
Advice.  In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

     

    
      
        
        

      

      
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    (c)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from
whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the right to
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all reasonable fees and
expenses incurred in connection with defense thereof; provided, that the failure of
any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and
only) to the extent that such failure shall have materially and adversely
prejudiced the Indemnifying Party.

     

    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest exists or may
arise if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party); provided, that the Indemnifying Party shall not be
liable for the fees and expenses of more than one separate firm of attorneys at
any time for all Indemnified Parties except to the extent that an Indemnified
Party shall have been advised by counsel that a conflict of interest exists or
may arise if the same counsel were to represent such Indemnified Party and
another Indemnified Party.  The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld, delayed or
conditioned.  No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

     

    Subject
to the terms of this Agreement, all fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within twenty Business Days of written notice thereof to the
Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is finally judicially determined to not be entitled to
indemnification hereunder). The failure to deliver written notice to the
Indemnifying Party within a reasonable time of the commencement of any such
action shall not relieve such Indemnifying Party of any liability to the
Indemnified Party under this Section 6, except to the extent that the
Indemnifying Party is prejudiced in its ability to defend such
action.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (d)           Contribution.  If
a claim for indemnification under Section 6(a) or 6(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations.  The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

     

    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section 6(d), (A)
no Holder shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the net proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding exceeds
the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission and (B) no contribution will be made under circumstances where the
maker of such contribution would not have been required to indemnify the
Indemnified Party under the fault standards set forth in this Section
6.  No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.

     

    The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties and are not in diminution or limitation of the indemnification
provisions under the Purchase Agreement.

     

    7.     
      Piggy-Back
Registrations.

     

    (a)           If
at any time after the date hereof there is not one or more effective
Registration Statements covering all of the Registrable Securities then
outstanding or Registrable Securities issuable upon exercise of then outstanding
Warrants, the Company shall notify all Holders in writing at least five (5)
Business Days prior to the filing of any registration statement under the
Securities Act for purposes of a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, but excluding Special Registration
Statements) and will, subject to Section 7(b) hereof, afford each such Holder an
opportunity to include in such registration statement all or part of such
Registrable Securities held by such Holder.  Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by it shall, within five (5) Business Days after the
above-described notice from the Company, so notify the Company in writing. Such
notice shall state the intended method of disposition of the Registrable
Securities by such Holder.  If a Holder decides not to include all of
its Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth
herein.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (b)           Underwriting. If the registration
statement under which the Company gives notice under this Section 7 is for an
underwritten offering, the Company shall so advise the Holders.  In
such event, the right of any such Holder to be included in a registration
pursuant to this Section 7 shall be conditioned upon such Holder’s participation
in such underwriting and the inclusion of such Holder’s Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their Registrable Securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company (or, in the case of a
registration statement initiated by stockholders of the Company, the underwriter
selected by such stockholders that is reasonably acceptable to the
Company).  Notwithstanding any other provision of the Agreement, if
the underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of shares that
may be included in the underwriting shall be allocated (i) in the case of a
registration statement initiated by the Company for any offering of shares by
the Company, first, to the Company; second, to the Holders, together with any
other stockholders of the Company  on a pro rata basis and
(ii) in the case of a registration statement initiated by stockholders of
the Company  the Holders and any other participating stockholders of
the Company on a pro rata basis. If any Holder disapproves of the terms of any
such underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company and the underwriter, delivered at least ten (10) Business
Days prior to the effective date of the applicable registration
statement.  Any Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration.

     

    (c)           Right to Terminate
Registration. The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 7 prior to the effectiveness
of such registration whether or not any Holder has elected to include securities
in such registration, and shall promptly notify any Holder that has elected to
include Registrable Securities in such registration of such termination or
withdrawal. The expenses of such withdrawn registration shall be borne by the
Company in accordance with this Agreement.

     

    8.        
   Other
Agreements.

     

    (a)           Preemptive
Rights.

     

    1.           So
long as a Purchaser owns not less than fifty percent (50%) of the Unit Shares
(or shares of Common Stock issued or issuable upon conversion of such Unit
Shares) purchased under the Purchase Agreement by such Purchaser as of the time
of a determination under this Section, and subject to applicable securities
laws, each Purchaser shall have a right of first refusal to purchase its pro rata share of all Common
Stock Equivalents that the Company may, from time to time, propose to sell and
issue, other than Excluded Securities.  Each Purchaser’s pro rata share is equal to
the ratio of (A) the number of outstanding Unit Shares (including all
shares of Common Stock issuable or issued upon conversion of such Unit Shares)
of which such Purchaser is deemed to be a holder immediately prior to the
issuance of such Common Stock Equivalents to (B) the total number of
outstanding shares of Common Stock of the Company on an as-converted basis
immediately prior to the issuance of the Common Stock Equivalents; provided, however, that such
Purchaser shall not have right of first refusal to purchase more than twenty
five percent (25%) of each offering of such Common Stock
Equivalents.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    2.           If
the Company proposes to issue any Common Stock Equivalents, it shall give each
Purchaser written
notice of its intention, describing the Common Stock Equivalents, the price and
the terms and conditions upon which the Company proposes to issue the
same.  Each Purchaser shall have ten (10)
Business Days from the receipt of such notice to agree to purchase its pro rata share of the Common
Stock Equivalents (except as provided above) for the price and upon the terms
and conditions specified in the notice by giving written notice to the Company
and stating therein the quantity of Common Stock Equivalents to be
purchased.  Notwithstanding the foregoing, the Company shall not be
required to offer or sell such Common Stock Equivalents to any Purchaser who would cause the
Company to be in violation of applicable federal securities laws by virtue of
such offer or sale.

     

    3.           If
not all of the Purchasers elect to purchase their pro rata share of the
available Common Stock Equivalents, then the Company shall promptly notify in
writing the Purchasers who do so elect and shall offer such Purchasers the right
to acquire such unsubscribed shares on a pro rata basis among such
participating Purchasers.  The Purchasers shall have five (5) days
after receipt of such notice to notify the Company of its election to purchase
all or a portion thereof of the unsubscribed shares.  The Company
shall have ninety (90) days thereafter to sell the Common Stock Equivalents in
respect of which the Purchasers’ rights were not exercised, at a price not lower
and upon terms and conditions not more favorable, or in preference to the rights
granted, to the purchasers thereof than specified in the Company’s notice to the
Purchasers pursuant to Section 8(a)(2) hereof.  If the Company has not
sold such Common Stock Equivalents within such ninety (90) day period, the
Company shall not thereafter issue or sell any Common Stock Equivalents, without
first offering such securities to the Purchasers in the manner provided
above.

     

    (b)          Board of
Directors.

     

    1.           
From and after the Closing, the Company shall take all appropriate action and
each Key Holder hereby agrees to vote with respect to all Capital Stock held by
such Key Holder to establish the initial size of the Board at three (3) members,
(i) one (1) of which shall be the Company’s Chairman (ii) one (1) of which shall
be designated in writing by OrbiMed to be nominated by the Company to serve as a
member of the Board (the “OrbiMed
Designee”), so long as OrbiMed  (together with any Affiliates)
beneficially owns at least 5% of the outstanding shares of Common Stock of the
Company on an as-converted basis and (iii) one (1) of which shall be an
individual with no prior affiliation with the Company or the Company’s existing
stockholders as of the Closing, which individual will be acceptable to OrbiMed
(the “Independent
Designee”).  The OrbiMed Designee may, from time to time, name
an associate or advisor who shall be entitled to accompany the OrbiMed Designee
to all meetings of the Board and committees of the Board, or, in the absence of
the OrbiMed Designee, to attend such meetings as an observer, provided, that the Company
reserves the right to exclude such associate or advisor from access to any
material or meeting or portion thereof if the Company believes upon advice of
counsel that such exclusion is reasonably necessary to preserve the
attorney-client privilege.

     

    2.           The
Company (including any appropriate committee thereof) shall nominate the OrbiMed
Designee and the Independent Designee for election (in case of the initial
election of the OrbiMed Designee and the Independent Designee) or re-election
(including, in the case of the end of the term of the OrbiMed Designee and the
Independent Designee), as applicable, as a director of the Company as part of
the slate proposed by the Company that is included in the proxy statement (or
consent solicitation or similar document) of the Company relating to the
election of its directors, and shall use its best efforts to have the OrbiMed
Designee and the Independent Designee elected and provide the same level of
support for each of the OrbiMed Designee and the Independent Designee as it
provides to other members of the Board or other persons standing for election as
a director of the Company as part of a slate proposed by the Company, so long as
OrbiMed (together with any Affiliates) beneficially owns at least 5% of the
outstanding shares of on an as-converted basis of the Company on an as-converted
basis.  In the event that a vacancy is created on the Board at any
time by the resignation, death or disability of the OrbiMed Designee, so long as
OrbiMed (together with any Affiliates) beneficially owns at least 5% of the
outstanding shares of Common Stock of the Company on an as-converted basis,
OrbiMed may designate another person as the OrbiMed Designee to fill the vacancy
created thereby, and the Company hereby agrees to take, at any time and from
time to time, all actions necessary to fill the vacancy as provided in the
foregoing.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    3.           The
Company shall provide each of the OrbiMed Designee and the Independent Designee
with all notices, minutes, consents and other materials, financial or otherwise,
which the Company provides to the other members of the Board and committees
thereof in their capacity as such.

     

    4.           The
Company shall reimburse each of the OrbiMed Designee and the Independent
Designee for his or her out-of-pocket expenses incurred in connection with his
or her participation as a member of the Board, in a manner consistent with the
Company’s policies for reimbursing such expenses of the members of the Board. In
addition, the Company shall pay each of the OrbiMed Designee and the Independent
Designee, in his or her capacity as a non-employee member of the Board, the same
compensation as to which all non-employee members of the Board are entitled, in
their capacity as such, subject to compliance with applicable law. The Company
shall indemnify each of the OrbiMed Designee and the Independent Designee to the
same extent it indemnifies its other directors pursuant to its organizational
documents and applicable law.

     

    (c)           Qualified
Auditor.  The Company hereby agrees that so long as OrbiMed or
any of its affiliates holds any Capital Stock of the Company, the Company shall
continue to engage a Qualified Auditor to perform audit services.

     

    (d)           Transactions with
Affiliates.  The Company shall not, without the prior written
consent of OrbiMed, enter into, renew, extend or be a party to, or permit any of
its Subsidiaries to enter into, renew, extend or be a party to, any transaction
or series of related transactions (including the purchase, sale, lease, transfer
or exchange of property or assets of any kind or the rendering of services of
any kind) with any Affiliate, director, officer or employee except (i) in the
ordinary course of business in a manner and to an extent consistent with past
practice and necessary or desirable for the prudent operation of its business,
for fair consideration and on terms no less favorable to it or its Subsidiaries
than would be obtainable in a comparable arm’s length transaction with a Person
that is not an Affiliate thereof, (ii) reasonable and customary director,
officer and employee compensation (including bonuses) and other benefits
(including retirement, health, stock option, and other benefit plans) and, in
the case of senior officers or director, indemnification arrangements, in each
case approved in good faith by the board of directors of the Company, and (iii)
transactions related to any tax sharing agreement between the Company and any
other Person with which the Company files a consolidated tax return or with
which the Company is part of a consolidated group for tax purposes.

     

    (e)           D&O Insurance.
The Company shall use reasonable efforts to obtain and maintain directors’ and
officers’ liability insurance in an amount reasonably acceptable to the Board
and consistent with industry practice.

     

    9.       
    Miscellaneous.

     

    (a)           Remedies.  In
the event of a breach by the Company or by a Holder of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.  The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (b)          No Senior Registration
Rights.  Until such time as all Registrable Securities have
been registered on a Registration Statement that has been declared effective by
the Commission, neither the Company nor any of its security holders (other than
the Holders in such capacity pursuant hereto) may include securities of the
Company in a Registration Statement other than the Registrable Securities, and
the Company shall not enter into any agreement providing any such right to any
of its security holders or prospective security holders that are senior to the
rights of the Holders without the written consent of Holders of at least a
majority of the Registrable Securities.

     

    (c)          Entire
Agreement.  This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein.  This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter, except for, and as provided in the Transaction
Documents.

     

    (d)          Amendments and
Waivers.  The provisions of Sections 2 through 7 and 9 of this
Agreement, including definitions in Section 1 with respect to such sections, may
not be amended, modified, supplemented or waived unless the same shall be in
writing and signed by the Company and Holders holding at least a majority of the
then outstanding Registrable Securities.  The provisions of Section 8
of this Agreement, including the definitions in Section 1 and the provisions of
this sentence with respect to such section, may not be amended, modified,
supplemented or waived unless the same shall be in writing and signed by the
Company (i) each Purchaser to which such amendment, modification, supplement or
waiver relates with respect to Section 8(a) and (ii)
OrbiMed.  Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively to
the rights of Holders and that does not directly or indirectly affect the rights
of other Holders may be given by Holders of all of the Registrable Securities to
which such waiver or consent relates; provided, however, that the provisions
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding
sentence.

     

    (e)           Term.  The
registration rights provided to the Holders of Registrable Securities hereunder,
and the Company’s obligation to keep the Registration Statements effective,
shall terminate at such time as there are no Registrable
Securities.  Notwithstanding the foregoing, Section 5, Section 6 and
Section 9 shall survive the termination of this Agreement.

     

    (f)           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be delivered as set forth in the Purchase
Agreement.

     

    (g)          Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder.  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.  The Company may not assign its
rights or obligations (i) under Sections 2 through 7 hereof without the prior
written consent of Holders holding at least a majority of the then outstanding
Registrable Securities, (ii) under Section 8(a) hereof without the prior written
consent of each Purchaser to which such assignment relates or (iii) under
Section 8(b) hereof without the prior written consent of OrbiMed (other than by
merger or consolidation or to an entity which acquires the Company, including by
way of acquiring all or substantially all of the Company’s
assets).  The rights of the Holders hereunder, including the right to
have the Company register Registrable Securities pursuant to this Agreement, may
be assigned by each Holder to transferees or assignees of all or any portion of
the Registrable Securities, but only if (i) the Holder agrees in writing with
the transferee or assignee to assign such rights and related obligations under
this Agreement, and for the transferee or assignee to assume such obligations,
and a copy of such agreement is furnished to the Company within a reasonable
time after such assignment, (ii) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being transferred or assigned, (iii) at or before
the time the Company received the written notice contemplated by clause (ii) of
this sentence, the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein and (iv) the transferee is an
“accredited investor,” as that term is defined in Rule 501 of Regulation
D.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (h)          Execution and
Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature were the original
thereof.

     

    (i)           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreement.

     

    (j)           Cumulative
Remedies.  The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

     

    (k)           Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction.  It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

     

    (l)           Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

     

    (m)         Currency.  Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
United States Dollars.  All amounts owing under this Agreement are in
United States Dollars.  All amounts denominated in other currencies
shall be converted in the United States Dollar equivalent amount in accordance
with the applicable exchange rate in effect on the date of
calculation.

     

    (n)          Further
Assurances.  The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,

    SIGNATURE
PAGES TO FOLLOW]

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the parties have executed this Investor Rights Agreement as of
the date first written above.

     

    
      
        
          
            
              
                
                  
                    	 
      	
                            KUN
      RUN BIOTECHNOLOGY, INC.

                          
	 
      	 
      
	 
      	
                            By:

                          	
                              

                          
	 	 	Name: 
	 	 	Title: 

                  

                

              

            

          

        

      

    

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,

    SIGNATURE
PAGES OF HOLDERS TO FOLLOW]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the parties have
executed this Investor Rights Agreement as of the date first written
above.

    

    
      
        	 
      	
                NAME
      OF PURCHASER

              

      

    

    

    
      
        
          	 
      	
                  Caduceus
      Asia Partners, LP

                
	 
      	 
      	 
      
	 
      	
                  By:

                	
                    

                
	 
      	
                  Name:

                	
                    

                
	 
      	
                  Title:

                	
                    

                

        

      

    

    

    
      
        
          	 
      	
                  ADDRESS
      FOR NOTICE

                
	 
      	 
      	 
      
	 
      	
                  c/o:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Street:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  City/State/Zip:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Country:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Attention:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Tel:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Fax:

                	
                    

                
	 
      	 
      	 
      
	 
      	
                  Email:

                	
                    

                

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the parties have
executed this Investor Rights Agreement as of the date first written
above.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                	 
      	
                                                        NAME
      OF KEY HOLDER

                                                      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                                                        AUTHORIZED
      SIGNATORY

                                                      
	 
      	 
      
	 
      	By:	
                                                         

                                                      
	 	 	Name: 
	 	 	Title: 
	 
      	 
      
	 
      	
                                                        ADDRESS
      FOR NOTICE

                                                      
	 
      	 
      
	 
      	
                                                        c/o:

                                                      	 
      
	 
      	 
      	 
      
	 
      	
                                                        Street:

                                                      	 
      
	 
      	 
      	 
      
	 
      	
                                                        City/State/Zip:

                                                      	 
      
	 
      	 
      	 
      
	 
      	
                                                        Attention:

                                                      	 
      
	 
      	 
      	 
      
	 
      	
                                                        Tel:

                                                      	 
      
	 
      	 
      	 
      
	 
      	
                                                        Fax:

                                                      	 
      
	 
      	 
      	 
      
	 
      	
                                                        Email:

                                                      	 
      

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Annex A

     

    SELLING
STOCKHOLDER NOTICE AND QUESTIONNAIRE

    

    The
undersigned holder of shares of and warrants to purchase shares of the Series A
Preferred Stock, par value $0.001 per share, of Kun Run Biotechnology, Inc., a
Nevada corporation (the “Company”),
issued pursuant to that certain Securities Purchase Agreement by and among the
Company and the Purchasers named therein, dated as of April 17, 2010 (the “Purchase
Agreement”), understands that the Company intends to file with the
Commission a registration statement on Form S-3 (except if the Company is
ineligible to register for resale the Registrable Securities on Form S-3, in
which case such registration shall be on a registration statement on Form S-1)
(the “Resale
Registration Statement”) for the registration and the resale under Rule
415 of the Securities Act of Registrable Securities in accordance with the terms
of that certain Investor Rights Agreement, dated as of the date of the Purchase
Agreement, by and among the Company and the Purchasers as defined therein, to
which this Notice and Questionnaire is attached as Annex A (the “Agreement”).
All capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Agreement.

    

    In order
to sell or otherwise dispose of any Registrable Securities pursuant to the
Resale Registration Statement, a holder of Registrable Securities generally will
be required to be named as a selling stockholder in the related prospectus or a
supplement thereto (as so supplemented, the “Prospectus”),
deliver such Prospectus to purchasers of Registrable Securities (including
pursuant to Rule 172 under the Securities Act) and be bound by the provisions of
the Agreement (including certain indemnification provisions, as described
below). Holders must complete and deliver this Notice and Questionnaire in order
to be named as selling stockholders in the Prospectus. Holders of Registrable Securities who
do not complete, execute and return this Notice and Questionnaire within ten
(10) Business Days following the date of the Agreement shall not be entitled to
(1) be named as a selling stockholder in the Resale Registration Statement or
the Prospectus or (2) use such Prospectus for offers and resales of Registrable
Securities at any time.

    

    Certain
legal consequences arise from being named as a selling stockholder in the Resale
Registration Statement and the Prospectus. Holders of Registrable Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not named as a selling stockholder in the Resale Registration
Statement and the Prospectus.

    

    NOTICE

     

    The
undersigned holder (the “Selling
Stockholder”) of Registrable Securities hereby gives notice to the
Company of its intention to sell or otherwise dispose of Registrable Securities
owned by it and listed below in Item (3), unless otherwise specified in Item
(3), pursuant to the Resale Registration Statement. The undersigned, by signing
and returning this Notice and Questionnaire, understands and agrees that it will
be bound by the terms and conditions of this Notice and Questionnaire and the
Agreement.

    

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate and
complete:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      QUESTIONNAIRE

    

     

    
      1.  Name.

    

     

    
      
        
          	
                   
      

                	
                  (a)

                	
                  Full
      Legal Name of Selling Stockholder:

                
	 	 	 
	 	 	 

        

      

      

      
        
          	
                   
      

                	
                  (b)

                	
                  Full
      Legal Name of Registered Holder (if not the same as (a) above) through
      which Registrable Securities Listed in Item 3 below are
    held:

                
	 	 	 
	 	 	 

        

      

       

      
        
          	
                   
      

                	
                  (c)

                	
                  Full
      Legal Name of Natural Control Person (which means a natural person who
      directly or indirectly alone or with others has power to vote or dispose
      of the securities covered by this Notice and
    Questionnaire):

                
	 	 	 
	 	 	 

        

      

      

      
        2.  Address
for Notices to Selling Stockholder:

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	 
	 
	 
	
                                                  Telephone:

                                                	 
      
	
                                                  Fax:

                                                	 
      
	
                                                  Contact Person:

                                                	 
      
	
                                                  E-mail
      Address of Contact Person:

                                                	 
      

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      

      
        3.  Beneficial
Ownership of Registrable Securities Issuable Pursuant to the Purchase
Agreement:

      

       

      
        
          	
                   
      

                	
                  (a)

                	
                  Type
      and Number of Registrable Securities beneficially owned and issued
      pursuant to the Purchase Agreement:

                
	 	 	 
	 	 	 
	 	 	 
	 	 	 

        

      

       

      
        
          	
                   
      

                	
                  (b)

                	
                  Number
      of shares of common stock to be registered pursuant to this Notice and
      Questionnaire for resale:

                
	 	 	 
	 	 	 
	 	 	 
	 	 	 

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        4.  Broker-Dealer
Status:

      

       

      
        	
                 
      

              	
                (a)

              	
                Are
      you a broker-dealer?

              

      

      
         

        Yes o               No
o

      

       

      
        
          	
                	
                  (b)

                	
                  If
      “yes” to Section 4(a), did you receive your Registrable Securities as
      compensation for investment
      banking services to the
Company?

                

        

      

       

      
        Yes o              
No o

      

       

      
        	
                Note:

              	
                If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Are
      you an affiliate of a
broker-dealer?

              

      

       

      
        Yes o              
No o

      

       

      
        
          	
                	
                  Note:

                	
                  If
      yes, provide a narrative explanation below:

                
	 	 	 
	 	 	 
	 	 	 

        

      

      

      
        	
                 
      

              	
                (c)

              	
                If
      you are an affiliate of a broker-dealer, do you certify that you bought
      the Registrable Securities in the ordinary course of business, and at the
      time of the purchase of the Registrable Securities to be resold, you had
      no agreements or understandings, directly or indirectly, with any person
      to distribute the Registrable
Securities?

              

      

       

      
        Yes o              
No o

      

       

      
        	
              	
                Note:

              	
                If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

              

      

       

      
        5.  Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Stockholder.

      

       

      Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.

       

      
        
          	
                   
      

                	
                  (a)

                	
                  Type
      and amount of other securities beneficially owned:

                
	 	 	 
	 	 	 
	 	 	 
	 	 	 

        

      

       

      6.  Relationships
with the Company:

       

      Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        
          	
                   
      

                	
                  State
      any exceptions here:

                
	 	 
	 	 
	 	 

        

      

      

      
        7.  Plan
of Distribution:

      

       

      The
undersigned has reviewed the form of Plan of Distribution provided by the
Company, and hereby confirms that, except as set forth below, the information
contained therein regarding the undersigned and its plan of distribution is
correct and complete.

       

      
        
          	
                   
      

                	
                  State
      any exceptions here:

                
	 	 
	 	 
	 	 

        

      

      

      
        ***********

         

      

      The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the effective date of any applicable Resale Registration Statement.
All notices hereunder shall be made as provided in the Agreement. In the absence
of any such notification, the Company shall be entitled to continue to rely on
the accuracy of the information in this Notice and Questionnaire.

       

      By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and the inclusion
of such information in the Resale Registration Statement and the Prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of any such Registration
Statement and the Prospectus.

       

      By
signing below, the undersigned acknowledges that it understands its obligation
to comply, and agrees that it will comply, with the provisions of the Exchange
Act and the rules and regulations thereunder, particularly Regulation M in
connection with any offering of Registrable Securities pursuant to the Resale
Registration Statement. The undersigned also acknowledges that it understands
that the answers to this Notice and Questionnaire are furnished for use in
connection with Registration Statements filed pursuant to the Investor Rights
Agreement and any amendments or supplements thereto filed with the Commission
pursuant to the Securities Act.

       

      The
undersigned hereby acknowledges and is advised of the following Interpretation
A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations
regarding short selling:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “An
Issuer filed a Form S-3 registration statement for a secondary offering of
common stock which is not yet effective.  One of the selling
stockholders wanted to do a short sale of common stock “against the box” and
cover the short sale with registered shares after the effective
date.  The issuer was advised that the short sale could not be made
before the registration statement becomes effective, because the shares
underlying the short sale are deemed to be sold at the time such sale is
made.  There would, therefore, be a violation of Section 5 if the
shares were effectively sold prior to the effective date.”

       

      By
returning this Notice and Questionnaire, the undersigned will be deemed to be
aware of the foregoing interpretation.

       

      I confirm
that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Notice and Questionnaire) are
correct.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

       

      
        
          
            
              
                
                  
                    
                      	
                              Dated:

                            	 
      	 
      	
                              Beneficial
      Owner:

                            	 
      

                    

                  

                

              

            

          

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	 
      	 
      	 
      	
                                    By:

                                  	 
      
	 	 	 	 	Name: 
	 	 	 	 	Title: 

                          

                        

                      

                    

                  

                

              

            

          

        

         

      

      PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

      

      Free
Trade Zone

      168
Nanhai Avenue, Haikou City

      Hainan
Province, China 570216

      Telephone No.:
86-898-6680-2207

      Facsimile
No.:

      Attention:  President

      

      With a
copy to:

      

      Cadwalader,
Wickersham & Taft LLP

      2301
China Central Place, Tower 2,

      No. 79
Jianguo Road

      Beijing,
China 100025

      Telephone
No.:  86-10-6599-7200

      Facsimile
No.:  86-10-6599-7300

      Attention:  Jiannan
Zhang, Esq.

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
D-1

     

    ACCREDITED
INVESTOR QUESTIONNAIRE

    

    INVESTOR
NAME: ________________________

    

    Kun Run
Biotechnology, Inc. (the “Company”) is relying exclusively upon this
questionnaire to determine the suitability of the undersigned (the “Investor”)
as a potential investor in securities of the Company.

    

    
      	
              1.1

            	
              INVESTOR
      CATEGORY  The Investor represents and warrants that the
      Investor comes within one category marked below, and that
      for any category marked, the Investor has truthfully set forth, where
      applicable, the factual basis or reason the Investor comes within that
      category.  ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE
      KEPT STRICTLY CONFIDENTIAL.  The undersigned shall furnish any
      additional information which the Company deems necessary in order to
      verify the answers set forth below.

            

    

    

    (please
check the appropriate box)

     

    
      	
              Category
      A    ̈

            	
              The
      undersigned is an individual (not a partnership, corporation, etc.) whose
      individual net worth, or joint net worth with his or her spouse, presently
      exceeds US$1,000,000.

            

    

    

    Explanation.  In
calculating net worth you may include equity in personal property and real
estate, including your principal residence, cash, short-term investments, stock
and securities.  Equity in personal property and real estate should be
based on the fair market value of such property less debt secured by such
property.

    

    
      	
              Category
      B    ̈

            	
              The
      undersigned is an individual (not a partnership, corporation, etc.) who
      had an individual income in excess of US$200,000 in each of the two most
      recent years, or joint income with his or her spouse in excess of
      US$300,000 in each of those years (in each case including foreign income,
      tax exempt income and full amount of capital gains and losses but
      excluding any income of other family members and any unrealized capital
      appreciation) and has a reasonable expectation of reaching the same income
      level in the current year.

            

    

    

    
      	
              Category
      C    ̈

            	
              The
      undersigned is a director or executive officer of the Company which is
      issuing and selling the securities.

            

    

    

    
      	
              Category
      D    ̈

            	
              The
      undersigned is a bank; a savings and loan association; insurance company;
      registered investment company; registered business development company;
      licensed small business investment company (“SBIC”); or employee benefit
      plan within the meaning of Title 1 of ERISA and (a) the investment
      decision is made by a plan fiduciary which is either a bank, savings and
      loan association, insurance company or registered investment advisor, or
      (b) the plan has total assets in excess of US$5,000,000 or is a self
      directed plan with investment decisions made solely by persons that are
      accredited investors.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	
                  

              
	
                (describe
      entity)

              

      

    

    

    
      	
              Category
      E    ̈

            	
              The
      undersigned is a private business development company as defined in
      section 202(a)(22) of the Investment Advisors Act of
  1940.

            

    

    
      
        	
                  

              
	
                (describe
      entity)

              

      

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    

    
      	
              Category
      F    ̈

            	
              The
      undersigned is either a corporation, partnership, Massachusetts business
      trust, or non-profit organization within the meaning of Section 501(c)(3)
      of the Internal Revenue Code, in each case not formed for the specific
      purpose of acquiring the securities and with total assets in excess of
      US$5,000,000.

            

    

    
      
        	
                  

              
	
                (describe
      entity)

              

      

    

    

    
      	
              Category
      G    ̈

            	
              The
      undersigned is a trust with total assets in excess of US$5,000,000, not
      formed for the specific purpose of acquiring the securities, where the
      purchase is directed by a “sophisticated person” as defined in Regulation
      506(b)(2)(ii) under the Act.

            

    

    

    
      	
              Category
      H    ̈

            	
              The
      undersigned is an entity (other than a trust) all the equity owners of
      which are “accredited investors” within one or more of the above
      categories.  If relying upon this Category alone, each equity
      owner must complete a separate copy of this
  Agreement.

            

    

    
      
        	
                  

              
	
                (describe
      entity)

              

      

    

    

    
      	
              Category
      I    ̈

            	
              The
      undersigned is not within any of the categories above and is therefore
      not an accredited
      investor.

            

    

    

    The
undersigned agrees that the undersigned will notify the Company at any time on
or prior to the execution of this Agreement in the event that the
representations and warranties in this Agreement shall cease to be true,
accurate and complete.

    

    1.2           SUITABILITY  (please
answer each question)

    

    
      
        	
                 
      

              	
                (a)

              	
                For
      an individual Investor, please describe your current employment, including
      the company by which you are employed and its principal
      business:

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

    

     

    
      
        
          
            
              
                
                  
                    
                      (b) 
For
an individual Investor, please describe any college or graduate degrees held by
you:

                       

                    

                  

                

              

            

          

        

      

    

    
      	 	
               

            	
               

            
	 	 	 
	 	 	 

    

     

    
      	 	
              (c) 

            	
              For
      all Investors, please list types of prior
  investments:

            

    

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    
      
        	 	
                 

              	
                 

              
	 	 	 
	 	 	 

      

    

    
      
        
          
            
              
                
                  
                    
                       

                      (d) 
For all
Investors, please state whether you have you participated in otherprivate placements
before:

                    

                  

                

              

            

          

        

      

    

    

     ̈ YES                       ̈ NO

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    

    (e)  If
your answer to question (d) above was “YES”, please indicate frequency of such
prior participation in private placements
of:

    

    
      
        
          
            	 
      	
                    Public

                  	 	
                    Private

                  
	 
      	
                    Companies

                  	 	
                    Companies

                  
	 
      	 
      	 	 
      
	
                    Frequently

                  	
                     ̈

                  	 	
                     ̈

                  
	
                    Occasionally

                  	
                     ̈

                  	 	
                     ̈

                  
	
                    Never

                  	
                     ̈

                  	 	
                     ̈

                  

          

        

      

    

    

    (f)  For
individual Investors, do you expect your current level of income to
significantly decrease in the foreseeable future:

    

     ̈ YES                       ̈ NO

    

    If so,
please explain: 

    _______________________________________

    

    (g)  For
trust, corporate, partnership and other institutional Investors, do you expect
your total assets to significantly decrease in the foreseeable
future:

    

     ̈ YES                       ̈ NO

    

    If so,
please explain: 

    _______________________________________

    

    (h)  For
all Investors, do you have any other investments or contingent liabilities which
you reasonably anticipate could cause you to need sudden cash requirements in
excess of cash readily available to you:

    

     ̈ YES                       ̈ NO

    

    (i)  For
all Investors, are you familiar with the risk aspects and the non-liquidity of
investments such as the securities for which you seek to subscribe?

    

     ̈ YES                       ̈ NO

    

    (j)  For
all Investors, do you understand that there is no guarantee of financial return
on this investment and that you run the risk of losing your entire
investment?

    

     ̈ YES                       ̈ NO

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (k)  For
all Investors, please state whether or not you have been indicted or convicted
of any felony or any criminal conduct in any foreign, federal, state or local
proceeding:

    

     ̈ YES                       ̈ NO

    

    (1) If you answered yes to item (k)
above, please describe such activity and the penalty, if any, imposed upon
you.

     

    
      
        	 	
                 

              	
                 

              
	 	 	 
	 	 	 

      

    

     

    (2) You hereby authorize us to perform
a background check upon you and your affiliates, if necessary, in order to
provide to us sufficient information to determine your suitability as an
investor.

    

     ̈ YES                       ̈ NO

    

    1.3           MANNER IN
WHICH TITLE IS TO BE HELD  (check
one)

    

    
      	
               
      

            	
               ̈ Individual
      Ownership

            

    

    
      	
               
      

            	
               ̈ Community
      Property

            

    

    
      	
               
      

            	
               ̈ Joint Tenant with
      Right of Survivorship (both parties must
sign)

            

    

    
      	
               
      

            	
               ̈ Partnership*

            

    

    
      	
               
      

            	
               ̈ Tenants in
      Common

            

    

    
      	
               
      

            	
               ̈ Corporation*

            

    

    
      	
               
      

            	
               ̈ Trust*

            

    

    
      	
               
      

            	
               ̈ Limited Liability
      Company*

            

    

    
      	
               
      

            	
               ̈ Other

            

    

     

    *If the
securities are being subscribed for by an entity, the attached Certificate of
Signatory must also be completed.

    

    1.4           NASD
AFFILIATION

    

    Are you
affiliated or associated with an NASD member firm (please check
one):

    

     ̈ YES                                 ̈ NO

    

    If Yes,
please describe:

    
       

      
        
          	 	
                   

                	
                   

                
	 	 	 
	 	 	 

        

      

    

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    

    *If
Investor is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:

    

    The
undersigned NASD member firm acknowledges receipt of the notice required by Rule
3050 of the NASD Conduct Rules.

     

    
      
        

      

    

    Name of
NASD Member Firm

    

    
      
        
          	
                  By:

                	
                    

                
	 
      	
                  Authorized
      Officer

                
	 
      	 
      
	
                  Date:

                	
                    

                

        

      

    

    

    
      	
              1.5

            	
              The
      undersigned has been informed of the significance to the Company of the
      foregoing representations and answers contained in the Accredited Investor
      Questionnaire contained in this Section and such answers have been
      provided under the assumption that the Company will rely on
      them.

            

    

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    Signature
Page

    

    INVESTOR
NAME:__________________

    

    INFORMATION
IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL

     

    (1)           Address
Information

    Please
complete the following contact information for the address where Investor wishes
to receive all correspondence concerning this matter.

     

    
      
        
          
            	 
      	
                      

                  	 
      	
                      

                  
	 
      	
                    Address for Correspondence

                  	 
      	
                    Address for Correspondence

                  
	 
      	 
      	 
      	 
      
	 
      	
                      

                  	 
      	
                      

                  
	 
      	
                    City, State and Zip Code

                  	 
      	
                    City, State and Zip Code

                  
	 
      	 
      	 
      	 
      
	 
      	
                    E-mailAddress _______________________________

                  	 
      	
                    E-mail Address ___________________________________

                  
	 
      	 
      	 
      	 
      
	 
      	
                      

                  	 
      	
                      

                  
	 
      	
                    Telephone (Business)

                  	 
      	
                    Telephone (Business)

                  
	 
      	 
      	 
      	 
      
	 
      	
                      

                  	 
      	
                      

                  
	 
      	
                    Telephone (Residence)

                  	 
      	
                    Telephone (Residence)

                  
	 
      	 
      	 
      	 
      
	 
      	
                      

                  	 
      	
                      

                  
	 
      	
                    Facsimile (Business)

                  	 
      	
                    Facsimile (Business)

                  
	 
      	 
      	 
      	 
      
	 
      	
                      

                  	 
      	
                      

                  
	 
      	
                    Facsimile (Residence)

                  	 
      	
                    Facsimile (Residence)

                  
	 
      	 
      	 
      	 
      
	 
      	
                      

                  	 
      	
                      

                  
	 
      	
                    Tax ID # or Social Security #

                  	 
      	
                    Tax ID # or Social Security #

                  
	 
      	 
      	 
      	 
      
	 
      	
                    AGREED AND SUBSCRIBED

                  	 
      	
                    AGREED AND SUBSCRIBED

                  
	 
      	
                    This __ day of ______, 2010

                  	 
      	
                    This __ day of ______, 2010

                  
	 
      	 
      	 
      	 
      
	
                    BY:

                  	
                     

                  	 
      	
                    By:

                  	
                      

                  
	 
      	
                          SIGNATURE OF INVESTOR 
      

                  	 
      	
                    SIGNATURE OF JOINT INVESTOR (if

                  
	 
      	 
      	 
      	
                    any)

                  
	 
      	 
      	
                      

                  	 
      
	 
      	
                       

                  	 
      	
                       

                  
	 
      	
                    Investor Name (Typed or Printed)

                  	 
      	
                    Additional Investor Name (Typed or

                  
	 
      	 
      	 
      	
                    Printed)

                  

          

        

      

    

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    (2)           Alternate
Legal Address Information

    

    If the
address information set forth above is not the Investor’s primary legal
residence (in the case of an individual) or primary place of business (in the
case of an entity), please set forth such primary address information
below.

    

    
      
        	
                  

              	 
      	
                  

              
	
                Legal Address

              	 
      	
                Legal Address

              
	 
      	 
      	 
      
	
                  

              	 
      	
                  

              
	
                City, State, and Zip Code

              	 
      	
                City, State, and Zip Code

              

      

    

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    Certificate of
Signatory

    

    (To
be completed only if the
securities are being subscribed for by an entity)

    

    I,                                      , am the _____________________
(title) of _______________________ (the “Entity”).

    I certify that I am empowered and duly
authorized by the Entity to execute and carry out the terms of the Securities
Purchase Agreement and to purchase and hold the Series A Preferred Stock, and
certify further that the Securities Purchase Agreement has been duly and validly
executed on behalf of the Entity and constitutes a legal and binding obligation
of the Entity.

    

    IN WITNESS WHEREOF, I have set my hand
this ____ day of _________________, 2010.

    

    
      
        	
                  

              
	 
      
	
                (Signature)

              

      

    

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    EXHIBIT
D-2

     

    Stock
Certificate Questionnaire

    

    Please
provide us with the following information:

    

    1.
 The exact name that the Securities are to be registered in (this is the
name that will appear on the stock certificate(s) and
warrant(s)):

     

    

    2.  The
relationship between the Purchaser of the Securities and the Registered Holder
listed in response to Item 1 above:

     

    

    3.  The
mailing address, telephone and telecopy number of the Registered Holder listed
in response to Item 1 above:

     

     

    4.  The
Tax Identification Number (or, if an individual, the Social Security Number) of
the Registered Holder listed in response to Item 1 above:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
E-1

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
E-2

      

    
    

    Kun Run Biotechnology, Inc. -  Form of Company Counsel
Opinion

    

    
      	
              1.

            	
              The
      Company has been duly incorporated and is a validly existing corporation
      in good standing under the laws of the State of
  Nevada.

            

    

     

    
      	
              2.

            	
              The
      Company has the requisite corporate power to enter into and perform its
      obligations under the Transaction Documents.  The Company has
      the requisite corporate power to own its properties and assets and to
      conduct its business as, to the best of our knowledge, it is currently
      being conducted, and, to the best of our knowledge, is not required to
      qualify as a foreign corporation to do business in any other jurisdiction
      in the United States.

            

    

     

    
      	
              3.

            	
              The
      Transaction Documents have been duly and validly authorized, executed and
      delivered by the Company and constitute valid and binding agreements of
      the Company enforceable against the Company in accordance with their
      respective terms.

            

    

     

    
      	
              4.

            	
              The
      Unit Shares, the Net Income Warrant Shares and the Repayment Warrant
      Shares (together, the “Shares”) have been duly authorized, and upon
      issuance and delivery against payment therefor in accordance with the
      terms of the Agreement, the Net Income Warrant or the Repayment Warrant,
      as applicable, the Shares will be duly authorized, validly issued and
      fully paid and nonassessable.

            

    

     

    
      	
              5.

            	
              The
      execution and delivery of the Transaction Documents by the Company and the
      offer, issuance and sale of the Shares pursuant to the Agreement do not
      violate any provision of the Company’s [Articles of Incorporation] or
      [Bylaws], do not constitute a default under, or a material breach of, any
      Material Agreement do not violate or contravene (a) any governmental
      statute, rule or regulation which in our experience is typically
      applicable to transactions of the nature contemplated by the Transaction
      Documents or (b) any order, writ, judgment, injunction, decree,
      determination or award which has been entered against the Company and of
      which we are aware, in each case to the extent the violation or
      contravention of which would materially and adversely affect the Company,
      its assets, financial condition or
operations.

            

    

     

    
      	
              6.

            	
              The
      Company’s authorized capital stock consists of (a) [______] shares of
      Common Stock, par value $[_______] per share, and (b) [________]shares of
      Preferred Stock, par value $0.0001 per share, of which [_________] have
      been designated [_________].  The holders of outstanding shares
      of capital stock of the Company are not entitled to preemptive rights
      under the Company’s [Articles of Incorporation], as in effect as of the
      date hereof (the “Restated Certificate”), or [Bylaws], as in effect as of
      the date hereof (the “Restated Bylaws”), or Nevada
  law.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              7.

            	
              To
      our knowledge, there is  no action, suit or proceeding by or
      before any court or other governmental agency, authority or body or any
      arbitrator pending or overtly threatened against the Company by a third
      party that questions the validity of the Transaction
      Documents.

            

    

     

    
      	
              8.

            	
              The
      offer and sale of the Common Shares are exempt from the registration
      requirements of the Securities Act of 1933, as amended, subject to the
      timely filing of a Form D pursuant to Securities and Exchange Commission
      Regulation D.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
G

       

    KUN RUN BIOTECHNOLOGY,
INC.

     

    certificate
of Secretary

     

    This
Certificate is being issued in connection with the Securities Purchase Agreement
dated as of April __, 2010 (the “Agreement”), by and among Kun Run
Biotechnology, Inc., a Nevada corporation (the “Company”), the Purchasers
identified on the signature pages thereto and Xueyun Cui. Capitalized terms used
but not defined herein shall have the same meanings given them in the
Agreement.

    

    The
undersigned hereby certifies as follows:

     

    1.           That
[he] is the duly appointed and at this date is Secretary of the Company.

    

    2.           Attached
hereto as Exhibit A is a true and correct copy of the Company’s Amended and
Restated Articles of Incorporation, together with all certificates of
designation as in effect as of the date hereof (the “Restated Articles”). Said
Restated Articles has not in any way been amended, annulled, rescinded,
repealed, revoked or supplemented, and remains in full force and effect as of
the date hereof.

    

    3.           Attached
hereto as Exhibit B is a true and correct copy of the Company’s Amended and
Restated Bylaws as presently in effect.

    

    4.           Attached
hereto as Exhibit C is a full, true and correct copy of the resolutions
adopted by the Board of Directors of the Company on __________, 2010 approving
the transactions contemplated by the Agreement and the other Transaction
Documents and the issuance of the Securities.  Said resolutions have
not been revoked, modified, rescinded, or amended and are in full force and
effect.

    

    5.           Each
of the following named individuals is, on the date hereof, a duly elected
officer of the Company, holding the office set forth opposite his name, the
signature set forth opposite his name is his genuine signature and each of the
following named individuals is authorized to execute and deliver the Agreement,
the other Transaction Documents and any certificate or instrument furnished
pursuant to the Agreement:

     

    
      
        
          
            
              
                
                  
                    	
                            Name

                          	 	
                            Office

                          	 	
                            Signature

                          
	 
      	 	 
      	 	 
      
	
                            Xiaoqun
      Ye

                          	 	
                            Chief
      Executive Officer

                          	 	 
      

                  

                

              

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    In Witness
Whereof, I have set my hand thereto as of the __________ day of ________,
2010.

     

    
      
        
          
            	 
      	__________________________________________________ 
      
	 
      	
                    __________,
      Secretary

                  

          

        

      

    

    

    I, Xiaoqun Ye, Chief Executive Officer
of the Company, do hereby certify that __________ is the duly appointed,
qualified and acting Secretary of the Company and that the signature above is
[his] genuine signature.

    

    
      
        
          	 
      	 
      
	 
      	
                  Xiaoqun
      Ye, Chief Executive
Officer

                

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A

    

    AMENDED
AND RESTATED ARTICLES OF INCORPORATION

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
B

    

    AMENDED
AND RESTATED BYLAWS

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
C

    

    RESOLUTIONS
ADOPTED BY THE BOARD OF DIRECTORS

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
H

     

    
    

    KUN
RUN BIOTECHNOLOGY, INC.

     

    Compliance
Certificate

     

    Pursuant
to Section 5.1(h) of the Securities Purchase Agreement dated as of April
__, 2010 (the “Agreement”), by and among Kun Run Biotechnology, Inc., a Nevada
corporation (the “Company”), the Purchasers identified on the signature pages
thereto, and Xueyun Cui, Xiaoqun Ye certifies that he is the duly elected and
acting Chief Executive Officer of the Company, and further certifies on behalf
of the Company that:  (i) the representations and warranties of the
Company contained in the Agreement are true and correct in all respects as of
the date when made and as of the Closing Date, as though made on and as of such
date; (ii) the Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing, and (iii) the Company has obtained in a timely fashion any
and all consents, permits, approvals, registrations and waivers necessary for
consummation of the purchase and sale of the Units at the Closing (including,
without limitation, all Required Approvals and any other necessary regulatory
and third party consents and approvals), all of which are and remain so long as
necessary in full force and effect.  Capitalized terms used but not
defined herein shall have the same meanings given them in the
Agreement.

     

    In Witness
Whereof, the undersigned has hereunto set his hand as Chief Executive
Officer of the Company this __________ day of __________, 2010.

     

    
      
        
          
            	 
      	
                    Kun
      Run Biotechnology, Inc.

                  
	 	 
	 
      	
                    By:

                  	 
      
	 
      	 
      	
                    Xiaoqun
      Ye, Chief Executive
Officer

                  

          

        

      

    

     

    
      
         

      

      
        1.

        
          

        

      

      
         

      

    

    EXHIBIT
I

     

    
    

    CERTIFICATE
OF DESIGNATION

    of
the

    PREFERENCES,
RIGHTS, LIMITATIONS, QUALIFICATIONS AND RESTRICTIONS

    of
the

    SERIES A
CONVERTIBLE PREFERRED STOCK

    of

    KUN RUN
BIOTECHNOLOGY, INC.

    

    KUN RUN
BIOTECHNOLOGY, INC. (the “Corporation”), a corporation organized and existing
under Chapter 78 of the Nevada Revised Statutes, as amended (the "NRS"), hereby
certifies that, pursuant to the authority conferred upon the Board of Directors
of the Corporation (the “Board”) by its Amended and Restated Articles of
Incorporation, filed with the Secretary of State of the State of Nevada on
November 1, 2008 (the "Articles of Incorporation"), and pursuant to the
provisions of the NRS, the Board adopted the following resolution providing for
the authorization of 6,800,000 shares of the Corporation's Series A Convertible
Preferred Stock, $0.001 par value per share (the "Series A Preferred
Stock"):

    

    RESOLVED,
that pursuant to the authority vested in the Board by the Corporation’s Articles
of Incorporation, the Board hereby establishes the Series A Preferred Stock of
the Corporation, authorizes 6,800,000 shares of Series A Preferred Stock and
determines the designation, preferences, rights, qualifications, limitations and
privileges of Series A Preferred Stock of the Corporation as
follows:

    

    1. Voting
Rights.

    

    (a) Except as otherwise provided herein
or as required by law, the Series A Preferred Stock shall be entitled,
notwithstanding any provision hereof, to notice of any stockholders' meeting in
accordance with the Bylaws of the Corporation and shall vote together with the
Corporation's common stock, $0.001 par value per share (the "Common Stock"), as
a single class at any annual or special meeting of stockholders of the
Corporation and may act by written consent in the same manner as the Common
Stock, in either case upon the following basis: each holder of shares of Series
A Preferred Stock (each, a "Holder" and collectively, the "Holders") shall be
entitled to such number of votes as shall be equal to the whole number of shares
of Common Stock into which such Holder’s aggregate number of shares of Series A
Preferred Stock are convertible pursuant to Section 3 below immediately after
the close of business on the record date fixed for such meeting or the effective
date of such written consent.

    

    (b) The Series A Preferred Stock shall
have the following class voting rights (in addition to the voting rights set
forth in Section 1(a) hereof). So long as any shares of the Series A Preferred
Stock remain outstanding, the Corporation shall not, without the affirmative
vote or consent of the holders of a majority of the shares of the Series A
Preferred Stock outstanding at the time (the “Required Holders”), given in
person or by proxy, either in writing or at a meeting in which the holders of
the Series A Preferred Stock vote separately as a class:

    

    (i) increase or decrease the authorized
amount of the Common Stock or any class or series of Preferred
Stock;

    

    (ii) Any authorization or any
designation, whether by reclassification or otherwise, of any new class or
series of stock or any other securities convertible into equity securities of
the Corporation ranking on a parity with or senior to the Series A Preferred
Stock in right of redemption, liquidation preference, voting or dividend rights
or any increase in the authorized or designated number of any such new class or
series;;

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (iii) amend, alter or repeal the
provisions of the Series A Preferred Stock, whether by merger, consolidation,
filing of a certificate of designation or otherwise, so as to adversely affect
any right, preference, privilege or voting power of the Series A Preferred
Stock; provided, however, that any creation and issuance of other classes and
series of equity securities of the Corporation which by their terms do not rank
pari passu or senior to the Series A Preferred Stock (“Junior Stock”) shall not
be deemed to adversely affect such rights, preferences, privileges or voting
powers;

    

    (iv) consummate an Acquisition or Asset
Transfer as defined in Section 2(c) herein;

    

    (v) repurchase or redeem shares of
Common Stock (other than as permitted by Section 5(b) hereof);

    

    (vi) amend or waive any provision of
the Articles of Incorporation or By-Laws of the Corporation so as to affect
materially and adversely any right, preference, privilege or voting power of the
Series A Preferred Stock; provided, however, that any creation and issuance of
another series of Junior Stock shall not be deemed to adversely affect such
rights, preferences, privileges or voting powers;

    

    (vii) increase or decrease the
authorized size of the Corporation’s Board of Directors;

    

    (viii) pay or declare dividends on or
make any distribution to any shares of Common Stock or any class or series of
Preferred Stock; or

    

    (ix) issue debt in excess of $250,000
(unless such issuance of debt has been approved by a majority of the
Corporation’s Board of Directors).

    

    (c)          Election
of Board of Directors.

    

    (i)           The
holders of Common Stock and Series A Preferred Stock, voting together as a
single class on an as-if-converted basis, shall be entitled to elect all members
of the Corporation’s Board of Directors at each meeting or pursuant to each
consent of the Corporation’s stockholders for the election of directors, and to
remove from office such directors and to fill any vacancy caused by the
resignation, death or removal of such directors.

    

    2.
Liquidation Rights.

    

    (a) Upon any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary (a
“Liquidation Event”), after payment or provision for payment of debts and other
liabilities of the Corporation, before any distribution or payment shall be made
to the holders of any other equity securities of the Corporation by reason of
their ownership thereof, the Holders of Series A Preferred Stock shall first be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount with respect to each share of Series
A Preferred Stock equal to $1.53 (the “Original Series A Issue Price”), plus any
declared and accrued but unpaid dividends thereon (collectively, the “Series A
Liquidation Value”).

    

    (b) After payment has been made to the
Holders of the Series A Preferred Stock of the full amount of the Series A
Liquidation Value, any remaining assets of the Corporation  (or the
consideration received by the Corporation or its stockholders in such
Acquisition or Asset Transfer) shall be distributed
ratably to the holders of the Corporation's Common Stock and Series A Preferred
Stock (on an as-if-converted to Common Stock basis) .

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (c) In the case of any merger,
consolidation, business combination, reorganization or recapitalization of the
Corporation (other than any merger effected solely for the purpose of changing
the domicile of the Corporation) in which the Corporation is not the surviving
entity or in which the stockholders of the Corporation immediately prior to such
transaction own capital stock representing less than 50% of the Corporation’s
voting power immediately after such transaction or any transaction or series of
related transactions in which capital stock representing in excess of 50% of the
Corporation’s voting power is transferred (each, an “Acquisition”) or a sale,
conveyance, transfer, lease, exclusive license or other disposition of all
or substantially all of the assets of the Corporation (each, an “Asset
Transfer”), the Holders of the Series A Preferred Stock shall be entitled to
receive the amount of cash, securities or other property which such Holders
would be entitled to receive in a Liquidation Event pursuant to sections 2(a)
and 2(b).

    

    (d) If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation
shall be insufficient to make payment in full to all Holders of Series A
Preferred Stock, then such assets shall be distributed among the Holders of
Series A Preferred Stock at the time outstanding, ratably in proportion to the
full amounts to which they would otherwise be respectively
entitled.

    

    (e) Whenever any distribution provided
for in this Section 2 shall be payable in securities or property other than
cash, the value of such distribution shall be the fair market value thereof as
determined in good faith by the Board.

    

    3.
Conversion Rights.  The Holders of Series A Preferred Stock shall have
the following rights with respect to the conversion of Series A Preferred Stock
into shares of Common Stock pursuant to this Section 3:

    

    (a) Conversion.  Subject to
and in compliance with the provisions of this Section 3, any shares of Series A
Preferred Stock may, at the option of the Holder thereof, be converted at any
time into fully paid and nonassessable shares of Common Stock.  The
number of shares of Common Stock to which a Holder of Series A Preferred Stock
shall be entitled upon conversion shall be the product obtained by multiplying
the number of shares of Series A Preferred Stock being converted by the
then-effective Series A Conversion Rate (determined in accordance with Section
3(b) below).

    

    (b) Series A Conversion
Rate.  The conversion rate in effect at any time for conversion of the
Series A Preferred Stock (the "Series A Conversion Rate") shall be the quotient
obtained by dividing the Series A Liquidation Value by the then-effective Series
A Conversion Price (determined in accordance with Section 3(c)
below).

    

    (c) Series A Conversion
Price.  The conversion price for Series A Preferred Stock (the “Series
A Conversion Price”) initially shall be the Original Series A Issue
Price.  The Series A Conversion Price is subject to adjustment as
provided in Section 3(d) and all references herein to the Series A Conversion
Price shall mean the Series A Conversion Price as so adjusted.

    

    (d) Adjustment to the Series A
Conversion Price.

    

    (i) If, at any time or from time to
time after the filing of this Certificate of Designation with the Secretary of
State of the State of Nevada (the "Original Series A Filing Date"), the
Corporation shall issue, or is deemed to issue by the express provisions of this
Section 3(d),  any Additional Stock (as defined below) without
consideration or for consideration per share less than the Series A Conversion
Price in effect immediately prior to the issuance of such Additional Stock, then
and in such event (except as otherwise provided in this Section 3(d)) the
Conversion Price of the Series A Preferred Stock shall be reduced, concurrently
with such issue, to the lowest price at which any of the Additional Stock are
issued.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (ii) No adjustment of the Series A
Conversion Price for any Series A Preferred Stock shall be made in an amount
less than one cent per share; provided that any adjustments which are not
required to be made by reason of this sentence shall be carried forward and
shall be taken into account in any subsequent adjustment made prior to three
years from the date of the event giving rise to the adjustment being carried
forward.  No adjustment of such Series A Conversion Price pursuant to
this Section 3(d) shall have the effect of increasing the Series A Conversion
Price above the Series A Conversion Price in effect immediately prior to such
adjustment.

    

    (iii) In the case of the issuance of
Additional Stock for cash, the consideration shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by the Corporation for any underwriting
or otherwise in connection with the issuance and sale thereof.

    

    (iv) In the case of the issuance of the
Additional Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair value thereof as
determined in good faith by the Board of the Corporation .

    

    (v) Additional Stock; Certain Issues
Excepted. For the purpose of making any adjustment to the Conversion Price of
the Series A Preferred Stock required under this Section 3(d), “Additional
Stock” shall mean all shares of Common Stock issued by the Corporation or deemed
to be issued pursuant to this Section 3 (including shares of Common Stock
subsequently reacquired or retired by the Corporation), other than the
following, for which, anything herein to the contrary notwithstanding, the
Corporation shall not be required to make any adjustment to the Conversion Price
upon: (A) a bona fide firm underwritten public offering of the Corporation; (B)
issuance of securities pursuant to a bona fide acquisition of another business
entity or business segment of any such entity by the Corporation pursuant to a
merger, purchase of substantially all the assets or any type of reorganization
 provided that (1) the Corporation will own more than fifty percent (50%)
of the voting power of such business entity or business segment of such entity
and (2) such transaction is approved by the Board of Directors; (C) securities
issued pursuant to the conversion or exercise of convertible or exercisable
securities issued or outstanding on or prior to the Original Series A Filing
Date or issued pursuant to the Securities Purchase Agreement dated April 17,
2010 entered into by and among the Corporation, the Purchasers (as defined
therein) and the Key Stockholder (as defined therein) (so long as the terms
governing the conversion or exercise price of such securities are not amended to
lower such price and/or adversely affect the holders of the Series A Preferred
Stock); (D) securities issued in connection with bona fide strategic license
agreements or other partnering arrangements so long as such issuances are not
for the primary purpose of raising capital and are approved by the Board of
Directors; (E) Common Stock issued or the issuance or grants of options to
purchase Common Stock, in each case, at no less than the then-applicable fair
market value, pursuant to equity incentive plans that are adopted and approved
by the Corporation’s Board of Directors; (F) securities issued at no less
than the then-applicable fair market value to advisors or consultants
(including, without limitation, financial advisors and investor relations firms)
in connection with any engagement letter or consulting agreement, provided that
any such issuance is approved by the Board of Directors; (G) securities issued
to financial institutions or lessors in connection with reasonable commercial
credit arrangements, equipment financings or similar transactions, provided that
any such issue is approved by the Board of Directors).

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (vi) In the event the Corporation at
any time or from time to time after the Original Series A Filing Date fixes a
record date for the effectuation of a split or subdivision of the outstanding
shares of Common Stock or the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional shares of Common
Stock ("Common Stock Equivalents") without payment of any consideration by such
holder for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion
or exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Series A
Conversion Price shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of each share of Series A Preferred
Stock shall be increased in proportion to such increase of the aggregate of
shares of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents with the number of shares issuable with respect to
Common Stock Equivalents determined from time to time in the manner provided for
deemed issuances in Section 3(d)(v).

    

    (vii) If the number of shares of Common
Stock outstanding at any time after the Original Series A Filing Date is
decreased by a combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Series A Conversion Price
shall be appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of Series A Preferred Stock shall be
decreased in proportion to such decrease in outstanding shares.

    

    (viii)       For
the purpose of the adjustment required under this Section 3(d), if the
Corporation issues or sells (x) preferred stock or other stock, options,
warrants, purchase rights or other securities convertible into, Additional Stock
(such convertible stock or securities being herein referred to as “Convertible
Securities”) or (y) rights or options for the purchase of Additional Stock
or Convertible Securities and if the Effective Price  (as defined
below) of such Additional Stock is less than the Series A Preferred Stock
Conversion Price, in each case the Corporation shall be deemed to have issued at
the time of the issuance of such rights or options or Convertible Securities the
maximum number of Additional Stock issuable upon exercise or conversion thereof
and to have received as consideration for the issuance of such shares an amount
equal to the total amount of the consideration, if any, received by the
Corporation for the issuance of such rights or options or Convertible Securities
plus:

    

    (A)          in
the case of such rights or options, the minimum amounts of consideration, if
any, payable to the Corporation upon the exercise of such rights or options;
and

    

    (B)           in
the case of Convertible Securities, the minimum amounts of consideration, if
any, payable to the Corporation upon the conversion thereof (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities); provided that if the minimum amounts of such consideration cannot
be ascertained, but are a function of antidilution or similar protective
clauses, the Corporation shall be deemed to have received the minimum amounts of
consideration without reference to such clauses.

    

    (C)           If
the minimum amount of consideration payable to the Corporation upon the exercise
or conversion of rights, options or Convertible Securities is reduced over time
or on the occurrence or non-occurrence of specified events other than by reason
of antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is reduced; provided
further, that if the minimum amount of consideration payable to the Corporation
upon the exercise or conversion of such rights, options or Convertible
Securities is subsequently increased, the Effective Price shall be again
recalculated using the increased minimum amount of consideration payable to the
Corporation upon the exercise or conversion of such rights, options or
Convertible Securities.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (D)           No
further adjustment of the Series A Preferred Stock Conversion Price, as adjusted
upon the issuance of such rights, options or Convertible Securities, shall be
made as a result of the actual issuance of Additional Stock or the exercise of
any such rights or options or the conversion of any such Convertible
Securities.  If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire without having been
exercised, the Series A Preferred Stock Conversion Price as adjusted upon the
issuance of such rights, options or Convertible Securities shall be readjusted
to the Series A Preferred Stock Conversion Price which would have been in effect
had an adjustment been made on the basis that the only Additional Stock so
issued were the Additional Stock, if any, actually issued or sold on the
exercise of such rights or options or rights of conversion of such Convertible
Securities, and such Additional Stock, if any, were issued or sold for the
consideration actually received by the Corporation upon such exercise, plus the
consideration, if any, actually received by the Corporation for the granting of
all such rights or options, whether or not exercised, plus the consideration
received for issuing or selling the Convertible Securities actually converted,
plus the consideration, if any, actually received by the Corporation (other than
by cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion of such Convertible Securities, provided that such
readjustment shall not apply to prior conversions of Series
Preferred.

    

    The
“Effective Price” of Additional Stock shall mean the quotient determined by
dividing the total number of shares of Additional Stock issued or sold, or
deemed to have been issued or sold by the Corporation under this Section 3, into
the aggregate consideration received, or deemed to have been received by the
Corporation for such issue under this Section 3, for such shares of
Additional Stock.  In the event that the number of shares of
Additional Common Stock or the Effective Price cannot be ascertained at the time
of issuance, such Additional Stock shall be deemed issued immediately upon the
occurrence of the first event that makes such number of shares or the Effective
Price, as applicable, ascertainable.

    

    (e) Other Distributions.  In
the event the Corporation shall declare a distribution payable in securities of
other persons, evidences of indebtedness issued by the Corporation or other
persons, assets (excluding cash dividends), securities or options or rights not
referred to in Section 3(d), then, in each such case for the purpose of this
Section 3(e), the Holders of the Series A Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock into which their shares of Series A
Preferred Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of the Corporation entitled to
receive such distribution.

    

    (f) Recapitalizations.  If at
any time or from time to time there shall be a recapitalization of the Common
Stock (other than a subdivision, combination, merger or sale of assets
transaction provided for elsewhere in this Section 3 or Section 2) provision
shall be made so that the Holders of the Series A Preferred Stock shall
thereafter be entitled to receive upon conversion of the Series A Preferred
Stock the number of shares of stock or other securities or property of the
Corporation or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization.  In any
case, appropriate adjustment shall be made in the application of the provisions
of this Section 3 with respect to the rights of the Holders of the Series A
Preferred Stock after the recapitalization to the end that the provisions of
this Section 3 (including adjustment of the Series A Conversion Price then in
effect and the number of shares purchasable upon conversion of the Series A
Preferred Stock) shall be applicable after that event as nearly equivalent as
may be practicable.

    

    (g) Treasury Shares.  The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Corporation, if any, and the
disposition of any shares so owned or held shall be considered an issue or sale
of Common Stock.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (h) No Impairment.  The
Corporation shall not, by the amendment of its Articles of Incorporation or
through any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but at all times shall in
good faith assist in the carrying out of all the provisions of this Section 3
and in the taking of all such action as may be necessary or appropriate in
order to protect the conversion rights of the Holders of the Series A Preferred
Stock, against impairment.

    

    (i) Mechanics of
Conversion.  Before any Holder of Series A Preferred Stock shall be
entitled to convert the same into shares of Common Stock, such Holder shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or of any transfer agent for the Series A Preferred Stock,
and shall give written notice to the Corporation at its principal corporate
office of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued.  The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such Holder of Series A Preferred Stock, or
to the nominee or nominees of such Holder, a certificate or certificates for the
number of shares of Common Stock to which such Holder shall be entitled as
aforesaid, together with any cash dividends declared but unpaid on such shares
of Series A Preferred Stock.  In case the number of shares of Series A
Preferred Stock represented by the certificate or certificates surrendered
pursuant to Section 3(a) above exceeds the number of shares converted, the
Corporation shall, upon conversion, execute and deliver to the Holder (at the
expense of the Corporation) a new certificate or certificates for the number of
shares of Series A Preferred Stock surrendered but not converted.  Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of such Series A Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such
date.  If the conversion is in connection with an underwritten
offering of securities registered pursuant to the Securities Act of 1933, as
amended, the conversion may, at the option of any Holder tendering such Series A
Preferred Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive Common Stock upon conversion of such Series A
Preferred Stock shall not be deemed to have converted such Series A Preferred
Stock until immediately prior to the closing of such sale of
securities.

    

    (j) Certificate of
Adjustment.  In each case of an adjustment or readjustment of the
Series A Conversion Price or the number of shares of Common Stock or other
securities issuable upon conversion of the Series A Preferred Stock, the
Corporation, at its expense, shall compute such adjustment or readjustment in
accordance with the provisions of this Section 3, prepare a certificate showing
such adjustment or readjustment and furnish such certificate to each registered
Holder of Series A Preferred Stock.  Such certificate shall set forth
such adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (A) the
consideration received or deemed to be received by the Corporation for any
additional shares of Common Stock issued or sold or deemed to have been issued
or sold, (B) the Series A Conversion Price in effect before and after such
adjustment, (C) the number of additional shares of Common Stock issued or sold
or deemed to have been issued or sold and (D) the type and amount, if any,
of other property which at the time would be received upon conversion of the
Series A Preferred Stock.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (k) Notices of Record
Date.  Upon (i) any taking by the Corporation of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution or (ii)
any Acquisition, Asset Transfer or any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, in each case the Corporation shall
furnish to each Holder of Series A Preferred Stock at least 20 days prior to the
record date specified therein a notice specifying (1) the date on which any such
record is to be taken for the purpose of such dividend or distribution and a
description of such dividend or distribution, (2) the date on which any such
Acquisition, Asset Transfer, dissolution, liquidation or winding up is expected
to become effective and (3) the date, if any, that is to be fixed for
determining the holders of record of Common Stock (or other securities) that
shall be entitled to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such Acquisition, Asset
Transfer, dissolution, liquidation or winding up.

    

    (l) Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Series A Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of Series A Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Series A Preferred Stock, the Corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in best efforts to obtain the requisite stockholder approval of any
necessary amendment to the Articles of Incorporation.

    

    (m) Fractional Shares.  No
fractional shares of Common Stock shall be issued upon conversion of Series A
Preferred Stock.  All shares of Common Stock (including fractions
thereof) issuable upon conversion of more than one share of Series A Preferred
Stock by a Holder thereof shall be aggregated for purposes of determination
whether the conversion would result in the issuance of any fractional
share.  If, after such aggregation, the conversion would result in the
issuance of any fractional share, in lieu of issuing any fractional share, the
Corporation shall round the number of shares of Common Stock to be issued to the
nearest whole number.

    

    4.  Dividend
Rights.

    

    (a)         Holders
of Series A Preferred Stock, in preference to the holders of Common Stock, shall
be entitled to receive, when, as and if declared by the Board of Directors (the
“Board”), but only out of funds that are legally available therefor, cash
dividends at the rate of six percent (6%) of the Original Series A Issue Price
per annum on each outstanding share of Series A Preferred Stock.  Such
dividends shall be payable only when, as and if declared by the Board and shall
be non-cumulative.

    

    (b)         So
long as any shares of Series A Preferred Stock are outstanding, the Corporation
shall not pay or declare any dividend, whether in cash or property, or make any
other distribution on the Common Stock, or purchase, redeem or otherwise acquire
for value any shares of Common Stock until all dividends as set forth in
Section 5(a) above on the Series Preferred shall have been paid or declared and
set apart, except for:

    

    (i) 
          acquisitions of
Common Stock by the Corporation pursuant to agreements which permit the
Corporation to repurchase such shares at cost (or the lesser of cost or fair
market value) upon termination of services to the Corporation;

    

    (ii)           acquisitions
of Common Stock in exercise of the Corporation’s right of first refusal to
repurchase such shares; or

    

    (iii)          distributions
to holders of Common Stock in accordance with Section 2.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (c)           In
the event dividends are paid on any share of Common Stock, the Corporation shall
pay an additional dividend on all outstanding shares of Series A Preferred Stock
in a per share amount equal (on an as-if-converted to Common Stock basis) to the
amount paid or set aside for each share of Common Stock.

    

    5.
Transferability. The Series A Preferred Stock and any shares of Common Stock
issued upon conversion thereof, may only be sold, transferred, assigned, pledged
or otherwise disposed of ("Transfer") in accordance with state and federal
securities laws.  The Corporation shall keep at its principal office a
register of the Series A Preferred Stock.  Upon the surrender of any
certificate representing Series A Preferred Stock at such place, the
Corporation, at the request of the record Holder of such certificate, shall
execute and deliver (at the Corporation’s expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares represented by the surrendered certificate.  Each such new
certificate shall be registered in such name and shall represent such number of
shares as is requested by the Holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate.

    

    6.
Amendment and Waiver.  This Certificate of Designation shall not be
amended, either directly or indirectly or through merger or consolidation with
another entity, in any manner that would alter or change the powers, preferences
or special rights of the Series A Preferred Stock so as to affect them
materially and adversely without the affirmative vote of the Required
Holders.  Any amendment, modification or waiver of any of the terms or
provisions of the Series A Preferred Stock by the Required Holders, whether
prospectively or retroactively effective, shall be binding upon all Holders of
Series A Preferred Stock.

    

    7.
Replacement.  Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered Holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series A Preferred Stock, and in the case of any such loss,
theft or destruction upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory) or in the case
of any such mutilation upon surrender of such certificate, the Corporation, at
its expense, shall execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.

    

    8.
Notices.  Any notice required by the provisions of this Certificate of
Designation shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified; (ii) when sent by confirmed
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day; (iii) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt.  All notices to the
Corporation shall be addressed to the Corporation’s Chief Executive Officer
at the Corporation’s principal place of business on file with the Secretary of
State of the State of Nevada.  All notices to stockholders shall be
addressed to each holder of record at the address of such holder appearing on
the books of the Corporation.

    

    * * * *
*

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to
be executed by Xiaoqun Ye, an Executive Officer of the Corporation, this ___ day
of April, 2010.

    

    
      
        	 
      	
                By:

              	 
      
	 
      	
                Name:

              	
                Xiaoqun
      Ye

              
	 
      	
                Title:

              	
                Chief
      Executive Officer

              

      

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    EXHIBIT
L

     

    
    

    VOTING
AGREEMENT

     

    This
VOTING AGREEMENT (this “Agreement”)
is entered into as of [   ], 2010, by and among Kun Run
Biotechnology, Inc., a Nevada corporation (the “Company”),
the holders of capital stock of the Company listed on Exhibit A hereto
(each, a “Stockholder”
and collectively, the “Stockholders”)
and the Investors listed on the signature pages hereto (each, an “Investor”,
and collectively, the “Investors”).

     

    WHEREAS,
the Company and the Investors have entered into a Securities Purchase Agreement,
dated as of the date hereof (the “Purchase
Agreement”), pursuant to which, among other things, the Company has
agreed to issue and sell to the Investors and the Investors have agreed to
purchase units of the Company consisting of (i) shares of Series A Preferred
Stock of the Company (the “Series A
Preferred”), and (ii) warrants to purchase shares of Series A
Preferred.

     

    WHEREAS,
as of the date hereof, each Stockholder owns (i) the shares of capital stock of
the Company listed opposite such Stockholder’s name on Exhibit A and (ii)
the stock options, warrants or other rights to acquire shares of capital stock
of the Company listed opposite such Stockholder’s name on Exhibit A (“Convertible
Securities”).

     

    WHEREAS,
as a condition to the willingness of the Investors to enter into the Purchase
Agreement and to consummate the transactions contemplated thereby (collectively,
the “Transaction”),
the Investors have required that the Stockholders agree, and in order to induce
the Investors to enter into the Purchase Agreement, the Stockholders have
agreed, to enter into this Agreement with respect to all Shares now owned and
which may hereafter be acquired by the Stockholders.

     

    NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:

     

    
      	
              1.

            	
              Voting
      Agreement.

            

    

     

    1.1         Purchase
Agreement.  Prior to the earlier of the Closing (as defined in
the Purchase Agreement) or the valid termination of the Purchase Agreement
pursuant to Section 6.1 thereto, the Stockholders hereby agree that at any
meeting of the stockholders of the Company, however called, and in any action by
written consent of the Company’s stockholders, the Stockholders shall vote all
shares of capital stock of the Company registered in their respective names or
beneficially owned by them as of the date hereof and any and all other
securities of the Company legally or beneficially acquired by each of the
Stockholders after the date hereof, whether by conversion or exercise of
Convertible Securities or otherwise (hereinafter collectively referred to as the
“Shares”):

     

    (a)          in
favor of the Stockholder Approval (as defined in the Purchase Agreement),
including without limitation the approval of (i) any amended and restated
articles of incorporation or certificate of designation of the Company to be
filed with the Secretary of State of the State of Nevada pursuant to the
Purchase Agreement and (ii) all other transactions contemplated by the Purchase
Agreement as to which the stockholders of the Company are called upon to vote in
favor of or consent to any matter necessary for the consummation of the
transactions contemplated by the Purchase Agreement; and

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)          against
(i) any proposal or any other action or agreement that would result in a breach
of any covenant, representation or warranty or any other obligation or agreement
of the Company, any of its Affiliates or any Stockholders under the Transaction
Documents (as such terms are defined in the Purchase Agreement) or which could
result in any of the conditions to the obligations of the Company, any of its
Affiliates or any Stockholders under the Transaction Documents not being
fulfilled and (ii) any proposal or any other action or agreement, including
without limitation a Competing Transaction (as defined in the Purchase
Agreement) that is intended to, or would reasonably be expected to, impede,
interfere with, delay, postpone, discourage or adversely affect the consummation
of the Closing and all other transactions contemplated by the Purchase
Agreement.

     

    The
Stockholders shall not take or commit or agree to take any action inconsistent
with the foregoing.  The Stockholders acknowledge receipt and review
of a copy of the Purchase Agreement and the other Transaction
Documents.

     

    1.2         Election of
Directors.

     

    (a)          On
and after the Closing (as defined in the Purchase Agreement), on all matters
relating to the election and removal of directors of the Company, the
Stockholders and the Investors hereby agree that at any meeting of the
stockholders of the Company, however called, and in any action by written
consent of the Company’s stockholders, the Stockholders shall vote all Shares
and the Investors shall vote all shares of capital stock of the Company held by
such Investors (“Investor
Shares”) so as to elect members of the Company’s Board of Directors (the
“Board”)  as
follows:

     

    (i)           one
member of the Board designated by Caduceus Asia Partners, LP and its Affiliates
(“OrbiMed”)
so long as OrbiMed beneficially owns at least 5% of the Company’s outstanding
shares of Common Stock on an as-converted basis, who shall initially be Nancy
Chang;

    

    (ii)          one
member of the Board that has no prior affiliation with the Company or any holder
of shares of the Company’s capital stock as of the Closing, which individual
shall be acceptable to OrbiMed, so long as OrbiMed beneficially owns at least 5%
of the Company’s outstanding shares of Common Stock on an as-converted basis;
and

     

    (iii)         one
member of the Board designated by Xueyun Cui, so long as Xueyun Cui beneficially
owns at least 10% of the Company’s outstanding shares of Common Stock on an
as-converted basis, who shall initially be Xueyun Cui.

     

    (b)          Any
vote taken to remove any director elected pursuant to Sections 1.2(a)(i),
1.2(a)(ii) or 1.2(a)(iii), as applicable, or to fill any vacancy created by the
resignation, removal or death of a director elected pursuant to
Sections 1.2(a)(i), 1.2(a)(ii) or 1.2(a)(iii), as applicable, shall also be
subject to the provisions of Sections 1.2(a)(i), 1.2(a)(ii) or 1.2(a)(iii),
as applicable.  Upon the request of any party entitled to designate a
director as provided in Sections 1.2(a)(i), 1.2(a)(ii) or 1.2(a)(iii), as
applicable, each Stockholder and Investor agrees to vote its Shares and Investor
Shares, as applicable, for the removal of such director.

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

     

    1.3         No Liability for Election of
Recommended Director. None of the parties
hereto and no officer, director, stockholder, partner, employee or agent of any
party makes any representation or warranty as to the fitness or competence of
the nominee of any party hereunder to serve on the Board of Directors by virtue
of such party’s execution of this Agreement or by the act of such party in
voting for such nominee pursuant to this Agreement.

     

    
      	
              2.

            	
              Representations and
      Warranties of the
Stockholders.

            

    

     

    Each Stockholder hereby represents and
warrants, severally but not jointly to the Company and each of the Investors as
follows:

    

    2.1         Authority Relative to this
Agreement.  Such Stockholder has all necessary power (if such
Stockholder is an entity), capacity (if such Stockholder is an individual) and
authority to execute and deliver this Agreement, to perform his or its
obligations hereunder and to consummate the transactions contemplated
hereby.  This Agreement has been duly executed and delivered by such
Stockholder and constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms,
except (a) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws
now or hereafter in effect relating to, or affecting generally, the enforcement
of creditors’ and other obligees’ rights and (b) where the remedy of specific
performance or other forms of equitable relief may be subject to certain
equitable defenses and principles and to the discretion of the court before
which the proceeding may be brought.

     

    2.2         No
Conflicts.

     

    (a)          The
execution and delivery of this Agreement by such Stockholder does not, and the
performance of this Agreement by such Stockholder shall not, (i) conflict with
or violate any federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to such Stockholder or by which
the Shares, owned by such Stockholder are bound or affected or (ii) result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the Shares owned by such Stockholder
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which such
Stockholder is a party or by which such Stockholder is bound.

     

    (b)          The
execution and delivery of this Agreement by such Stockholder does not, and the
performance of this Agreement by such Stockholder shall not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental entity by such Stockholder, except for applicable
requirements, if any, of the Securities Exchange Act of 1934, as
amended.

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    2.3         Title to
Shares.  As of the date hereof, each Stockholder owns the
Shares and Convertible Securities listed on Exhibit A hereto, and
each Stockholder is entitled to vote, without restriction, on all matters
brought before holders of capital stock of the Company.  Such Shares
are all the securities of the Company owned, either of record or beneficially,
by each Stockholder.  Such Shares are owned free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on such Stockholder’s voting rights, charges and other
encumbrances of any nature whatsoever (“Encumbrances”).  Except
as set forth in this Agreement, no Stockholder has deposited into a voting trust
or entered into a voting agreement or similar arrangement with respect to any
Shares or appointed or granted any proxy, which appointment or grant is still
effective, with respect to the Shares owned by such Stockholder.

     

    
      	
              3.

            	
              Covenants.

            

    

     

    3.1         No Disposition or
Encumbrance of Stock.  Prior to the earlier of the Closing or
the valid termination of the Purchase Agreement pursuant to Section 6.1 thereto,
each Stockholder hereby covenants and agrees that except as set forth in this
Agreement, such Stockholder shall not (a) sell, transfer, tender, assign,
hypothecate or otherwise dispose of any Shares, deposit into a voting trust or
enter into a voting agreement or similar arrangement with respect to any Shares,
grant a proxy or power of attorney with respect to any Shares, or create or
permit to exist any Encumbrance with respect to the Shares, (b) commit or agree
to take any of the foregoing actions, (c) directly or indirectly, or initiate,
solicit or encourage any person to take actions which could reasonably be
expected to lead to the occurrence of any of the foregoing actions or (d) take
any action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling such Stockholder from performing its obligations under this
Agreement.

     

    3.2         Company
Cooperation.  The Company hereby covenants and agrees that it
will not, and each Stockholder irrevocably and unconditionally acknowledges and
agrees that the Company will not (and waives any rights against the Company in
relation thereto), recognize any Encumbrance or agreement on any of the Shares
subject to this Agreement.

     

    3.3         Disclosure.  Stockholder
hereby agrees that the Company may publish and disclose in any registration
statement (including all documents and schedules filed with the United States
Securities and Exchange Commission (the “SEC”)),
proxy statement, or prospectus filed with any regulatory authority in connection
with the Transaction and any related documents filed with such regulatory
authority and as otherwise required by applicable law, such Stockholder’s
identity and ownership of Shares and the nature of such Stockholder’s
commitments, arrangements and understandings under this Agreement and may
further file this Agreement as an exhibit to a registration statement or
prospectus or in any other filing made by the Company as required by applicable
law or the terms of the Transaction Documents, including with the SEC or other
regulatory authority, relating to the Transaction.

     

    
      	
              4.

            	
              Miscellaneous.

            

    

     

    4.1         Further
Assurances.  Each Stockholder and Investor shall execute and
deliver such further documents and instruments and take all further action as
may be reasonably necessary in order to consummate the transactions contemplated
hereby.

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    4.2         Specific
Performance.  The parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement was not performed in
accordance with the terms hereof and that any Investor (without being joined by
any other Investor) shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or in equity.  Any
Investor shall be entitled to its reasonable attorneys’ fees in any action
brought to enforce this Agreement in which it is the prevailing
party.

     

    4.3         Entire
Agreement.  This Agreement constitutes the entire agreement
among the Company, Investors and Stockholders (other than the Purchase Agreement
and the other Transaction Documents to which the Investors and Stockholders are
parties) with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, among the Company,
Investors and Stockholders with respect to the subject matter
hereof.

     

    4.4         Amendment.  This
Agreement may be amended or modified (or provisions of this Agreement waived)
only upon the written consent of the Company, OrbiMed, and the Stockholders
holding a majority of the Shares.

     

    4.5         Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

     

    4.6         Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law thereof.  Each
party agrees that all Proceedings (as defined in the Purchase Agreement)
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the courts of the State of New York
sitting in New York County or in the United States of America for the Southern
District of New York (the “New York
Courts”).  Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum.  Each party hereto
hereby irrevocably waives personal service of process and consents to process
being served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY HEREBY ACKNOWLEDGES THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASERS ENTERING INTO THIS
AGREEMENT.

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

     

    4.7         Termination.  This
Agreement shall continue in full force and effect from the date hereof through
the earliest of the following dates, on which date it shall terminate in its
entirety:

     

    (a)          ten
(10) years from the date of this Agreement;

     

    (b)          the
date of the closing of an Acquisition or Asset Transfer, as defined in the
Company’s Certificate of Designation, as amended from time to time;

     

    (c)          the
date as of which the parties hereto terminate this Agreement by written consent
of the Company, OrbiMed, and the Stockholders holding a majority of the Shares;
or

     

    (d)          the
date of the valid termination of the Purchase Agreement pursuant to Section 6.1
thereto.

     

    4.8         Successors and
Assigns.  The provisions hereof shall inure to the benefit of,
and be binding upon, the parties hereto and their respective successors,
assigns, heirs, executors and administrators and other legal
representatives.

     

    4.9         Additional
Shares.  In the event that subsequent to the date of this
Agreement any shares or other securities are issued on, or in exchange for, any
of the Shares or Investor Shares by reason of any stock dividend, stock split,
combination of shares, reclassification or the like, such shares or securities
shall be deemed to be Shares or Investor Shares, as the case may be, for
purposes of this Agreement.

     

    4.10      Counterparts.  This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original, but all of which together shall constitute one
instrument.

     

    4.11      Waiver.  No
waivers of any breach of this Agreement extended by any party hereto to any
other party shall be construed as a waiver of any rights or remedies of any
other party hereto or with respect to any subsequent breach.

     

    4.12      Delays or
Omissions.  It is agreed that no delay or omission to exercise
any right, power or remedy accruing to any party, upon any breach, default or
noncompliance  by another party under this Agreement shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring.  It
is further agreed that any waiver, permit, consent or approval of any kind or
character on any party’s part of any breach, default or noncompliance under this
Agreement or any waiver on such party’s part of any provisions or conditions of
the Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing.  All remedies, either under
this Agreement by law, or otherwise afforded to any party, shall be cumulative
and not alternative.

     

    4.13      Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be delivered as set forth in the Purchase
Agreement.

     

    [Signature
Pages Follow]

    
      
         

      

      
        - 6
-

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties have duly executed this Voting Agreement as of the
first date written above.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    THE
      COMPANY:

                                  
	 
	
                                    Kun
      Run Biotechnology, Inc.

                                  
	 
	
                                    By:

                                  	 
      
	 
      	
                                    Name:

                                  
	 
      	
                                    Title:

                                  
	 	 
	
                                    Address:

                                  

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties have
duly executed this Voting Agreement as of the first date written
above.

    

    
      
        
          
            
              	 
      	
                      STOCKHOLDERS:

                    
	 	 
	 
      	
                      Xueyun
      Cui

                    
	 
      	 
      
	 	 
	 
      	
                      Address:

                    

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties have
duly executed this Voting Agreement as of the first date written
above.

    

    
      
        
          
            
              
                
                  
                    	
                            INVESTORS:

                          
	 
	
                            Caduceus
      Asia Partners, LP

                          
	 
      	 
      
	
                            By:

                          	 
      
	 
      	
                            Name:

                          
	 
      	
                            Title:

                          
	 
      	 
      
	
                            Address:

                          

                  

                

              

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A

    

    List
of Stockholders

     

    
      
        	
                Name and Address of
    Stockholder

              	 
      	
                No. of Shares

              	 
      	
                No. of Options

              	 
      	
                No. of Warrants

              
	
                Xueyun
      Cui

              	
                  

              	
                22,522,500

              	
                  

              	
                N/A

              	
                  

              	
                N/A

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