Document:

Exhibit
      10.2

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.

    

    CERTIFICATE
      OF DESIGNATIONS OF PREFERENCES, 

    RIGHTS
      AND LIMITATIONS

    OF
      SERIES A CONVERTIBLE PREFERRED STOCK

    

    The
      undersigned, Jinjiang Wang and Fengxi Lang, do hereby certify that:

     

    1. They
      are
      the President and Secretary, respectively, of China Kangtai Cactus Bio-Tech,
      Inc., a Nevada corporation (the “Company”).

     

    2. The
      Company is authorized to issue 833,333 shares of preferred stock, none of which
      have been previously issued.

     

    3. The
      following resolutions were duly adopted by the Board of Directors:

     

    WHEREAS,
      the Articles of Incorporation of the Company provides for a class of its
      authorized stock known as preferred stock, comprised of 200,000,000 shares,
      $0.001 par value per share, issuable from time to time in one or more
      series;

     

    WHEREAS,
      the Board of Directors of the Company is authorized to fix the dividend rights,
      dividend rate, voting rights, conversion rights, rights and terms of redemption
      and liquidation preferences of any wholly unissued series of preferred stock
      and
      the number of shares constituting any Series and the designation thereof, of
      any
      of them; and

     

    WHEREAS,
      it is the desire of the Board of Directors of the Company, pursuant to its
      authority as aforesaid, to fix the rights, preferences, restrictions and other
      matters relating to a series of the preferred stock, which shall consist of
      up
      to 833,333 shares of the preferred stock which the Company has the authority
      to
      issue, as follows:

     

    WHEREAS,
      the Board of Directors of the Company by unanimous written consent have agreed
      to amend certain provisions of the preferred stock and adopt this Amended and
      Restated Certificate of Designation; and 

     

    NOW,
      THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide
      for
      the issuance of a series of preferred stock for cash or exchange of other
      securities, rights or property and does hereby fix and determine the rights,
      preferences, restrictions and other matters relating to such series of preferred
      stock as follows:

    

    TERMS
      OF PREFERRED STOCK

    

    Section
      1.
      Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Purchase Agreement (as defined below) shall have the meanings given such terms
      in the Purchase Agreement. For the purposes hereof, the following terms shall
      have the following meanings:

     

    “Bankruptcy
      Event”
means
      any of the following events: (a) the Company or any Significant Subsidiary
      (as
      such term is defined in Rule 1.02(s) of Regulation S-X) thereof commences a
      case
      or other proceeding under any bankruptcy, reorganization, arrangement,
      adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
      or
      similar law of any jurisdiction relating to the Company or any Significant
      Subsidiary thereof; (b) there is commenced against the Company or any
      Significant Subsidiary thereof any such case or proceeding that is not dismissed
      within 60 days after commencement; (c) the Company or any Significant Subsidiary
      thereof is adjudicated insolvent or bankrupt or any order of relief or other
      order approving any such case or proceeding is entered; (d) the Company or
      any
      Significant Subsidiary thereof suffers any appointment of any custodian or
      the
      like for it or any substantial part of its property that is not discharged
      or
      stayed within 60 days; (e) the Company or any Significant Subsidiary thereof
      makes a general assignment for the benefit of creditors; (f) the Company or
      any
      Significant Subsidiary thereof calls a meeting of its creditors with a view
      to
      arranging a composition, adjustment or restructuring of its debts; or (g) the
      Company or any Significant Subsidiary thereof, by any act or failure to act,
      expressly indicates its consent to, approval of or acquiescence in any of the
      foregoing or takes any corporate or other action for the purpose of effecting
      any of the foregoing.

    

      CHINA
        KANGTAI CACTUS BIO-TECH, INC. CERTIFICATE OF DESIGNATION

       

    

    
      
        
        

      

      
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    “Closing
      Date”
means
      the date on which the payment of the Purchase Price (as defined herein) by
      the
      Investor to the company is completed pursuant to this Agreement to purchase
      the
      Preferred Stock and Warrants, which shall occur on or before March 21,
      2008.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock"
      means
      the Company's common stock, par value $0.001 per share, and stock of any other
      class into which such shares may hereafter have been reclassified or
      changed.

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries 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.

     

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

     

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

     

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

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
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    “Conversion
      Shares”
means,
      collectively, the shares of Common Stock into which the shares of Series A
      Preferred Stock are convertible in accordance with the terms
      hereof.

     

    “Conversion
      Shares Registration Statement”
means
      a
      registration statement that meets the requirements of the Registration Rights
      Agreement and registers the resale of all Conversion Shares by the Holder,
      who
      shall be named as a “selling stockholder” thereunder, all as provided in the
      Registration Rights Agreement.

     

    “Dilutive
      Issuance”
shall
      have the meaning set forth in Section 7(b) hereof.

     

    “Effective
      Date”
means
      the date that the Conversion Shares Registration Statement is declared effective
      by the Commission.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock or option plan duly adopted
      by a
      majority of the non-employee members of the Board of Directors of the Company
      or
      a majority of the members of a committee of non-employee directors established
      for such purpose, (b) securities upon the exercise of or conversion of any
      securities issued hereunder, and of any convertible securities, options or
      warrants issued and outstanding on the date of this Certificate of Designations,
      provided that such securities have not been amended since the date of this
      Certificate of Designations to increase the number of such securities, and
      (c)
      securities issued pursuant to acquisitions or strategic transactions, provided
      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 a 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.

     

    “Fundamental
      Transaction”
shall
      have the meaning set forth in Section 7(f)(iv) hereof.

     

    “Holder”
shall
      have the meaning given such term in Section 2 hereof.

     

    “Junior
      Securities”
means
      the Common Stock and all other equity or equity equivalent securities of the
      Company other than those securities that are explicitly senior in rights or
      liquidation preference to the Series A Preferred Stock. 

     

    “Original
      Issue Date”
shall
      mean the date of the first issuance of any shares of the Series A Preferred
      Stock regardless of the number of transfers of any particular shares of Series
      A
      Preferred Stock and regardless of the number of certificates which may be issued
      to evidence such Series A Preferred Stock.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        PAGE
          3 OF 17

        
          

        

      

      
        
        

      

    

     

    “Person”
means
      a
      Company, an association, a partnership, a limited liability company, a business
      association, an individual, a government or political subdivision thereof or
      a
      governmental agency.

     

    “Purchase
      Agreement”
means
      the Preferred Stock Purchase Agreement, dated as of March 21, 2008, to which
      the
      Company and the original Holders are parties, as amended, modified or
      supplemented from time to time in accordance with its terms, a copy of which
      is
      on file at the principal offices of the Company.

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated as of the Closing Date, to which the
      Company and the original Holder are parties, as amended, modified or
      supplemented from time to time in accordance with its terms.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Series
      A Preferred Stock”
shall
      have the meaning set forth in Section 2.

     

    “Subscription
      Amount”
shall
      mean the Five Hundred Thousand Dollars ($500,000.00) to be paid for the Series
      A
      Preferred Stock purchased pursuant to the Purchase Agreement, in United States
      Dollars and in immediately available funds.

     

    “Subsidiary”
shall
      mean a Company, limited liability company, partnership, joint venture or other
      business entity of which the Company owns beneficially or of record more than
      19% of the equity interest.

     

    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the Nasdaq SmallCap Market, the American
      Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or
      the
      OTC Bulletin Board.

     

    “Transaction
      Documents”
shall
      have the meaning set forth in the Purchase Agreement.

     

    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the primary Trading Market on which the Common
      Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based
      on
      a Trading Day from 9:30 a.m. EST to 4:02 p.m. Eastern Time) using the VAP
      function; (b) if the Common Stock is not then listed or quoted on the
      Trading Market and if prices for the Common Stock are then reported in the
“Pink
      Sheets” published by the National Quotation Bureau Incorporated (or a similar
      organization or agency succeeding to its functions of reporting prices), the
      most recent bid price per share of the Common Stock so reported; or (c) in
      all other cases, the fair market value of a share of Common Stock as determined
      by a nationally recognized-independent appraiser selected in good faith by
      Purchasers holding a majority of the principal amount of Series A Preferred
      Stock then outstanding.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
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    Section
      2.
      Designation,
      Amount and Par Value.
      The
      series of preferred stock shall be designated as the Company’s Series A
      Convertible Preferred Stock (the “Series
      A Preferred Stock or “Preferred Stock”)
      and
      the number of shares so designated shall be (which shall not be subject to
      increase without the consent of all of the holders of the Series A Preferred
      Stock (each a “Holder”
and
      collectively, the “Holders”).
      Each
      share of Series A Preferred Stock shall have a par value of $0.001 per share.
      Capitalized terms not otherwise defined herein shall have the meaning given
      such
      terms in Section 1 hereof.

     

    Section
      3.
      Dividends
      and Other Distributions.
      No
      dividends shall be payable with respect to the Series A Preferred Stock. No
      dividends shall be payable with respect to the Common Stock while the Series
      A
      Preferred Stock is outstanding. The Common Stock shall not be redeemed while
      the
      Series A Preferred Stock is outstanding.

     

    Section
      4.
      Voting
      Rights.
      The
      Series A Preferred Stock shall have no voting rights. However, so long as any
      shares of Series A Preferred Stock are outstanding, the Company shall not,
      without the affirmative approval of the Holders of the shares of the Series
      A
      Preferred Stock then outstanding, (a) alter or change adversely the powers,
      preferences or rights given to the Series A Preferred Stock or alter or amend
      this Certificate of Designation, (b) authorize or create any class of stock
      ranking as to dividends or distribution of assets upon a Liquidation (as defined
      in Section 5) senior to or otherwise pari passu with the Series A Preferred
      Stock, or any of preferred stock possessing greater voting rights or the right
      to convert at a more favorable price than the Series A Preferred Stock, (c)
      amend its certificate or articles of incorporation or other charter documents
      in
      breach of any of the provisions hereof, (d) increase the authorized number
      of
      shares of Series A Preferred Stock, or (e) enter into any agreement with respect
      to the foregoing.

     

    Section
      5.
      Liquidation.
      Upon
      any liquidation, dissolution or winding-up of the Company, whether voluntary
      or
      involuntary (a “Liquidation”),
      the
      Holders shall be entitled to receive out of the assets of the Company, whether
      such assets are capital or surplus, for each share of Series A Preferred Stock
      an amount equal to $0.60 (the “Liquidation
      Value”)
      before
      any distribution or payment shall be made to the holders of any Junior
      Securities, and if the assets of the Company shall be insufficient to pay in
      full such amounts, then the entire assets to be distributed to the Holders
      shall
      be distributed among the Holders ratably in accordance with the respective
      amounts that would be payable on such shares if all amounts payable thereon
      were
      paid in full. At the election of a Holder made by written notice delivered
      to
      the Company at least two (2) business days prior to the effective date of the
      subject transaction, as to the shares of Series A Preferred Stock held by such
      Holder, a Fundamental Transaction (excluding for purposes of this Section 5
      any
      Fundamental Transaction described in Section 7(f)(iv)(A) or 7(f)(iv)(B)) or
      Change of Control shall be treated as a Liquidation. 

     

    Section
      6.
      Conversion.

     

    a) Conversions
      at Option of Holder.
      Each
      share of Series A Preferred Stock shall be initially convertible (subject to
      the
      limitations set forth in Section 6(c)), into one (1) share of Common Stock
      (as
      adjusted as provided below, the “Conversion
      Ratio”)
      at the
      option of the Holders, at any time and from time to time from and after the
      Original Issue Date. Holders shall effect conversions by providing the Company
      with the form of conversion notice attached hereto as Annex
      A
      (a
“Notice
      of Conversion”)
      as
      fully and originally executed by the Holder, together with the delivery by
      the
      Holder to the Company of the stock certificate(s) representing the number of
      shares of Series A Preferred Stock so converted, with such stock certificates
      being duly endorsed in full for transfer to the Company or with an applicable
      stock power duly executed by the Holder in the manner and form as deemed
      reasonable by the transfer agent of the Common Stock. Each Notice of Conversion
      shall specify the number of shares of Series A Preferred Stock to be converted,
      the number of shares of Series A Preferred Stock owned prior to the conversion
      at issue, the number of shares of Series A Preferred Stock owned subsequent
      to
      the conversion at issue, the stock certificate number and the shares of Series
      A
      Preferred Stock represented thereby which are accompanying the Notice of
      Conversion, and the date on which such conversion is to be effected, which
      date
      may not be prior to the date the Holder delivers such Notice of Conversion
      and
      the applicable stock certificates to the Company by overnight delivery service
      (the “Conversion
      Date”).
      If no
      Conversion Date is specified in a Notice of Conversion, the Conversion Date
      shall be the Trading Day immediately following the date that such Notice of
      Conversion and applicable stock certificates are received by the Company. The
      calculations and entries set forth in the Notice of Conversion shall control
      in
      the absence of manifest or mathematical error. Shares of Series A Preferred
      Stock converted into Common Stock in accordance with the terms hereof shall
      be
      canceled and may not be reissued. The initial value of the Series A Preferred
      Stock on the Conversion Date shall be equal to $0.60 per share (as adjusted
      pursuant to Section 7 or otherwise as provided herein, the “Conversion
      Value”).
      If
      the initial Conversion Value is adjusted pursuant to Section 7 or as otherwise
      provided herein, the Conversion Ratio shall likewise be adjusted and the new
      Conversion Ratio shall equal the Liquidation Value divided by the new Conversion
      Value. Thereafter, subject to any further adjustments in the Conversion Value,
      each share of Series A Preferred Stock shall be initially convertible into
      that
      number of shares of Common Stock equal to the new Conversion Ratio.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
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    b) Automatic
      Conversion Upon Change of Control.

     

    i. Subject
      to Section 5, all of the outstanding shares of Series A Preferred Stock shall
      be
      automatically converted into the Conversion Shares upon the close of business
      on
      the business day immediately preceding the date fixed for consummation of any
      transaction resulting in a Change of Control of the Company (an "Automatic
      Conversion Event"). A "Change in Control" means a consolidation or merger of
      the
      Company with or into another company or entity in which the Company is not
      the
      surviving entity or the sale of all or substantially all of the assets of the
      Company to another company or entity not controlled by the then existing
      stockholders of the Company in a transaction or series of transactions. The
      Company shall not be obligated to issue certificates evidencing the Conversion
      Shares unless certificates evidencing the shares of Series A Preferred Stock
      so
      converted are either delivered to the Company or its transfer agent or the
      holder notifies the Company or its transfer agent in writing that such
      certificates have been lost, stolen, or destroyed and executes an agreement
      satisfactory to the Company to indemnify the Company from any loss incurred
      by
      it in connection therewith. Upon the conversion of the Series A Preferred Stock
      pursuant to this Section 6(b)(i), the Company shall promptly send written notice
      thereof, by hand delivery or by overnight delivery, to the holder of record
      of
      all of the Series A Preferred Stock at its address then shown on the records
      of
      the Company, which notice shall state that certificates evidencing shares of
      Series A Preferred Stock must be surrendered at the office of the Company (or
      of
      its transfer agent for the Common Stock, if applicable).

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
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    c) Beneficial
      Ownership Limitation.
      Except
      as provided in Section 6(b) above, the Company shall not effect any conversion
      of the Series A Preferred Stock, and the Holder shall not have the right to
      convert any portion of the Series A Preferred Stock to the extent that after
      giving effect to such conversion, the Holder (together with the Holder’s
      affiliates), as set forth on the applicable Notice of Conversion, would
      beneficially own in excess of 4.9% of the number of shares of the Common Stock
      outstanding immediately after giving effect to such conversion.  For
      purposes of the foregoing sentence, the number of shares of Common Stock
      beneficially owned by the Holder and its affiliates shall include the number
      of
      shares of Common Stock issuable upon conversion of the Series A Preferred Stock
      with respect to which the determination of such sentence is being made, but
      shall exclude the number of shares of Common Stock which would be issuable
      upon
      (A) conversion of the remaining, nonconverted shares of Series A Preferred
      Stock
      beneficially owned by the Holder or any of its affiliates, so long as such
      shares of Series A Preferred Stock are not convertible within sixty (60) days
      from the date of such determination, and (B) exercise or conversion of the
      unexercised or nonconverted portion of any other securities of the Company
      (including the Warrants) subject to a limitation on conversion or exercise
      analogous to the limitation contained herein beneficially owned by the Holder
      or
      any of its affiliates, so long as such other securities of the Company are
      not
      exercisable nor convertible within sixty (60) days from the date of such
      determination.  For purposes of this Section 6(c), in determining the
      number of outstanding shares of Common Stock, the Holder may rely on the number
      of outstanding shares of Common Stock as reflected in the most recent of the
      following: (A) the Company’s most recent quarterly reports, Form 10-Q, Form
      10-QSB, Annual Reports, Form 10-K, or Form 10-KSB, as the case may be, as filed
      with the Commission under the Exchange Act (B) a more recent public announcement
      by the Company or (C) any other written notice by the Company or the Company’s
      transfer agent setting forth the number of shares of Common Stock
      outstanding.  Upon the written or oral request of the Holder, the Company
      shall within two (2) Trading Days confirm orally and in writing to the Holder
      the number of shares of Common Stock then outstanding.  In any case, the
      number of outstanding shares of Common Stock shall be determined after giving
      effect to the conversion or exercise of securities of the Company, including
      the
      Series A Preferred Stock, by the Holder or its affiliates since the date as
      of
      which such number of outstanding shares of Common Stock was publicly reported
      by
      the Company. This Section 6(c) may be waived or amended only with the consent
      of
      the Holders of all of the Series A Preferred Stock and the consent of the
      holders of a majority of the shares of outstanding Common Stock of the Company
      who are not Affiliates. For the purpose of the immediately preceding sentence,
      the term “Affiliate” shall mean any person: (a) that directly or indirectly,
      through one or more intermediaries controls, or is controlled by, or is under
      common control with the Company, or (b) who beneficially owns (i) any shares
      of
      Series A Preferred Stock, or (ii) the Company’s Common Stock Purchase Warrant(s)
      dated March 21, 2008. For purposes of this Section 6(c), beneficial ownership
      shall be calculated in accordance with Section 13(d) of the Exchange
      Act.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
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    d) Mechanics
      of Conversion

     

    i. Delivery
      of Certificate Upon Conversion.
      Except
      as otherwise set forth herein, not later than three Trading Days after each
      Conversion Date (the “Share
      Delivery Date”),
      the
      Company shall deliver to the Holder (A) a certificate or certificates which,
      after the Effective Date, shall be free of restrictive legends and trading
      restrictions (other than those required by the Purchase Agreement) representing
      the number of shares of Common Stock being acquired upon the conversion of
      shares of Series A Preferred Stock, and (B) a bank check in the amount of
      accrued and unpaid dividends (if the Company has elected or is required to
      pay
      accrued dividends in cash). After the Effective Date, the Company shall, upon
      request of the Holder, deliver any certificate or certificates required to
      be
      delivered by the Company under this Section electronically through the
      Depository Trust Company or another established clearing Company performing
      similar functions. If in the case of any Notice of Conversion such certificate
      or certificates are not delivered to or as directed by the applicable Holder
      by
      the third Trading Day after the Conversion Date, the Holder shall be entitled
      to
      elect by written notice to the Company at any time on or before its receipt
      of
      such certificate or certificates thereafter, to rescind such conversion, in
      which event the Company shall immediately return the certificates representing
      the shares of Series A Preferred Stock tendered for conversion.

     

    ii. Obligation
      Absolute; Partial Liquidated Damages.
      The
      Company’s obligations to issue and deliver the Conversion Shares upon conversion
      of Series A Preferred Stock in accordance with the terms hereof are absolute
      and
      unconditional, irrespective of any action or inaction by the Holder to enforce
      the same, any waiver or consent with respect to any provision hereof, the
      recovery of any judgment against any Person or any action to enforce the same,
      or any setoff, counterclaim, recoupment, limitation or termination, or any
      breach or alleged breach by the Holder or any other Person of any obligation
      to
      the Company or any violation or alleged violation of law by the Holder or any
      other person, and irrespective of any other circumstance which might otherwise
      limit such obligation of the Company to the Holder in connection with the
      issuance of such Conversion Shares. In the event a Holder shall elect to convert
      any or all of its Series A Preferred Stock, the Company may not refuse
      conversion based on any claim that such Holder or any one associated or
      affiliated with the Holder of has been engaged in any violation of law,
      agreement or for any other reason, unless, an injunction from a court, on
      notice, restraining and or enjoining conversion of all or part of this Series
      A
      Preferred Stock shall have been sought and obtained and the Company posts a
      surety bond for the benefit of the Holder in the amount of 150% of the
      Conversion Value of Series A Preferred Stock outstanding, which is subject
      to
      the injunction, which bond shall remain in effect until the completion of
      arbitration/litigation of the dispute and the proceeds of which shall be payable
      to such Holder to the extent it obtains judgment. 

     

    iii. Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Conversion.
      If the
      Company fails to deliver to the Holder such certificate or certificates pursuant
      to Section 6(d)(i) by a Share Delivery Date, and if after such Share Delivery
      Date the Holder purchases (in an open market transaction or otherwise) Common
      Stock to deliver in satisfaction of a sale by such Holder of the Conversion
      Shares which the Holder was entitled to receive upon the conversion relating
      to
      such Share Delivery Date (a “Buy-In”),
      then
      the Company shall pay in cash to the Holder the amount by which (x) the Holder's
      total purchase price (including brokerage commissions, if any) for the Common
      Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
      of Common Stock that such Holder was entitled to receive from the conversion
      at
      issue multiplied by (2) the price at which the sell order giving rise to such
      purchase obligation was executed. For example, if the Holder purchases Common
      Stock having a total purchase price of $11,000 to cover a Buy-In with respect
      to
      an attempted conversion of shares of Series A Preferred Stock with respect
      to
      which the aggregate sale price giving rise to such purchase obligation is
      $10,000, under clause (A) of the immediately preceding sentence the Company
      shall be required to pay the Holder $1,000. The Holder shall provide the Company
      written notice indicating the amounts payable to the Holder in respect of the
      Buy-In, together with applicable confirmations and other evidence reasonably
      requested by the Company. Nothing herein shall limit a Holder’s right to pursue
      any other remedies available to it hereunder, at law or in equity including,
      without limitation, a decree of specific performance and/or injunctive relief
      with respect to the Company's failure to timely deliver certificates
      representing shares of Common Stock upon conversion of the shares of Series
      A
      Preferred Stock as required pursuant to the terms hereof.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
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    iv. Reservation
      of Shares Issuable Upon Conversion.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock solely for the purpose of
      issuance upon conversion of the Series A Preferred Stock, each as herein
      provided, free from preemptive rights or any other actual contingent purchase
      rights of persons other than the Holders, not less than such number of shares
      of
      the Common Stock as shall (subject to any additional requirements of the Company
      as to reservation of such shares set forth in the Purchase Agreement) be
      issuable (taking into account the adjustments and restrictions of Section 7)
      upon the conversion of all outstanding shares of Series A Preferred Stock.
      The
      Company covenants that all shares of Common Stock that shall be so issuable
      shall, upon issue, be duly and validly authorized, issued and fully paid,
      nonassessable and, if the Conversion Shares Registration Statement is then
      effective under the Securities Act, registered for public sale in accordance
      with such Conversion Shares Registration Statement.

     

    v. Fractional
      Shares.
      Upon a
      conversion hereunder, the Company shall not be required to issue stock
      certificates representing fractions of shares of the Common Stock.

     

    vi. Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of the
      Series A Preferred Stock shall be made without charge to the Holders thereof
      for
      any documentary stamp or similar taxes that may be payable in respect of the
      issue or delivery of such certificate, provided that the Company shall not
      be
      required to pay any tax that may be payable in respect of any transfer involved
      in the issuance and delivery of any such certificate upon conversion in a name
      other than that of the Holder of such shares of Series A Preferred Stock so
      converted and the Company shall not be required to issue or deliver such
      certificates unless or until the person or persons requesting the issuance
      thereof shall have paid to the Company the amount of such tax or shall have
      established to the satisfaction of the Company that such tax has been
      paid.

     

    Section
      7.
       Certain
      Adjustments.

    

    a) Stock
      Dividends and Stock Splits.
      If the
      Company, at any time while the Series A Preferred Stock is outstanding: (A)
      shall pay a stock dividend or otherwise make a distribution or distributions
      on
      shares of its Common Stock or any other equity or equity equivalent securities
      payable in shares of Common Stock (which, for avoidance of doubt, shall not
      include any shares of Common Stock issued by the Company pursuant to this Series
      A Preferred Stock), (B) subdivide outstanding shares of Common Stock into a
      larger number of shares, (C) combine (including by way of reverse stock split)
      outstanding shares of Common Stock into a smaller number of shares, or (D)
      issue
      by reclassification of shares of the Common Stock any shares of capital stock
      of
      the Company, then the Conversion Value shall be multiplied by a fraction of
      which the numerator shall be the number of shares of Common Stock (excluding
      treasury shares, if any) outstanding before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding after
      such
      event. Any adjustment made pursuant to this Section shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution and shall become effective immediately
      after the effective date in the case of a subdivision, combination or
      re-classification.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        PAGE
          9 OF 17

        
          

        

      

      
        
        

      

    

     

    b) Price
      Adjustment. From
      the
      date hereof until such time as no Purchaser holds any of the Securities, the
      Company closes on the sale of a note or notes, shares of Common Stock, or shares
      of any class of Preferred Stock at a price per share of Common Stock, or with
      a
      conversion right to acquire Common Stock at a price per share of Common Stock,
      that is less than the Conversion Price (as adjusted to the capitalization per
      share as of the Closing Date, following any stock splits, stock dividends,
      or
      the like) (collectively, the “Subsequent Conversion Price”), the Company shall
      make a post-Closing adjustment in the Conversion Price so that the effective
      price per share paid by the Investor is adjusted to a price determined by
      multiplying such Conversion Price by a fraction, the numerator of which shall
      be
      the number of shares of Common Stock Outstanding (defined below) immediately
      prior to such issuance plus the number of shares of Common Stock that the
      aggregate consideration received by the Company for such issuance would purchase
      at such Conversion Price; and the denominator of which shall be the number
      of
      shares of Common Stock Outstanding (as defined below) immediately prior to
      such
      issuance plus the number of shares issued at such issuance. For purposes of
      this
Section
      7,
      the
      term “Common Stock Outstanding” shall mean and include the following: (1)
      outstanding Common Stock, (2) Common Stock issuable upon conversion of
      outstanding Preferred Stock, (3) Common Stock issuable upon exercise of
      outstanding warrants. Shares described in (1) through (4) above shall be
      included whether vested or unvested, whether contingent or non-contingent and
      whether exercisable or not yet exercisable.

     

    c) Subsequent
      Equity Sales.
      From
      the date hereof until such time as no Purchaser holds any of the Securities,
      the
      Company shall be prohibited from effecting or entering into an agreement to
      effect any Subsequent Financing involving a “Variable Rate Transaction” or an
“MFN Transaction” (each as defined below). The term “Variable Rate Transaction”
shall mean a transaction in which the Company issues or sells (i) any debt
      or
      equity securities that are convertible into, exchangeable or exercisable for,
      or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock.
      The
      term “MFN Transaction” shall mean a transaction in which the Company issues or
      sells any securities in a capital raising transaction or series of related
      transactions which grants to an investor the right to receive additional shares
      based upon future transactions of the Company on terms more favorable than
      those
      granted to such investor in such offering. Any Purchaser shall be entitled
      to
      obtain injunctive relief against the Company to preclude any such issuance,
      which remedy shall be in addition to any right to collect damages.
      Notwithstanding the foregoing, this Section 6.184 shall not apply in respect
      of
      an Exempt Issuance, except that no Variable Rate Transaction or MFN Transaction
      shall be an Exempt Issuance, nor shall this Section 6.14 prevent the Company
      from potentially granting anti-dilution protection to any potential future
      investors in the Company.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        PAGE
          10 OF 17

        
          

        

      

      
        
        

      

    

     

    d) Price
      Adjustment Based on Earnings Per Share.
      In the
      event the Company earns between $0.0670 and $0.0335 (50% Decline) per share
      (where such earnings in this paragraph shall always be defined as earnings
      on a
      pre tax fully diluted basis (including dilution from any options, warrants
      and
      convertible securities) as reported for the audited sixth months ended June
      30,
      2008 from continuing operations before any non-cash items the then current
      Conversion Price to the Investor at the time the audited numbers are reported
      to
      the SEC shall be decrease proportionately by 0% if the pre tax earnings (for
      first six months ended June 30, 2008) are $0.0670 per share or greater and
      by
      50% if the pre tax earnings (for first six months ended June 30, 2008) are
      $0.0335 per share (50% decrease). For example if the earnings are $ 0.0536
      per
      share or less (20% Decline) then the then current Conversion Price to the
      investor shall be reduced by 20%. Such adjustment shall be made automatically
      within five business days of the audited numbers being reported to the SEC.
      

     

    In
      the
      event the Company earns between $0.1559 and $0.0780 (50% Decline) per share
      (where such earnings in this paragraph shall always be defined as earnings
      on a
      pre tax fully diluted basis (including dilution from any options, warrants
      and
      convertible securities) as reported for the audited fiscal year ending 2008
      from
      continuing operations before any non-cash items the then current Conversion
      Price to the Investor at the time the audited numbers are reported to the SEC
      shall be decrease proportionately by 0% if the pre tax earnings are $0.1559
      per
      share or greater and by 50% if the pre tax earnings are $0.0780 per share (50%
      decrease). For example if the earnings are $ 0.1247 per share or less (20%
      Decline) then the then current Conversion Price to the investor shall be reduced
      by 20%. Such adjustment shall be made automatically within five business days
      of
      the audited numbers being reported to the SEC. 

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        PAGE
          11 OF 17

        
          

        

      

      
        
        

      

    

     

    e) Pro
      Rata Distributions.
      If the
      Company, at any time while Series A Preferred Stock is outstanding, shall
      distribute to all holders of Common Stock (and not to Holders) evidences of
      its
      indebtedness or assets or rights or warrants to subscribe for or purchase any
      security, then in each such case the Conversion Value shall be determined by
      multiplying such Conversion Value in effect immediately prior to the record
      date
      fixed for determination of stockholders entitled to receive such distribution
      by
      a fraction of which the denominator shall be the VWAP determined as of the
      record date mentioned above, and of which the numerator shall be such VWAP
      on
      such record date less the then fair market value at such record date of the
      portion of such assets or evidence of indebtedness so distributed applicable
      to
      one outstanding share of the Common Stock as determined by the Board of
      Directors in good faith. In either case the adjustments shall be described
      in a
      statement provided to the Holders of the portion of assets or evidences of
      indebtedness so distributed or such subscription rights applicable to one share
      of Common Stock. Such adjustment shall be made whenever any such distribution
      is
      made and shall become effective immediately after the record date mentioned
      above.

     

    f) Calculations.
      All
      calculations under this Section 7 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. 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 Company, and the description of any such shares of Common
      Stock shall be considered on issue or sale of Common Stock. For purposes of
      this
      Section 7, the number of shares of Common Stock deemed to be issued and
      outstanding as of a given date shall be the sum of the number of shares of
      Common Stock (excluding treasury shares, if any) actually issued and
      outstanding.

     

    g) Notice
      to Holders.

     

    i. Adjustment
      to Conversion Price.
      Whenever the Conversion Value is adjusted pursuant to any of this Section 7,
      the
      Company shall promptly mail to each Holder a notice setting forth the Conversion
      Value after such adjustment and setting forth a brief statement of the facts
      requiring such adjustment. If the Company issues a variable rate security,
      despite the prohibition thereon in the Purchase Agreement, the Company shall
      be
      deemed to have issued Common Stock or Common Stock Equivalents at the lowest
      possible conversion or exercise price at which such securities may be converted
      or exercised in the case of a Variable Rate Transaction (as defined in the
      Purchase Agreement), or the lowest possible adjustment price in the case of
      an
      MFN Transaction (as defined in the Purchase Agreement).

     

    ii. Notices
      of Other Events.
      If (A)
      the Company shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Company shall declare a redemption of the Common Stock; (C)
      the
      Company shall authorize the granting to all holders of the Common Stock rights
      or warrants to subscribe for or purchase any shares of capital stock of any
      class or of any rights; (D) the approval of any stockholders of the Company
      shall be required in connection with any reclassification of the Common Stock
      or
      any Fundamental Transaction, (E) the
      Company shall authorize the voluntary or involuntary dissolution, liquidation
      or
      winding up of the affairs of the Company; then in each case, the Company shall
      cause to be filed at each office or agency maintained for the purpose of
      conversion of the Series A Preferred Stock, and shall cause to be mailed
      to
      the Holders at their last addresses as they shall appear upon the stock
      books of
      the
      Company, at least 30 calendar days prior to the applicable record or effective
      date hereinafter specified, a notice stating (x)
      the
      date on which a record is to be taken for the purpose of such dividend,
      distribution, redemption, rights or warrants, or if a record is not to be taken,
      the date as of which the holders of the Common Stock of record to be entitled
      to
      such dividend, distributions, redemption, rights or warrants are to be
      determined or (y) the date on which such reclassification is expected to become
      effective or close, and the date as of which it is expected that holders of
      the
      Common Stock of record shall be entitled to exchange their shares of the Common
      Stock for securities, cash or other property deliverable upon such
      reclassification or Fundamental Transaction; provided,
      that
      the failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        PAGE
          12 OF 17

        
          

        

      

      
        
        

      

    

     

    iii. Exempt
      Issuance.
      Notwithstanding the foregoing, no adjustment will be made under this Section
      7
      in respect of an Exempt Issuance.

     

    iv. Fundamental
      Transaction.
      If, at
      any time while this Series A Preferred Stock is outstanding, (A) the Company
      effects any merger or consolidation of the Company with or into another Person,
      (B) the Company effects any sale of all or substantially all of its assets
      in
      one or a series of related transactions, (C) any tender offer or exchange offer
      (whether by the Company or another Person) is completed pursuant to which
      holders of Common Stock are permitted to tender or exchange their shares for
      other securities, cash or property, or (D) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property (in any such case, a “Fundamental
      Transaction”),
      then
      upon any subsequent conversion of this Series A Preferred Stock, the Holder
      shall have the right to receive, for each Conversion Share that would have
      been
      issuable upon such conversion absent such Fundamental Transaction, the same
      kind
      and amount of securities, cash or property as it would have been entitled to
      receive upon the occurrence of such Fundamental Transaction if it had been,
      immediately prior to such Fundamental Transaction, the holder of one share
      of
      Common Stock (the “Alternate
      Consideration”).
      For
      purposes of any such conversion, the determination of the Conversion Price
      shall
      be appropriately adjusted to apply to such Alternate Consideration based on
      the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Conversion Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any conversion of this Series A Preferred Stock following such
      Fundamental Transaction. To the extent necessary to effectuate the foregoing
      provisions, any successor to the Company or surviving entity in such Fundamental
      Transaction shall file a new Certificate of Designations with the same terms
      and
      conditions and issue to the Holder new preferred stock consistent with the
      foregoing provisions and evidencing the Holder’s right to convert such preferred
      stock into Alternate Consideration. The terms of any agreement pursuant to
      which
      a Fundamental Transaction is effected shall include terms requiring any such
      successor or surviving entity to comply with the provisions of this paragraph
      (f)(iv) and insuring that this Series A Preferred Stock (or any such replacement
      security) will be similarly adjusted upon any subsequent transaction analogous
      to a Fundamental Transaction.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        PAGE
          13 OF 17

        
          

        

      

      
        
        

      

    

     

    Section
      8.
       Miscellaneous.
      

     

    a) Notices.
      Any and
      all notices or other communications or deliveries to be provided by the Holders
      hereunder, including, without limitation, any Notice of Conversion, shall be
      in
      writing and delivered personally, by facsimile, sent by a nationally recognized
      overnight courier service, addressed to the Company, at the address provided
      in
      the Purchase Agreement, facsimile number +86 451 57351551,
      Attn: Jinjiang
      Wang or such other address or facsimile number as the Company may specify for
      such purposes by notice to the Holders delivered in accordance with this
      Section. Any and all notices or other communications or deliveries to be
      provided by the Company hereunder shall be in writing and delivered personally,
      by facsimile, sent by a nationally recognized overnight courier service
      addressed to each Holder at the facsimile telephone number or address of such
      Holder appearing on the books of the Company, or if no such facsimile telephone
      number or address appears, at the principal place of business of the Holder.
      Any
      notice or other communication or deliveries hereunder shall be deemed given
      and
      effective on the earliest of (i) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile telephone number
      specified in this Section prior to 5:30 p.m. (New York City time), (ii) the
      date
      after the date of transmission, if such notice or communication is delivered
      via
      facsimile at the facsimile telephone number specified in this Section later
      than
      5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New
      York
      City time) on such date, (iii) the second Business Day following the date of
      mailing, if sent by nationally recognized overnight courier service, or (iv)
      upon actual receipt by the party to whom such notice is required to be
      given. 

     

    b) Absolute
      Obligation.
      Except
      as expressly provided herein, no provision of this Certificate of Designation
      shall alter or impair the obligation of the Company, which is absolute and
      unconditional, to pay the liquidated damages (if any) on, the shares of Series
      A
      Preferred Stock at the time, place, and rate, and in the coin or currency,
      herein prescribed. 

     

    c) Lost
      or Mutilated Preferred Stock Certificate.
      If a
      Holder’s Series A Preferred Stock certificate shall be mutilated, lost, stolen
      or destroyed, the Company shall execute and deliver, in exchange and
      substitution for and upon cancellation of a mutilated certificate, or in lieu
      of
      or in substitution for a lost, stolen or destroyed certificate, a new
      certificate for the shares of Series A Preferred Stock so mutilated, lost,
      stolen or destroyed but only upon receipt of evidence of such loss, theft or
      destruction of such certificate, and of the ownership thereof, and indemnity,
      if
      requested, all reasonably satisfactory to the Company.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        PAGE
          14 OF 17

        
          

        

      

      
        
        

      

    

     

    d) Next
      Business Day.
      Whenever any payment or other obligation hereunder shall be due on a day other
      than a Business Day, such payment shall be made on the next succeeding Business
      Day.

     

    e) Headings.
      The
      headings contained herein are for convenience only, do not constitute a part
      of
      this Certificate of Designations and shall not be deemed to limit or affect
      any
      of the provisions hereof.

     

    RESOLVED,
      FURTHER,
      that
      the Chairman, the president or any vice-president, and the secretary or any
      assistant secretary, of the Company be and they hereby are authorized and
      directed to prepare and file a Certificate of Designation of Preferences, Rights
      and Limitations in accordance with the foregoing resolution and the provisions
      of Nevada law.

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        PAGE
          15 OF 17

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the undersigned have executed this Certificate this 21st day
      of
      March 2008.

     

    
      	 	 	 	 
	/s/
              jinjiang
              Wang	 	 	/s/
              Fengxi
              Lang
	
              

              Name:
                Jinjiang Wang

              Title:
                President and Chief Executive Officer

            	 	 	
              

              Name:
                Fengxi Lang

              Title:
                Secretary

            

    

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

    
      
        
        

      

      
        PAGE
          16 OF 17

        
          

        

      

      
        
        

      

    

     

    ANNEX
      A

    

    NOTICE
      OF
      CONVERSION

    

    (TO
      BE
      EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES A
      PREFERRED STOCK)

    

    The
      undersigned hereby elects to convert the number of shares of Series A
      Convertible Preferred Stock indicated below, into shares of common stock, par
      value $0.001 per share (the "Common
      Stock"),
      of
      China Kangtai Cactus Bio-Tech, Inc., a Nevada Company (the "Company"),
      according to the conditions hereof, as of the date written below. If shares
      are
      to be issued in the name of a person other than undersigned, the undersigned
      will pay all transfer taxes payable with respect thereto and is delivering
      herewith such certificates and opinions as reasonably requested by the Company
      in accordance therewith. No fee will be charged to the Holder for any
      conversion, except for such transfer taxes, if any.

    

    Conversion
      calculations:

    

    
      	
              Date
                to Effect Conversion:
                _____________________________________________

            
	 
	
              Number
                of shares of Common Stock owned prior to Conversion:
                _______________

            
	 
	
              Number
                of shares of Series A Preferred Stock to be Converted:
                ________________________

            
	 
	
              Value
                of shares of Series A Preferred Stock to be Converted:
                ____________________

            
	 
	
              Number
                of shares of Common Stock to be Issued:
                ___________________________

            
	 
	
              Certificate
                Number of Series A Preferred Stock attached
                hereto:________________________

            
	 
	
              Number
                of Shares of Series A Preferred Stock represented by attached
                certificate:__________

            
	 
	
              Number
                of shares of Series A Preferred Stock subsequent to Conversion:
                ________________

            

    

    
       

      
        	 	 	T
                Squared Investments LLC
	 	 	 
	 	 	 	 
	
              	 	By:	
              
	
              	 	 	
                

              
	
              	 	 	
              
	 	 	Name: 	 

                

              
	 	 	 	 
	 	 	Title:	 

                

              

      

    

     

    CHINA
      KANGTAI CACTUS BIO-TECH, INC.
      CERTIFICATE OF DESIGNATION

     

    
      
        
        

      

      
        PAGE
          17 OF 17Exhibit
      10.3

     

    REGISTRATION
      RIGHTS AGREEMENT

    

    THIS
      REGISTRATION RIGHTS AGREEMENT (the "Agreement")
      is
      made and entered into as of 21st day of March, 2008 by and among
      China Kangtai Cactus Bio-Tech, Inc., a
      corporation organized and existing under the laws of the State of Nevada
      (“CKGT”
or
      the
“Company”),
      and T
      Squared Investments LLC, a Delaware limited liability company, ( “T Squared
      Investments” or “Investor”). Unless defined otherwise, capitalized terms herein
      shall have the identical meaning as in the Preferred Stock Purchase
      Agreement.

     

    PRELIMINARY
      STATEMENT

    

    WHEREAS,
      pursuant to the Preferred Stock Purchase Agreement, of even date herewith,
      by
      and among the Company and the Investor, as part of the consideration, Investor
      shall receive Preferred Stock and Warrants, which upon conversion and exercise,
      in accordance with the terms of the Preferred Stock Purchase Agreement and
      Warrant Agreement, entitle the Investor to receive Shares of the Company;
      and

    

    WHEREAS,
      the
      ability of the Investors to sell their Shares of Common Stock is subject to
      certain restrictions under the 1933 Act; and

    

    WHEREAS,
      as a
      condition to the Preferred Stock Purchase Agreement, The Company has agreed
      to
      provide the Investor with a mechanism that will permit such Investor, to sell
      its Shares of Common Stock in the future.

    

      NOW,
      THEREFORE,
      in
      consideration of the premises and of the mutual covenants and agreements, and
      subject to the terms and conditions herein contained, the parties hereto hereby
      agree as follows:

     

    ARTICLE
      I

     

    INCORPORATION
      BY REFERENCE, SUPERSEDER

     

    1.1 Incorporation
      by Reference.
      The
      foregoing recitals and the Exhibits attached hereto and referred to herein,
      are
      hereby acknowledged to be true and accurate, and are incorporated herein by
      this
      reference.

     

    1.2 Superseder.
      This
      Agreement, to the extent that it is inconsistent with any other instrument
      or
      understanding among the parties governing the affairs of the Company, shall
      supersede such instrument or understanding to the fullest extent permitted
      by
      law. A copy of this Agreement shall be filed at the Company’s principal
      office.

     

    
      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

    

    

    PAGE
      1OF
      16

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      ARTICLE
        II

    

     

    DEMAND
      REGISTRATION RIGHTS

    

    2.1 Registrable
      Securities.
      Means
      and includes the Shares of the Company underlying the Preferred Stock and
      Warrants issued pursuant to the Preferred Stock Purchase Agreement and Warrant
      Agreement. As to any particular Registrable Securities, such securities will
      cease to be Registrable Securities when (a) they have been effectively
      registered under the 1933 Act and disposed of in accordance with the
      registration statement covering them, (b) they are or may be freely traded
      without registration pursuant to Rule 144 under the 1933 Act (or any similar
      provisions that are then in effect), or (c) they have been otherwise transferred
      and new certificates for them not bearing a restrictive legend have been issued
      by the Company and the Company shall not have "stop transfer" instructions
      against them. "Shares"
      shall
      mean, collectively, the shares of Common Stock of the Company issuable upon
      conversion of the Preferred Stock and those shares of Common Stock of the
      Company issuable to the Investor upon exercise of the Warrants.

     

    2.2 Registration
      of Registrable Securities.
      The
      Company shall prepare and file within Forty Five (45) days following the date
      hereof (the "Filing
      Date")
      a
      registration statement (the "Registration
      Statement")
      covering the resale of such number of shares of the Registrable Securities
      as
      the Investor shall elect by written notice to the Company, and absent such
      election, covering the resale of all of the shares of the Registrable
      Securities. The Company shall use its best efforts to cause the Registration
      Statement to be declared effective by the SEC on the earlier of (i) 120 days
      following the Closing Date with respect to the Registration Statement, (ii)
      ten
      (10) days following the receipt of a "No Review" or similar letter from the
      SEC
      or (iii) the fifth business day following the day the SEC determines the
      Registration Statement eligible to be declared effective (the "Required
      Effectiveness Date"),
      provided,
      that,
      if the SEC reviews and has written comments to a Registration Statement that
      would require the filing of a pre-effective amendment thereto with the
      Commission, then the Effectiveness Date under this clause shall be extended
      by
      40 days. Nothing
      contained herein shall be deemed to limit the number of Registrable Securities
      to be registered by the Company hereunder. As a result, should the Registration
      Statement not relate to the maximum number of Registrable Securities acquired
      by
      (or potentially acquirable by) the holders of the Shares of the Company issued
      to the Investor pursuant to the Preferred Stock Purchase Agreement, the Company
      shall be required to promptly file a separate registration statement (utilizing
      Rule 462 promulgated under the 1933 Act, where applicable) relating to such
      Registrable Securities which then remain unregistered. The provisions of this
      Agreement shall relate to any such separate registration statement as if it
      were
      an amendment to the Registration Statement. 

     

    2.3 Demand
      Registration.
      Subject
      to the limitations of Section 2.2, at any time and from time to time, the
      Investor may request the registration under the 1933 Act of all or part of
      the
      Registrable Shares then outstanding (a "Demand
      Registration").
      Subject to the conditions of Section 3, the Company shall use its best efforts
      to file such registration statement under the 1933 Act as promptly as
      practicable after the date any such request is received by the Company and
      to
      cause such registration statement to be declared effective. The Company shall
      notify the Investor promptly when any such registration statement has been
      declared effective. If more than eighty percent (80%) of the Shares issuable
      under the Preferred Stock Purchase Agreement have been registered, sold or
      cease
      to be Registrable Securities, this provision shall expire.

    
      
         

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          RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

        AND
          T SQUARED INVESTMENTS LLC

      

    

    
       

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    2.4 Registration
      Statement Form.
      Registrations under Section 2.2 and Section 2.3 shall be on the appropriate
      registration form of the SEC as shall permit the disposition of such Registrable
      Securities in accordance with the intended method or methods of disposition
      specified in the Registration Statement; provided, however, such intended method
      of disposition shall not include an underwritten offering of the Registrable
      Securities.

     

    2.5 Expenses.
      The
      Company will pay all Registration expenses in connection with any registration
      required by under Sections 2.2 and Section 2.3 herein.

     

    2.6 Effective
      Registration Statement.
      A
      registration requested pursuant to Sections 2.2 and Section 2.3 shall not be
      deemed to have been effected (i) unless a registration statement with respect
      thereto has become effective within the time period specified herein, provided
      that a registration which does not become effective after the Company filed
      a
      registration statement with respect thereto solely by reason of the refusal
      to
      proceed of any holder of Registrable Securities (other than a refusal to proceed
      based upon the advice of counsel in the form of a letter signed by such counsel
      and provided to the Company relating to a disclosure matter unrelated to such
      holder) shall be deemed to have been effected by the Company unless the holders
      of the Registrable Securities shall have elected to pay all Registration
      Expenses in connection with such registration, (ii) if, after it has become
      effective, such registration becomes subject to any stop order, injunction
      or
      other order or extraordinary requirement of the SEC or other governmental agency
      or court for any reason or (iii) if, after it has become effective, such
      registration ceases to be effective for more than the allowable Black-Out
      Periods (as defined herein).

     

    2.7 Plan
      Of Distribution.
      The
      Company hereby agrees that the Registration Statement shall include a plan
      of
      distribution section reasonably acceptable to the Investor; provided, however,
      such plan of distribution section shall be modified by the Company so as to
      not
      provide for the disposition of the Registrable Securities on the basis of an
      underwritten offering.

     

    2.8 Liquidated
      Damages.
      If,
      after four (4) months from the date hereof, in the event the Company does not
      register Registrable Securities pursuant to the requirements of Section 2.2
      herein, or if the Registration Statement filed pursuant to Section 2.2 herein
      is
      not declared effective, or if the Registrable Securities are registered pursuant
      to an effective Registration Statement and such Registration Statement or other
      Registration Statement(s) demanded by Investor including the Registrable
      Securities is not effective in the period from four months from the date hereof
      through two years following the date hereof, the Company shall, for each such
      day issue to the Investor, as liquidated damages and not as a penalty, 1,000
      shares of Preferred Stock for any such day (based on a 365 day year), such
      issuance shall be made no later than the tenth business day of the calendar
      month next succeeding the month in which such day occurs. In addition, if the
      Company has not filed a registration statement within the thirty day period
      after closing as specified in Section 2.2, the Company shall, for each such
      day
      after thirty days from closing and until the filing of a registration statement,
      issue to the Purchaser, as liquidated damages and not as a penalty, 1,000 shares
      of Preferred Stock and for any such day (based on a 365 day year), such payment
      shall be made no later than the tenth business day of the calendar month next
      succeeding the month in which such day occurs. However, in no event shall the
      Company be required to pay any liquidated damages under this Section 2.8 in
      an
      amount exceeding 250,000 of the shares underlying the Preferred Stock in the
      aggregate (as adjusted pursuant to the terms of the Certificate of
      Designation).
 

    
      
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          RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

        AND
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    The
      parties agree that the only damages payable for a violation of the terms of
      this
      Agreement with respect to which liquidated damages are expressly provided shall
      be such liquidated damages. Nothing shall preclude the Investor from pursuing
      or
      obtaining specific performance or other equitable relief with respect to this
      Agreement.

     

    The
      parties hereto agree that the liquidated damages provided for in this Section
      2.8 constitute a reasonable estimate of the damages that may be incurred by
      the
      Investor by reason of the failure of the Registration Statement(s) to be filed
      or declared effective in accordance with the provisions hereof.

     

    The
      obligation of the Company terminates when the holder of shares of Registrable
      Securities no longer holds more than five percent (5%) of its shares of
      Registrable Securities.

     

    ARTICLE
      III

     

    INCIDENTAL
      REGISTRATION RIGHTS

     

    3.1 Right
      To Include (“Piggy-Back”) Registrable Securities.
      Provided that the Registrable Securities have not been registered, if at any
      time after the date hereof but before the first anniversary of the date hereof,
      the Company proposes to register any of its securities under the 1933 Act (other
      than by a registration in connection with an acquisition in a manner which
      would
      not permit registration of Registrable Securities for sale to the public, on
      Form S-8, or any successor form thereto, on Form S-4, or any successor form
      thereto and other than pursuant to Section 2), on an underwritten basis (either
      best-efforts or firm-commitment), then, the Company will each such time give
      prompt written notice to all holders of Registrable Securities of its intention
      to do so and of such holders of Registrable Securities' rights under this
      Section 3.1. Upon the written request of any such holders 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 holders of Registrable Securities and the intended method of disposition
      thereof), the Company will, subject to the terms of this Agreement, use its
      commercially reasonable best efforts to effect the registration under the 1933
      Act of the Registrable Securities, to the extent requisite to permit the
      disposition (in accordance with the intended methods thereof as aforesaid)
      of
      such 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 that if, at any time after
      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 either not to register
      or to delay registration of such securities, the Company may, at its election,
      give written notice of such determination to each holders of Registrable
      Securities and, thereupon, (i) in the case of a determination not to register,
      shall be relieved of this obligation to register any Registrable Securities
      in
      connection with such registration (but not from its obligation to pay the
      Registration Expenses in connection therewith), without prejudice, however,
      to
      the rights of any holder or holders of Registrable Securities entitled to do
      so
      to request that such registration be effected as a registration under Section
      2,
      and (ii) in the case of a determination to delay registering, shall be permitted
      to delay registering any Registrable Securities, for the same period as the
      delay in registering such other securities. No registration effected under
      this
      Section 3.1 shall relieve the Company of its obligation to effect any
      registration upon request under Section 2. The Company will pay all Registration
      Expenses in connection with each registration of Registrable Securities
      requested pursuant to this Section 3.1. The right provided the Holders of the
      Registrable Securities pursuant to this Section shall be exercisable at their
      sole discretion and will in no way limit any of the Company's obligations to
      pay
      the Securities according to their terms.

     

    
      
        REGISTRATION
          RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

        AND
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    3.2 Priority
      In Incidental Registrations.
      If the
      managing underwriter of the underwritten offering contemplated by this Section
      3
      shall inform the Company and holders of the Registrable Securities requesting
      such registration by letter of its belief that the number of securities
      requested to be included in such registration exceeds the number which can
      be
      sold in such offering, then the Company will include in such registration,
      to
      the extent of the number which the Company is so advised can be sold in such
      offering, (i) first securities proposed by the Company to be sold for its own
      account, and (ii) second Registrable Securities and (iii) securities of other
      selling security holders requested to be included in such
      registration.

     

    ARTICLE
      IV

     

    REGISTRATION
      PROCEDURES

     

    4.1 Registration
      Procedures.
      If and
      whenever the Company is required to effect the registration of any Registrable
      Securities under the 1933 Act as provided in Section 2.2 and, as applicable,
      2.3, the Company shall, as expeditiously as possible:

     

    (i) prepare
      and file with the SEC the Registration Statement, or amendments thereto, to
      effect such registration (including such audited financial statements as may
      be
      required by the 1933 Act or the rules and regulations promulgated thereunder)
      and thereafter use its commercially reasonable best efforts to cause such
      registration statement to be declared effective by the SEC, as soon as
      practicable, but in any event no later than the Required Effectiveness Date
      (with respect to a registration pursuant to Section 2.2); provided, however,
      that before filing such registration statement or any amendments thereto, the
      Company will furnish to the counsel selected by the holders of Registrable
      Securities which are to be included in such registration, copies of all such
      documents proposed to be filed;

     

    
      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
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    (ii) with
      respect to any registration statement pursuant to Section 2.2 or Section 2.3,
      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 keep such registration statement effective and to comply with
      the
      provisions of the 1933 Act with respect to the disposition of all Registrable
      Securities covered by such registration statement until the earlier to occur
      of
      twenty four (24) months after the date of this Agreement (subject to the right
      of the Company to suspend the effectiveness thereof for not more than 10
      consecutive Trading Days or an aggregate of 10 Trading Days during each year
      (each a "Black-Out
      Period"))
      or
      such time as all of the securities which are the subject of such registration
      statement cease to be Registrable Securities (such period, in each case, the
      "Registration
      Maintenance Period").
      The
      Company must notify the Investor within twenty four (24) hours prior to any
      Black-Out Period;

     

    (iii) furnish
      to each holder of Registrable Securities covered by such registration statement
      such number of conformed copies of such registration statement and of each
      such
      amendment and supplement thereto (in each case including all exhibits), such
      number of copies of the prospectus contained in such registration statement
      (including each preliminary prospectus and any summary prospectus) and any
      other
      prospectus filed under Rule 424 under the 1933 Act, in conformity with the
      requirements of the 1933 Act, and such other documents, as such holder of
      Registrable Securities and underwriter, if any, may reasonably request in order
      to facilitate the public sale or other disposition of the Registrable Securities
      owned by such holder of Registrable Securities; 

     

    (iv) use
      its
      commercially reasonable best efforts to register or qualify all Registrable
      Securities and other securities covered by such registration statement under
      such other U.S. federal or state securities laws or U.S. state blue sky laws
      as
      any U.S. holder of Registrable Securities thereof shall reasonably request,
      to
      keep such registrations or qualifications in effect for so long as such
      registration statement remains in effect, and take any other action which may
      be
      reasonably necessary to enable such holder of Registrable Securities to
      consummate the disposition in such jurisdictions of the securities owned by
      such
      holder of Registrable Securities, except that the Company shall not for any
      such
      purpose be required to qualify generally to do business as a foreign corporation
      in any jurisdiction wherein it would not but for the requirements of this
      subdivision (iv) be obligated to be so qualified or to consent to general
      service of process in any such jurisdiction;

     

    (v) use
      its
      commercially reasonable best efforts to cause all 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 U.S.
      holder of Registrable Securities thereof to consummate the disposition of such
      Registrable Securities;

     

    (vi) furnish
      to each holder of Registrable Securities a signed counterpart, addressed to
      such
      holder of Registrable Securities, and the underwriters, if any, of an opinion
      of
      counsel for the Company, dated the effective date of such registration statement
      (or, if such registration includes an underwritten public offering, an opinion
      dated the date of the closing under the underwriting agreement), reasonably
      satisfactory in form and substance to such holder of Registrable Securities)
      including that the prospectus and any prospectus supplement forming a part
      of
      the Registration Statement does not contain an untrue statement of a material
      fact or omits 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, and

    
      
         

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          RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

        AND
          T SQUARED INVESTMENTS LLC

      

    

    
       

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    (vii) notify
      the Investor and its counsel promptly and confirm such advice in writing
      promptly after the Company has knowledge thereof:

     

    (a) when
      the
      Registration Statement, the prospectus or any prospectus supplement related
      thereto or post-effective amendment to the Registration Statement has been
      filed, and, with respect to the Registration Statement or any post-effective
      amendment thereto, when the same has become effective;

     

    (b) of
      any
      request by the SEC for amendments or supplements to the Registration Statement
      or the prospectus or for additional information;

     

    (c) of
      the
      issuance by the SEC of any stop order suspending the effectiveness of the
      Registration Statement or the initiation of any proceedings by any Person for
      that purpose; and

     

    (d) of
      the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification of any Registrable Securities for sale under the securities or
      blue sky laws of any jurisdiction or the initiation or threat of any proceeding
      for such purpose;

     

    (viii) notify
      each holder of Registrable Securities covered by such registration statement,
      at
      any time when a prospectus relating thereto is required to be delivered under
      the 1933 Act, upon discovery that, or upon the happening of any event as a
      result of which, the prospectus included in such registration statement, as
      then
      in effect, includes an untrue statement of a material fact or omits to state any
      material facts required to be stated therein or necessary to make the statements
      therein not misleading in the light of the circumstances then existing, and
      at
      the request of any such holder of Registrable Securities promptly prepare and
      furnish to such holder of Registrable Securities a reasonable number of copies
      of a supplement to or an amendment of such prospectus as may be necessary so
      that, as thereafter delivered to the purchasers of such securities, such
      prospectus shall not include 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 not misleading in the light of the circumstances then
      existing; use its best efforts to obtain the withdrawal of any order suspending
      the effectiveness of the Registration Statement at the earliest possible
      moment;

     

    (ix) otherwise
      use its commercially 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 covering the period of at
      least
      twelve months, but not more than eighteen months, beginning with the first
      full
      calendar month after the effective date of such registration statement, which
      earnings statement shall satisfy the provisions of Section 11(a) of the 1933
      Act
      and Rule 158 thereunder;

     

    (x) enter
      into such agreements and take such other actions as the Investors shall
      reasonably request in writing (at the expense of the requesting or benefiting
      Investors) in order to expedite or facilitate the disposition of such
      Registrable Securities; and

    
       

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        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

    

    
       

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    (xi) use
      its
      commercially reasonable best efforts to list all Registrable Securities covered
      by such registration statement on any securities exchange on which any of the
      Registrable Securities are then listed.

     

       The
      Company may require each holder of Registrable Securities as to which any
      registration is being effected to furnish the Company such information regarding
      such holder of Registrable Securities and the distribution of such securities
      as
      the Company may from time to time reasonably request in writing.

     

    4.2 The
      Company will not file any registration statement pursuant to Section 2.2 or
      Section 2.3, or amendment thereto or any prospectus or any supplement thereto
      to
      which the Investors shall reasonably object, provided that the Company may
      file
      such documents in a form required by law or upon the advice of its
      counsel.

     

    4.3 The
      Company represents and warrants to each holder of Registrable Securities that
      it
      has obtained all necessary waivers, consents and authorizations necessary to
      execute this Agreement and consummate the transactions contemplated hereby
      other
      than such waivers, consents and/or authorizations specifically contemplated
      by
      the Preferred Stock Purchase Agreement.

     

    4.4 Each
      holder of Registrable Securities agrees that, upon receipt of any notice from
      the Company of the occurrence of any event of the kind described in subdivision
      (viii) of Section 4.1, such Holder will forthwith discontinue such holder of
      Registrable Securities’ disposition of Registrable Securities pursuant to the
      Registration Statement relating to such Registrable Securities until such holder
      of Registrable Securities’ receipt of the copies of the supplemented or amended
      prospectus contemplated by subdivision (viii) of Section 4.1 and, if so directed
      by the Company, will deliver to the Company (at the Company's expense) all
      copies, other than permanent file copies, then in such Holder's possession
      of
      the prospectus relating to such Registrable Securities current at the time
      of
      receipt of such notice.

     

    ARTICLE
      V

     

    UNDERWRITTEN
      OFFERINGS 

    5.1 Incidental
      Underwritten Offerings.
      If the
      Company at any time proposes to register any of its securities under the 1933
      Act as contemplated by Section 3.1 and such securities are to be distributed
      by
      or through one or more underwriters, the Company will, if requested by any
      holder of Registrable Securities as provided in Section 3.1 and subject to
      the
      provisions of Section 3.2, use its commercially 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. In no event shall any Investor be deemed an underwriter for
      purposes of this Agreement.

     

    
      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

    

    
       

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    5.2 Participation
      In Underwritten Offerings.
      No
      holder of Registrable Securities may participate in any underwritten offering
      under Section 3.1 unless such holder of Registrable Securities (i) agrees to
      sell such Person's securities on the basis provided in any underwriting
      arrangements approved, subject to the terms and conditions hereof, by the
      holders of a majority of Registrable Securities to be included in such
      underwritten offering and (ii) completes and executes all questionnaires,
      indemnities, underwriting agreements and other documents (other than powers
      of
      attorney) required under the terms of such underwriting arrangements.
      Notwithstanding the foregoing, no underwriting agreement (or other agreement
      in
      connection with such offering) shall require any holder of Registrable
      Securities to make a representation or warranty to or agreements with the
      Company or the underwriters other than representations and warranties contained
      in a writing furnished by such holder of Registrable Securities expressly for
      use in the related registration statement or representations, warranties or
      agreements regarding such holder of Registrable Securities, such holder's
      Registrable Securities and such holder's intended method of distribution and
      any
      other representation required by law.

     

    5.3 Preparation;
      Reasonable Investigation.
      In
      connection with the preparation and filing of each registration statement under
      the 1933 Act pursuant to this Agreement, the Company will give the holders
      of
      Registrable Securities registered under such registration statement, and their
      respective counsel and accountants, the opportunity to participate in the
      preparation of such registration statement, each prospectus included therein
      or
      filed with the SEC, and each amendment thereof or supplement thereto, and will
      give each of them such access to its books and records and such opportunities
      to
      discuss the business of the Company with its officers and the independent public
      accountants who have certified its financial statements as shall be necessary,
      in the reasonable opinion of such holders' and such underwriters' respective
      counsel, to conduct a reasonable investigation within the meaning of the 1933
      Act.

     

    ARTICLE
      VI

    

    INDEMNIFICATION
      

    

    6.1 Indemnification
      by the Company.
      In the
      event of any registration of any securities of the Company under the 1933 Act,
      the Company will, and hereby does agree to indemnify and hold harmless the
      holder of any Registrable Securities covered by such registration statement,
      its
      directors and officers, each other Person who participates as an underwriter
      in
      the offering or sale of such securities and each other Person, if any, who
      controls such holder or any such underwriter within the meaning of the 1933
      Act
      against any losses, claims, damages or liabilities, joint or several, to which
      such holder or any such director or officer or underwriter or controlling person
      may become subject under the 1933 Act or otherwise, insofar as such losses,
      claims, damages or liabilities (or actions or proceedings, whether commenced
      or
      threatened, in respect thereof) arise out of or are based upon any untrue
      statement or alleged untrue statement of any material fact contained in any
      registration statement under which such securities were registered under the
      1933 Act, any preliminary prospectus, final prospectus or summary prospectus
      contained therein, or any amendment or supplement thereto, or any omission
      or
      alleged omission to state therein a material fact required to be stated therein
      or necessary to make the statements therein not misleading, and the Company
      will
      reimburse such holder and each such director, officer, underwriter and
      controlling person for any legal or any other expenses reasonably incurred
      by
      them in connection with investigating or defending any such loss, claim,
      liability, action or proceeding, provided that the Company shall not be liable
      in any such case to the extent that any such loss, claim, damage, liability,
      (or
      action or proceeding in respect thereof) or expense arises out of or is based
      upon an untrue statement or alleged untrue statement or omission or alleged
      omission made in such registration statement, any such preliminary prospectus,
      final prospectus, summary prospectus, amendment or supplement in reliance upon
      and in conformity with written information furnished to the Company by such
      holder or underwriter stating that it is for use in the preparation thereof
      and,
      provided further that the Company shall not be liable to any Person who
      participates as an underwriter in the offering or sale of Registrable Securities
      or to any other Person, if any, who controls such underwriter within the meaning
      of the 1933 Act, in any such case to the extent that any such loss, claim,
      damage, liability (or action or proceeding in respect thereof) or expense arises
      out of such Person's failure to send or give a copy of the final prospectus,
      as
      the same may be then supplemented or amended, within the time required by the
      1933 Act to the Person asserting the existence of an untrue statement or alleged
      untrue statement or omission or alleged omission at or prior to the written
      confirmation of the sale of Registrable Securities to such Person if such
      statement or omission was corrected in such final prospectus or an amendment
      or
      supplement thereto. Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of such holder or any
      such
      director, officer, underwriter or controlling person and shall survive the
      transfer of such securities by such holder.

    
      
         

        REGISTRATION
          RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

        AND
          T SQUARED INVESTMENTS LLC

         

        
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    6.2 Indemnification
      by the Investor.
      The
      Company may require, as a condition to including any Registrable Securities
      in
      any registration statement filed pursuant to this Agreement, that the Company
      shall have received an undertaking satisfactory to it from the prospective
      holder of such Registrable Securities, to indemnify and hold harmless (in the
      same manner and to the same extent as set forth in Section 6.1) the Company,
      each director of the Company, each officer of the Company and each other Person,
      if any, who controls the Company within the meaning of the 1933 Act, with
      respect to any statement or alleged statement in or omission or alleged omission
      from such registration statement, any preliminary prospectus, final prospectus
      or summary prospectus contained therein, or any amendment or supplement thereto,
      if such statement or alleged statement or omission or alleged omission was
      made
      in reliance upon and in conformity with written information furnished to the
      Company through an instrument duly executed by such holder of Registrable
      Securities specifically stating that it is for use in the preparation of such
      registration statement, preliminary prospectus, final prospectus, summary
      prospectus, amendment or supplement. Any such indemnity shall remain in full
      force and effect, regardless of any investigation made by or on behalf of the
      Company or any such director, officer or controlling person and shall survive
      the transfer of such securities by such Investor. The indemnification by the
      Investors shall be limited to Fifty Thousand ($50,000) Dollars.

     

    6.3 Notices
      Of Claims, Etc.
      Promptly after receipt by an indemnified party of notice of the commencement
      of
      any action or proceeding involving a claim referred to in Sections 6.1 and
      Section 6.2, such indemnified party will, if claim in respect thereof is to
      be
      made against an indemnifying party, give written notice to the latter of the
      commencement of such action, provided that the failure of any indemnified party
      to give notice as provided herein shall not relieve the indemnifying party
      of
      its obligations under Sections 6.1 and Section 6.2, except to the extent that
      the indemnifying party is actually prejudiced by such failure to give notice.
      In
      case any such action is brought against an indemnified party, unless in such
      indemnified party's reasonable judgment a conflict of interest between such
      indemnified and indemnifying parties may exist in respect of such claim, the
      indemnifying party shall be entitled to participate in and to assume the defense
      thereof, jointly with any other indemnifying party similarly notified, to the
      extent that the indemnifying party may wish, with counsel reasonably
      satisfactory to such indemnified party, and after notice from the indemnifying
      party to such indemnified party of its election so to assume the defense
      thereof, the indemnifying party shall not be liable to such indemnified party
      for any legal or other expenses subsequently incurred by the latter in
      connection with the defense thereof other than reasonable costs of
      investigation. No indemnifying party shall, without the consent of the
      indemnified party, consent to entry of any judgment or enter into any settlement
      of any such action which does not include as an unconditional term thereof
      the
      giving by the claimant or plaintiff to such indemnified party of a release
      from
      all liability, or a covenant not to sue, in respect to such claim or litigation.
      No indemnified party shall consent to entry of any judgment or enter into any
      settlement of any such action the defense of which has been assumed by an
      indemnifying party without the consent of such indemnifying party.

    
       

      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

    

    
       

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    6.4 Other
      Indemnification.
      Indemnification similar to that specified in Sections 6.1 and Section 6.2 (with
      appropriate modifications) shall be given by the Company and each holder of
      Registrable Securities (but only if and to the extent required pursuant to
      the
      terms herein) with respect to any required registration or other qualification
      of securities under any Federal or state law or regulation of any governmental
      authority, other than the 1933 Act.

     

    6.5 Indemnification
      Payments.
      The
      indemnification required by Sections 6.1 and Section 6.2 shall be made by
      periodic payments of the amount thereof during the course of the investigation
      or defense, as and when bills are received or expense, loss, damage or liability
      is incurred.

     

    6.6 Contribution.
      If the
      indemnification provided for in Sections 6.1 and Section 6.2 is unavailable
      to
      an indemnified party in respect of any expense, loss, claim, damage or liability
      referred to therein, 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 expense, loss, claim, damage or liability
      (i) in such proportion as is appropriate to reflect the relative benefits
      received by the Company on the one hand and the holder of Registrable Securities
      or underwriter, as the case may be, on the other from the distribution of the
      Registrable Securities or (ii) if the allocation provided by clause (i) above
      is
      not permitted by applicable law, in such proportion as is appropriate to reflect
      not only the relative benefits referred to in clause (i) above but also the
      relative fault of the Company on the one hand and of the holder of Registrable
      Securities or underwriter, as the case may be, on the other in connection with
      the statements or omissions which resulted in such expense, loss, damage or
      liability, as well as any other relevant equitable considerations. The relative
      benefits received by the Company on the one hand and the holder of Registrable
      Securities or underwriter, as the case may be, on the other in connection with
      the distribution of the Registrable Securities shall be deemed to be in the
      same
      proportion as the total net proceeds received by the Company from the initial
      sale of the Registrable Securities by the Company to the purchasers bear to
      the
      gain, if any, realized by all selling holders participating in such offering
      or
      the underwriting discounts and commissions received by the underwriter, as
      the
      case may be. The relative fault of the Company on the one hand and of the holder
      of Registrable Securities or underwriter, as the case may be, on the other
      shall
      be determined by reference to, among other things, whether the untrue or alleged
      untrue statement of a material fact or omission to state a material fact relates
      to information supplied by the Company, by the holder of Registrable Securities
      or by the underwriter and the parties' relative intent, knowledge, access to
      information supplied by the Company, by the holder of Registrable Securities
      or
      by the underwriter and the parties' relative intent, knowledge, access to
      information and opportunity to correct or prevent such statement or omission,
      provided that the foregoing contribution agreement shall not inure to the
      benefit of any indemnified party if indemnification would be unavailable to
      such
      indemnified party by reason of the provisions contained herein, and in no event
      shall the obligation of any indemnifying party to contribute under this Section
      6.6 exceed the amount that such indemnifying party would have been obligated
      to
      pay by way of indemnification if the indemnification provided for hereunder
      had
      been available under the circumstances.

     

    
      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

    

     

    
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    The
      Company and the holders of Registrable Securities agree that it would not be
      just and equitable if contribution pursuant to this Section 6.6 were determined
      by pro rata allocation (even if the holders of Registrable Securities and any
      underwriters were treated as one entity for such purpose) or by any other method
      of allocation that does not take account of the equitable considerations
      referred to in the immediately preceding paragraph. The amount paid or payable
      by an indemnified party as a result of the losses, claims, damages and
      liabilities referred to in the immediately preceding paragraph shall be deemed
      to include, subject to the limitations set forth herein, any legal or other
      expenses reasonably incurred by such indemnified party in connection with
      investigating or defending any such action or claim.

     

    Notwithstanding
      the provisions of this Section 6.6, no holder of Registrable Securities or
      underwriter shall be required to contribute any amount in excess of the amount
      by which (i) in the case of any such holder, the net proceeds received by such
      holder from the sale of Registrable Securities in the applicable Registration
      Statement or (ii) in the case of an underwriter, the total price at which the
      Registrable Securities purchased by it and distributed to the public were
      offered to the public exceeds, in any such case, the amount of any damages
      that
      such holder or underwriter has otherwise been required to pay by reason of
      such
      untrue or alleged untrue statement or omission. No Person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
      be
      entitled to contribution from any person who was not guilty of such fraudulent
      misrepresentation.

    
       

      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

    

     

    
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    ARTICLE
      VII

     

    RULE
      144

     

    7.1 Rule
      144.
      The
      Company shall file in a timely manner the reports required to be filed by the
      Company under the 1933 Act and the 1934 Act (including but not limited to the
      reports under Sections 13 and 15(d) of the Exchange Act referred to in
      subparagraph (c) of Rule 144 adopted by the SEC under the 1933 Act) and the
      rules and regulations adopted by the SEC thereunder (or, if the Company is
      not
      required to file such reports, will, upon the request of any holder of
      Registrable Securities, make publicly available other information) and will
      take
      such further action as any holder of Registrable Securities may reasonably
      request, all to the extent required from time to time to enable such holder
      to
      sell Registrable Securities without registration under the 1933 Act within
      the
      limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
      such Rule may be amended from time to time, or (b) any similar rule or
      regulation hereafter adopted by the SEC. Upon the request of any holder of
      Registrable Securities, the Company will deliver to such holder a written
      statement as to whether it has complied with the requirements of this Section
      7.1.

     

    ARTICLE
      VIII

     

    MISCELLANEOUS
      

    

    8.1 Amendments
      And Waivers.
      This
      Agreement may be amended and the Company may take any action herein prohibited,
      or omit to perform any act herein required to be performed by it, only if the
      Company shall have obtained the written consent to such amendment, action or
      omission to act, of the holder or holders of the sum of the fifty-one percent
      (51%) or more of the shares of (i) Registrable Securities issued at such time,
      plus (ii) Registrable Securities issuable upon exercise or conversion of the
      Securities then constituting derivative securities (if such Securities were
      not
      fully exchanged or converted in full as of the date such consent if sought).
      Each holder of any Registrable Securities at the time or thereafter outstanding
      shall be bound by any consent authorized by this Section 8.1, whether or not
      such Registrable Securities shall have been marked to indicate such
      consent.

     

    8.2 Nominees
      For Beneficial Owners.
      In the
      event that any Registrable Securities are held by a nominee for the beneficial
      owner thereof, the beneficial owner thereof may, at its election, be treated
      as
      the holder of such Registrable Securities for purposes of any request or other
      action by any holder or holders of Registrable Securities pursuant to this
      Agreement or any determination of any number of percentage of shares of
      Registrable Securities held by a holder or holders of Registrable Securities
      contemplated by this Agreement. If the beneficial owner of any Registrable
      Securities so elects, the Company may require assurances reasonably satisfactory
      to it of such owner's beneficial ownership or such Registrable
      Securities.

     

    8.3 Notices.
      Except
      as
      otherwise provided in this Agreement, all notices, requests and other
      communications to any Person provided for hereunder shall be in writing and
      shall be given to such Person (a) in the case of a party hereto other than
      the
      Company, addressed to such party in the manner set forth in the Preferred Stock
      Purchase Agreement or at such other address as such party shall have furnished
      to the Company in writing, or (b) in the case of any other holder of Registrable
      Securities, at the address that such holder shall have furnished to the Company
      in writing, or, until any such other holder so furnishes to the Company an
      address, then to and at the address of the last holder of such Registrable
      Securities who has furnished an address to the Company, or (c) in the case
      of
      the Company, at the address set forth on the signature page hereto, to the
      attention of its President, or at such other address, or to the attention of
      such other officer, as the Company shall have furnished to each holder of
      Registrable Securities at the time outstanding. Each such notice, request or
      other communication shall be effective (i) if given by mail, 72 hours after
      such
      communication is deposited in the mail with first class postage prepaid,
      addressed as aforesaid or (ii) if given by any other means (including, without
      limitation, by fax, email or air courier), when delivered at the address
      specified above, provided that any such notice, request or communication shall
      not be effective until received.

    
       

      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

    

    
       

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    8.4 Assignment.
      This
      Agreement shall be binding upon and inure to the benefit of and be enforceable
      by the parties hereto. In addition, and whether or not any express assignment
      shall have been made, the provisions of this Agreement which are for the benefit
      of the parties hereto other than the Company shall also be for the benefit
      of
      and enforceable by any subsequent holder of any Registrable Securities. Each
      of
      the Holders of the Registrable Securities agrees, by accepting any portion
      of
      the Registrable Securities after the date hereof, to the provisions of this
      Agreement including, without limitation, appointment of the Investors'
      Representative to act on behalf of such Holder pursuant to the terms hereof
      which such actions shall be made in the good faith discretion of the Investors'
      Representative and be binding on all persons for all purposes.

     

    8.5 Descriptive
      Headings.
      The
      descriptive headings of the several sections and paragraphs of this Agreement
      are inserted for reference only and shall not limit or otherwise affect the
      meaning hereof.

     

    8.6 Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of New York, without giving effect to applicable principles of
      conflicts of law.

     

    8.7 Jurisdiction.
      This
      Agreement shall be exclusively governed by and construed in accordance with
      the
      laws of the State of New York. If any action is brought among the parties with
      respect to this Agreement or otherwise, by way of a claim or counterclaim,
      the
      parties agree that in any such action, and on all issues, the parties
      irrevocably waive their right to a trial by jury. Exclusive jurisdiction and
      venue for any such action shall be the State or Federal Courts serving the
      State
      of New York. In the event suit or action is brought by any party under this
      Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed
      that the prevailing party shall be entitled to reasonable attorneys fees to
      be
      fixed by the arbitrator, trial court, and/or appellate court.

     

    8.8 Entire
      Agreement.
      This
      Agreement embodies the entire agreement and understanding between the Company
      and each other party hereto relating to the subject matter hereof and supercedes
      all prior agreements and understandings relating to such subject
      matter.

     

    8.9 Severability.
      If any
      provision of this Agreement, or the application of such provisions to any Person
      or circumstance, shall be held invalid, the remainder of this Agreement, or
      the
      application of such provision to Persons or circumstances other than those
      to
      which it is held invalid, shall not be affected thereby.

    
       

      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

    

    
       

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    8.10 Binding
      Effect.
      All the
      terms and provisions of this Agreement whether so expressed or not, shall be
      binding upon, inure to the benefit of, and be enforceable by the parties and
      their respective administrators, executors, legal representatives, heirs,
      successors and assignees. 

     

    8.11 Preparation
      of Agreement.
      This
      Agreement shall not be construed more strongly against any party regardless
      of
      who is responsible for its preparation. The parties acknowledge each contributed
      and is equally responsible for its preparation. 

     

    8.12 Failure
      or Indulgence Not Waiver; Remedies Cumulative.
      No
      failure or delay on the part of any party hereto in the exercise of any right
      hereunder shall impair such right or be construed to be a waiver of, or
      acquiescence in, any breach of any representation, warranty, covenant or
      agreement herein, nor shall nay single or partial exercise of any such right
      preclude other or further exercise thereof or of any other right. All rights
      and
      remedies existing under this Agreement are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    8.13 Counterparts.
      This
      Agreement may be executed in one or more counterparts, and by the different
      parties hereto in separate counterparts, each of which when executed shall
      be
      deemed to be an original, but all of which taken together shall constitute
      one
      and the same agreement. A facsimile transmission of this signed Agreement shall
      be legal and binding on all parties hereto. 

     

    [SIGNATURES
      ON FOLLOWING PAGE]

     

    
      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

      
         

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    IN
      WITNESS WHEREOF,
      the
      Investors and the Company have as of the date first written above executed
      this
      Agreement.

    

    COMPANY:

    

    China
      Kangtai Cactus Bio-Tech, Inc.

     

    
      	 	 	 	 	 
	By: 	/s/ Jinjiang
              Wang	 	 	
            
	 	
              

              Jinjiang
                Wang

              President
                and CEO 

            	 	 	
            

    

    

    INVESTOR:

    

    T
      Squared
      Investments LLC

    By:
      T
      Squared Capital LLC, Managing Member

     

    
      	 	 	 	 	 
	By: 	/s/ 
Thomas
              Sauve	 	 	
            
	 	
              

              
                Thomas
                  Sauve

                Managing
                  Member

                1325
                  Sixth Avenue, Floor 28

                New
                  York NY 10019 

              

            	 	 	
            

    

    
       

      REGISTRATION
        RIGHTS AGREEMENT BETWEEN CHINA KANGTAI CACTUS BIO-TECH, INC.

      AND
        T SQUARED INVESTMENTS LLC

      
         

        PAGE
          16OF
          16

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