Document:

THE
      SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES
      HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS
      AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K), OR (III)
      THE
      COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
      SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES
      ACT
      OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

    

    SUBJECT
      TO THE PROVISIONS HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN
      TIME ON JULY 31, 2011 (THE “EXPIRATION DATE”).

    

    No.
      __________

     

    

      
        	
                CHINA
                  SKY ONE MEDICAL, INC.

              
	 	 
	
                WARRANT
                  TO PURCHASE _______ SHARES OF

              
	
                COMMON
                  STOCK, PAR VALUE $0.001 PER
                  SHARE

              

      

    

    
 

    For
      VALUE
      RECEIVED, ____________________ (“Warrantholder”), is entitled to purchase,
      subject to the provisions of this Warrant, from China Sky One Medical, Inc.,
      a
      Nevada corporation (“Company”), at any time on or after July 31, 2008 but not
      later than 5:00 P.M., Eastern time, on the Expiration Date (as defined above),
      at an exercise price per share equal to $12.50 (the exercise price in effect
      being herein called the “Warrant Price”), ______ shares1 
      (“Warrant Shares”) of the Company’s Common Stock, par value $0.001 per share
      (“Common Stock”). The number of Warrant Shares purchasable upon exercise of this
      Warrant and the Warrant Price shall be subject to adjustment from time to time
      as described herein. This Warrant is being issued pursuant to the Securities
      Purchase Agreement, dated as of January 31, 2008 (the “Purchase Agreement”),
      among the Company and the initial holders of the Company Warrants (as defined
      below), in connection with an offering of units of securities of the Company
      (the “Offering”). Capitalized terms used herein have the respective meanings
      ascribed thereto in the Purchase Agreement unless otherwise defined
      herein.

    

    Section
      1. Registration.
      The
      Company shall maintain books for the transfer and registration of the Warrant.
      Upon the initial issuance of this Warrant, the Company shall issue and register
      the Warrant in the name of the Warrantholder.

    

    Section
      2. Transfers.
      As
      provided herein, this Warrant may be transferred only pursuant to a registration
      statement filed under the Securities Act of 1933, as amended (the “Securities
      Act”), or an exemption from such registration. Subject to such restrictions, the
      Company shall transfer this Warrant from time to time upon the books to be
      maintained by the Company for that purpose, upon surrender hereof for transfer,
      properly endorsed or accompanied by appropriate instructions for transfer and
      such other documents as may be reasonably required by the Company, including,
      if
      required by the Company, an opinion of its counsel to the effect that such
      transfer is exempt from the registration requirements of the Securities Act,
      to
      establish that such transfer is being made in accordance with the terms hereof,
      and a new Warrant shall be issued to the transferee and the surrendered Warrant
      shall be canceled by the Company.

     

      
        

      

    

    
      1
        30%
        warrant coverage.

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Section
      3. Exercise
      of Warrant.
      

    

    (a) General.
      Subject
      to the provisions hereof, the Warrantholder may exercise this Warrant, in whole
      or in part, at any time prior to its expiration upon surrender of the Warrant,
      together with delivery of a duly executed Warrant exercise form, in the form
      attached hereto as Appendix
      A
      (the
“Exercise Agreement”) and payment by cash, certified check or wire transfer of
      funds (or,
      in
      certain circumstances, by cashless exercise as provided in Section 3(c) below)
      of
      the
      aggregate Warrant Price for that number of Warrant Shares then being purchased,
      to the Company during normal business hours on any business day at the Company’s
      principal executive offices (or such other office or agency of the Company
      as it
      may designate by notice to the Warrantholder). The Warrant Shares so purchased
      shall be deemed to be issued to the Warrantholder or the Warrantholder’s
      designee, as the record owner of such shares, as of the close of business on
      the
      date on which this Warrant shall have been surrendered (or the date evidence
      of
      loss, theft or destruction thereof and security or indemnity satisfactory to
      the
      Company has been provided to the Company), the Warrant Price shall have been
      paid and the completed Exercise Agreement shall have been delivered.
      Certificates for the Warrant Shares so purchased shall be delivered to the
      Warrantholder within a reasonable time, not exceeding three (3) business days,
      after this Warrant shall have been so exercised. The certificates so delivered
      shall be in such denominations as may be requested by the Warrantholder and
      shall be registered in the name of the Warrantholder or such other name as
      shall
      be designated by the Warrantholder, as specified in the Exercise Agreement.
      If
      this Warrant shall have been exercised only in part, then, unless this Warrant
      has expired, the Company shall, at its expense, at the time of delivery of
      such
      certificates, deliver to the Warrantholder a new Warrant representing the right
      to purchase the number of shares with respect to which this Warrant shall not
      then have been exercised. As used herein, “business day” means a day, other than
      a Saturday or Sunday, on which banks in New York City are open for the general
      transaction of business. Each exercise hereof shall constitute the
      re-affirmation by the Warrantholder that the representations and warranties
      contained in Section 5 of the Purchase Agreement are true and correct in all
      material respects with respect to the Warrantholder as of the time of such
      exercise.

    

    (b) Conversion
      Limitation.
      Notwithstanding anything in this Warrant to the contrary, in no event shall
      the
      Warrantholder be entitled to exercise a number of Warrants (or portions thereof)
      in excess of the number of Warrants (or portions thereof) upon exercise of
      which
      the sum of (i) the number of shares of Common Stock beneficially owned by the
      Warrantholder and its affiliates (other than shares of Common Stock which may
      be
      deemed beneficially owned through the ownership of the unexercised Warrants
      and
      the unexercised or unconverted portion of any other securities of the Company
      (subject to a limitation on conversion or exercise analogous to the limitation
      contained herein) and (ii) the number of shares of Common Stock issuable upon
      exercise of the Warrants (or portions thereof) with respect to which the
      determination described herein is being made, would result in beneficial
      ownership by the Warrantholder and its affiliates of more than 9.99% of the
      outstanding shares of the Company’s Common Stock. For purposes of the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulation 13D-G thereunder, except as otherwise provided in clause
      (i) of the preceding sentence. Notwithstanding anything in this Warrant to
      the
      contrary, the limitation on exercise of this Warrant may be waived by written
      agreement between the Warrantholder and the Company; provided,
      however,
      such
      waiver may not be effective less than sixty-one (61) days from the date
      thereof.

    

    
      
        
        

      

      
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    (c) Cashless
      Exercise.
      Notwithstanding any other provision contained herein to the contrary, from
      and
      after the one year anniversary of the Closing Date and so long as the Company
      is
      required under the Registration Rights Agreement to have effected the
      registration of the Warrant Shares for resale to the public pursuant to a
      Registration Statement (as such term is defined in the Registration Rights
      Agreement), if the Warrant Shares may not be freely sold to the public due
      to
      the failure of the Company to have effected the registration of the Warrant
      Shares or to have a current prospectus available for delivery or otherwise,
      and
      if an exemption for such sale is not otherwise available pursuant to Rule 144
      promulgated under the Securities Act, the Warrantholder may elect to receive,
      without the payment by the Warrantholder of the aggregate Warrant Price in
      respect of the shares of Common Stock to be acquired, shares of Common Stock
      of
      equal value to the value of this Warrant, or any specified portion hereof,
      by
      the surrender of this Warrant (or such portion of this Warrant being so
      exercised) together with a Net Issue Election Notice, in the form annexed hereto
      as Appendix
      B,
      duly
      executed, to the Company. Thereupon, the Company shall issue to the
      Warrantholder such number of fully paid, validly issued and nonassessable shares
      of Common Stock as is computed using the following formula:

    

    X
      =
Y
      (A -
      B)

    A

    

    where 

    

    X
      = the
      number of shares of Common Stock to which the Warrantholder is entitled upon
      such cashless exercise;

    

    Y
      = the
      total
      number of shares of Common Stock covered by this Warrant for which the
      Warrantholder has surrendered purchase rights at such time for cashless exercise
      (including both shares to be issued to the Warrantholder and shares as to which
      the purchase rights are to be canceled as payment therefor);

    

    A
      = the
      “Market Price” of one share of Common Stock as at the date the net issue
      election is made; and

    

    B
      = the
      Warrant Price in effect under this Warrant at the time the net issue election
      is
      made.

    

    Section
      4. Compliance
      with the Securities Act.
      Except
      as provided in the Purchase Agreement, the Company may cause the legend set
      forth on the first page of this Warrant to be set forth on each Warrant, and
      a
      similar legend on any security issued or issuable upon exercise of this Warrant,
      unless counsel for the Company is of the opinion as to any such security that
      such legend is unnecessary.

    

    
      
        
        

      

      
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    Section
      5. Payment
      of Taxes.
      The
      Company will pay any documentary stamp taxes attributable to the initial
      issuance of Warrant Shares issuable upon the exercise of the Warrant; provided,
      however, that the Company shall not be required to pay any tax or taxes which
      may be payable in respect of any transfer involved in the issuance or delivery
      of any certificates for Warrant Shares in a name other than that of the
      Warrantholder in respect of which such shares are issued, and in such case,
      the
      Company shall not be required to issue or deliver any certificate for Warrant
      Shares or any Warrant until the person requesting the same has paid to the
      Company the amount of such tax or has established to the Company’s reasonable
      satisfaction that such tax has been paid. The Warrantholder shall be responsible
      for income taxes due under federal, state or other law, if any such tax is
      due.

    

    Section
      6. Mutilated
      or Missing Warrants.
      In case
      this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall
      issue in exchange and substitution of and upon surrender and cancellation of
      the
      mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen
      or destroyed, a new Warrant of like tenor and for the purchase of a like number
      of Warrant Shares, but only upon receipt of evidence reasonably satisfactory
      to
      the Company of such loss, theft or destruction of the Warrant, and with respect
      to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with
      respect thereto, if requested by the Company.

    

    Section
      7. Reservation
      of Common Stock.
      The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued shares of Common Stock, solely for the purpose of providing for the
      exercise of the Company Warrants, such number of shares of Common Stock as
      shall
      from time to time equal the number of shares sufficient to permit the exercise
      of the Company Warrants in accordance with their respective terms. The Company
      agrees that all Warrant Shares issued upon due exercise of the Warrant shall
      be,
      at the time of delivery of the certificates for such Warrant Shares, duly
      authorized, validly issued, fully paid and non-assessable shares of Common
      Stock
      of the Company.

    

    Section
      8. Adjustments.
      Subject
      and pursuant to the provisions of this Section 8, the Warrant Price and number
      of Warrant Shares subject to this Warrant shall be subject to adjustment from
      time to time as set forth hereinafter.

    

    (a) If
      the
      Company shall, at any time or from time to time while this Warrant is
      outstanding, pay a dividend or make a distribution on its Common Stock in shares
      of Common Stock, subdivide its outstanding shares of Common Stock into a greater
      number of shares or combine its outstanding shares of Common Stock into a
      smaller number of shares or issue by reclassification of its outstanding shares
      of Common Stock any shares of its capital stock (including any such
      reclassification in connection with a consolidation or merger in which the
      Company is the continuing corporation), then (i) the Warrant Price in effect
      immediately prior to the date on which such change shall become effective shall
      be adjusted by multiplying such Warrant Price by a fraction, the numerator
      of
      which shall be the number of shares of Common Stock outstanding immediately
      prior to such change and the denominator of which shall be the number of shares
      of Common Stock outstanding immediately after giving effect to such change
      and
      (ii) the number of Warrant Shares purchasable upon exercise of this Warrant
      shall be adjusted by multiplying the number of Warrant Shares purchasable upon
      exercise of this Warrant immediately prior to the date on which such change
      shall become effective by a fraction, the numerator of which is shall be the
      Warrant Price in effect immediately prior to the date on which such change
      shall
      become effective and the denominator of which shall be the Warrant Price in
      effect immediately after giving effect to such change, calculated in accordance
      with clause (i) above. Such adjustments shall be made successively whenever
      any
      event listed above shall occur.

    

    
      
        
        

      

      
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    (b) If
      any
      capital reorganization or reclassification of the capital stock of the Company,
      consolidation or merger of the Company with another corporation in which the
      Company is not the survivor, or sale, transfer or other disposition of all
      or
      substantially all of the Company’s assets to another corporation shall be
      effected, then, as a condition of such reorganization, reclassification,
      consolidation, merger, sale, transfer or other disposition, lawful and adequate
      provision shall be made whereby each Warrantholder shall thereafter have the
      right to purchase and receive upon the basis and upon the terms and conditions
      herein specified and in lieu of the Warrant Shares immediately theretofore
      issuable upon exercise of the Warrant, such shares of stock, securities or
      assets as would have been issuable or payable with respect to or in exchange
      for
      a number of Warrant Shares equal to the number of Warrant Shares immediately
      theretofore issuable upon exercise of the Warrant, had such reorganization,
      reclassification, consolidation, merger, sale, transfer or other disposition
      not
      taken place, and in any such case appropriate provision shall be made with
      respect to the rights and interests of each Warrantholder to the end that the
      provisions hereof (including, without limitation, provision for adjustment
      of
      the Warrant Price) shall thereafter be applicable, as nearly equivalent as
      may
      be practicable in relation to any shares of stock, securities or assets
      thereafter deliverable upon the exercise hereof. The Company shall not effect
      any such consolidation, merger, sale, transfer or other disposition unless
      prior
      to or simultaneously with the consummation thereof the successor corporation
      (if
      other than the Company) resulting from such consolidation or merger, or the
      corporation purchasing or otherwise acquiring such assets or other appropriate
      corporation or entity shall assume the obligation to deliver to the
      Warrantholder, at the last address of the Warrantholder appearing on the books
      of the Company, such shares of stock, securities or assets as, in accordance
      with the foregoing provisions, the Warrantholder may be entitled to purchase,
      and the other obligations under this Warrant. The provisions of this paragraph
      (b) shall similarly apply to successive reorganizations, reclassifications,
      consolidations, mergers, sales, transfers or other dispositions.

    

    (c) In
      case
      the Company shall fix a payment date for the making of a distribution to all
      holders of Common Stock (including any such distribution made in connection
      with
      a consolidation or merger in which the Company is the continuing corporation)
      of
      evidences of indebtedness or assets (other than cash dividends or cash
      distributions payable out of consolidated earnings or earned surplus or
      dividends or distributions referred to in Section 8(a)), or subscription rights
      or warrants, the Warrant Price to be in effect after such payment date shall
      be
      determined by multiplying the Warrant Price in effect immediately prior to
      such
      payment date by a fraction, the numerator of which shall be the total number
      of
      shares of Common Stock outstanding multiplied by the Market Price (as defined
      below) per share of Common Stock immediately prior to such payment date, less
      the fair market value (as determined by the Company’s Board of Directors in good
      faith) of said assets or evidences of indebtedness so distributed, or of such
      subscription rights or warrants, and the denominator of which shall be the
      total
      number of shares of Common Stock outstanding multiplied by such Market Price
      per
      share of Common Stock immediately prior to such payment date. “Market Price” as
      of a particular date (the “Valuation Date”) shall mean the following: (a) if the
      Common Stock is then listed on a national stock exchange, the closing sale
      price
      of one share of Common Stock on such exchange on the last trading day prior
      to
      the Valuation Date; (b) if the Common Stock is then quoted on The Nasdaq Stock
      Market, Inc. (“Nasdaq”), the National Association of Securities Dealers, Inc.
      OTC Bulletin Board (the “Bulletin Board”) or such similar quotation system or
      association, the closing sale price of one share of Common Stock on Nasdaq,
      the
      Bulletin Board or such other quotation system or association on the last trading
      day prior to the Valuation Date or, if no such closing sale price is available,
      the average of the high bid and the low asked price quoted thereon on the last
      trading day prior to the Valuation Date; or (c) if the Common Stock is not
      then
      listed on a national stock exchange or quoted on Nasdaq, the Bulletin Board
      or
      such other quotation system or association, the fair market value of one share
      of Common Stock as of the Valuation Date, as determined in good faith by the
      Board of Directors of the Company and the Warrantholder. If the Common Stock
      is
      not then listed on a national securities exchange, Nasdaq the Bulletin Board
      or
      such other quotation system or association, the Board of Directors of the
      Company shall respond promptly, in writing, to an inquiry by the Warrantholder
      prior to the exercise hereunder as to the fair market value of a share of Common
      Stock as determined by the Board of Directors of the Company. In the event
      that
      the Board of Directors of the Company and the Warrantholder are unable to agree
      upon the fair market value in respect of subpart (c) of this paragraph, the
      Company and the Warrantholder shall jointly select an appraiser, who is
      experienced in such matters. The decision of such appraiser shall be final
      and
      conclusive, and the cost of such appraiser shall be borne equally by the Company
      and the Warrantholder. Such adjustment shall be made successively whenever
      such
      a payment date is fixed.

    

    
      
        
        

      

      
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    (d) An
      adjustment to the Warrant Price shall become effective immediately after the
      payment date in the case of each dividend or distribution and immediately after
      the effective date of each other event which requires an
      adjustment.

    

    (e) In
      the
      event that, as a result of an adjustment made pursuant to this Section 8, the
      Warrantholder shall become entitled to receive any shares of capital stock
      of
      the Company other than shares of Common Stock, the number of such other shares
      so receivable upon exercise of this Warrant shall be subject thereafter to
      adjustment from time to time in a manner and on terms as nearly equivalent
      as
      practicable to the provisions with respect to the Warrant Shares contained
      in
      this Warrant.

    

    (f) Except
      as
      provided in subsection (g) hereof, if and whenever the Company shall issue
      or
      sell, or is, in accordance with any of subsections (f)(l) through (f)(7) hereof,
      deemed to have issued or sold, any Additional Shares of Common Stock for no
      consideration or for a consideration per share less than the Warrant Price
      in
      effect immediately prior to the time of such issue or sale, then and in each
      such case (a “Trigger
      Issuance”)
      the
      then-existing Warrant Price shall be reduced, as of the close of business on
      the
      effective date of the Trigger Issuance, to a price determined as
      follows:

    

    Adjusted
      Warrant Price = (A
      x
      B) + D

    A+C

    

    where

    

    “A”
      equals the number of shares of Common Stock outstanding, including Additional
      Shares of Common Stock (as defined below) deemed to be issued hereunder,
      immediately preceding such Trigger Issuance;

    

    “B”
      equals the Warrant Price in effect immediately preceding such Trigger
      Issuance;

    

    “C”
      equals the number of Additional Shares of Common Stock issued or deemed issued
      hereunder as a result of the Trigger Issuance; and

    

    “D”
      equals the aggregate consideration, if any, received or deemed to be received
      by
      the Company upon such Trigger Issuance;

    

    provided,
      however, that in no event shall the Warrant Price after giving effect to such
      Trigger Issuance be greater than the Warrant Price in effect prior to such
      Trigger Issuance.

    

    For
      purposes of this subsection (f), “Additional Shares of Common Stock” shall mean
      all shares of Common Stock issued by the Company or deemed to be issued pursuant
      to this subsection (f), other than Excluded Issuances (as defined in subsection
      (g) hereof).

    

    For
      purposes of this subsection (f), the following subsections (f)(l) to (f)(7)
      shall also be applicable:

    

    
      
        
        

      

      
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    (f)(1)
      Issuance of Rights or Options. In case at any time the Company shall in any
      manner grant (directly and not by assumption in a merger or otherwise) any
      warrants or other rights to subscribe for or to purchase, or any options for
      the
      purchase of, Common Stock or any stock or security convertible into or
      exchangeable for Common Stock (such warrants, rights or options being called
      “Options” and such convertible or exchangeable stock or securities being called
“Convertible Securities”) whether or not such Options or the right to convert or
      exchange any such Convertible Securities are immediately exercisable, and the
      price per share for which Common Stock is issuable upon the exercise of such
      Options or upon the conversion or exchange of such Convertible Securities
      (determined by dividing (i) the sum (which sum shall constitute the applicable
      consideration) of (x) the total amount, if any, received or receivable by the
      Company as consideration for the granting of such Options, plus (y) the
      aggregate amount of additional consideration payable to the Company upon the
      exercise of all such Options, plus (z), in the case of such Options which relate
      to Convertible Securities, the aggregate amount of additional consideration,
      if
      any, payable upon the issue or sale of such Convertible Securities and upon
      the
      conversion or exchange thereof, by (ii) the total maximum number of shares
      of
      Common Stock issuable upon the exercise of such Options or upon the conversion
      or exchange of all such Convertible Securities issuable upon the exercise of
      such Options) shall be less than the Warrant Price in effect immediately prior
      to the time of the granting of such Options, then the total number of shares
      of
      Common Stock issuable upon the exercise of such Options or upon conversion
      or
      exchange of the total amount of such Convertible Securities issuable upon the
      exercise of such Options shall be deemed to have been issued for such price
      per
      share as of the date of granting of such Options or the issuance of such
      Convertible Securities and thereafter shall be deemed to be outstanding for
      purposes of adjusting the Warrant Price. Except as otherwise provided in
      subsection 8(f)(3), no adjustment of the Warrant Price shall be made upon the
      actual issue of such Common Stock or of such Convertible Securities upon
      exercise of such Options or upon the actual issue of such Common Stock upon
      conversion or exchange of such Convertible Securities.

    

    (f)(2)
      Issuance of Convertible Securities. In case the Company shall in any manner
      issue (directly and not by assumption in a merger or otherwise) or sell any
      Convertible Securities, whether or not the rights to exchange or convert any
      such Convertible Securities are immediately exercisable, and the price per
      share
      for which Common Stock is issuable upon such conversion or exchange (determined
      by dividing (i) the sum (which sum shall constitute the applicable
      consideration) of (x) the total amount received or receivable by the Company
      as
      consideration for the issue or sale of such Convertible Securities, plus (y)
      the
      aggregate amount of additional consideration, if any, payable to the Company
      upon the conversion or exchange thereof, by (ii) the total number of shares
      of
      Common Stock issuable upon the conversion or exchange of all such Convertible
      Securities) shall be less than the Warrant Price in effect immediately prior
      to
      the time of such issue or sale, then the total maximum number of shares of
      Common Stock issuable upon conversion or exchange of all such Convertible
      Securities shall be deemed to have been issued for such price per share as
      of
      the date of the issue or sale of such Convertible Securities and thereafter
      shall be deemed to be outstanding for purposes of adjusting the Warrant Price,
      provided that (a) except as otherwise provided in subsection 8(f)(3), no
      adjustment of the Warrant Price shall be made upon the actual issuance of such
      Common Stock upon conversion or exchange of such Convertible Securities and
      (b)
      no further adjustment of the Warrant Price shall be made by reason of the issue
      or sale of Convertible Securities upon exercise of any Options to purchase
      any
      such Convertible Securities for which adjustments of the Warrant Price have
      been
      made pursuant to the other provisions of subsection 8(f).

     

    (f)(3)
      Change in Option Price or Conversion Rate. Upon the happening of any of the
      following events, namely, if the purchase price provided for in any Option
      referred to in subsection 8(f)(l) hereof, the additional consideration, if
      any,
      payable upon the conversion or exchange of any Convertible Securities referred
      to in subsections 8(f)(l) or 8(f)(2), or the rate at which Convertible
      Securities referred to in subsections 8(f)(l) or 8(f)(2) are convertible into
      or
      exchangeable for Common Stock shall change at any time (including, but not
      limited to, changes under or by reason of provisions designed to protect against
      dilution), the Warrant Price in effect at the time of such event shall forthwith
      be readjusted to the Warrant Price which would have been in effect at such
      time
      had such Options or Convertible Securities still outstanding provided for such
      changed purchase price, additional consideration or conversion rate, as the
      case
      may be, at the time initially granted, issued or sold. On the termination of
      any
      Option for which any adjustment was made pursuant to this subsection 8(f) or
      any
      right to convert or exchange Convertible Securities for which any adjustment
      was
      made pursuant to this subsection 8(f) (including without limitation upon the
      redemption or purchase for consideration of such Convertible Securities by
      the
      Company), the Warrant Price then in effect hereunder shall forthwith be changed
      to the Warrant Price which would have been in effect at the time of such
      termination had such Option or Convertible Securities, to the extent outstanding
      immediately prior to such termination, never been issued.

     

    
      
        
        

      

      
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    (f)(4)
      Stock Dividends. Subject to the provisions of this Section 8(f), in case the
      Company shall declare or pay a dividend or make any other distribution upon
      any
      stock of the Company (other than the Common Stock) payable in Common Stock,
      Options or Convertible Securities, then any Common Stock, Options or Convertible
      Securities, as the case may be, issuable in payment of such dividend or
      distribution shall be deemed to have been issued or sold without
      consideration.

    

    (f)(5)
      Consideration for Stock. In case any shares of Common Stock, Options or
      Convertible Securities shall be issued or sold for cash, the consideration
      received therefor shall be deemed to be the net amount received by the Company
      therefor, after deduction therefrom of any expenses incurred or any underwriting
      commissions or concessions paid or allowed by the Company in connection
      therewith. In case any shares of Common Stock, Options or Convertible Securities
      shall be issued or sold for a consideration other than cash, the amount of
      the
      consideration other than cash received by the Company shall be deemed to be
      the
      fair value of such consideration as determined in good faith by the Board of
      Directors of the Company, after deduction of any expenses incurred or any
      underwriting commissions or concessions paid or allowed by the Company in
      connection therewith. In case any Options shall be issued in connection with
      the
      issue and sale of other securities of the Company, together comprising one
      integral transaction in which no specific consideration is allocated to such
      Options by the parties thereto, such Options shall be deemed to have been issued
      for such consideration as determined in good faith by the Board of Directors
      of
      the Company. If Common Stock, Options or Convertible Securities shall be issued
      or sold by the Company and, in connection therewith, other Options or
      Convertible Securities (the “Additional Rights”) are issued, then the
      consideration received or deemed to be received by the Company shall be reduced
      by the fair market value of the Additional Rights (as determined using the
      Black-Scholes option pricing model or another method mutually agreed to by
      the
      Company and the Warrantholder). The Board of Directors of the Company shall
      respond promptly, in writing, to an inquiry by the Warrantholder as to the
      fair
      market value of the Additional Rights. In the event that the Board of Directors
      of the Company and the Warrantholder are unable to agree upon the fair market
      value of the Additional Rights, the Company and the Warrantholder shall jointly
      select an appraiser, who is experienced in such matters. The decision of such
      appraiser shall be final and conclusive, and the cost of such appraiser shall
      be
      borne evenly by the Company and the Warrantholder.

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

       

    

    (f)(6)
      Record Date. In case the Company shall take a record of the holders of its
      Common Stock for the purpose of entitling them (i) to receive a dividend or
      other distribution payable in Common Stock, Options or Convertible Securities
      or
      (ii) to subscribe for or purchase Common Stock, Options or Convertible
      Securities, then such record date shall be deemed to be the date of the issue
      or
      sale of the shares of Common Stock deemed to have been issued or sold upon
      the
      declaration of such dividend or the making of such other distribution or the
      date of the granting of such right of subscription or purchase, as the case
      may
      be.

    

    (f)(7)
      Treasury Shares. The number of shares of Common Stock outstanding at any given
      time shall not include shares owned or held by or for the account of the Company
      or any of its wholly-owned subsidiaries, and the disposition of any such shares
      (other than the cancellation or retirement thereof) shall be considered an
      issue
      or sale of Common Stock for the purpose of this subsection (f).

    

    (g) Anything
      herein to the contrary notwithstanding, the Company shall not be required to
      make any adjustment of the Warrant Price in the case of the issuance of
(A)
      capital stock, Options or Convertible Securities issued to directors, officers,
      employees or consultants of the Company in connection with their service as
      directors of the Company, their employment by the Company or their retention
      as
      consultants by the Company pursuant to an equity compensation program approved
      by the Board of Directors of the Company or the compensation committee of the
      Board of Directors of the Company, (B) shares of Common Stock issued upon the
      conversion or exercise of Options or Convertible Securities issued prior to
      the
      date hereof, provided such securities are not amended after the date hereof
      to
      increase the number of shares of Common Stock issuable thereunder or to lower
      the exercise or conversion price thereof, (C) securities issued pursuant to
      the
      Purchase Agreement and securities issued upon the exercise or conversion of
      those securities, (D) shares of Common Stock issued or issuable by reason of
      a
      dividend, stock split or other distribution on shares of Common Stock (but
      only
      to the extent that such a dividend, split or distribution results in an
      adjustment in the Warrant Price pursuant to the other provisions of this
      Warrant), and (E) capital stock, Options or Convertible Securities issued to
      strategic partners of the Company in connection with transactions consummated
      with such strategic partners in furtherance of the Company’s business objectives
      (collectively, “Excluded Issuances”).

    

    (h) Upon
      any
      adjustment to the Warrant Price pursuant to Section 8(f) above, the number
      of
      Warrant Shares purchasable hereunder shall be adjusted by multiplying such
      number by a fraction, the numerator of which shall be the Warrant Price in
      effect immediately prior to such adjustment and the denominator of which shall
      be the Warrant Price in effect immediately thereafter.

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

       

    

    (i) To
      the
      extent permitted by applicable law and the listing requirements of any stock
      market or exchange on which the Common Stock is then listed, the Company from
      time to time may decrease the Warrant Price by any amount for any period of
      time
      if the period is at least twenty (20) days, the decrease is irrevocable during
      the period and the Board shall have made a determination that such decrease
      would be in the best interests of the Company, which determination shall be
      conclusive. Whenever the Warrant Price is decreased pursuant to the preceding
      sentence, the Company shall provide written notice thereof to the Warrantholder
      at least five (5) days prior to the date the decreased Warrant Price takes
      effect, and such notice shall state the decreased Warrant Price and the period
      during which it will be in effect.

    

    Section
      9. Fractional
      Interest.
      The
      Company shall not be required to issue fractions of Warrant Shares upon the
      exercise of this Warrant. If any fractional share of Common Stock would, except
      for the provisions of the first sentence of this Section 9, be deliverable
      upon
      such exercise, the Company, in lieu of delivering such fractional share, shall
      pay to the exercising Warrantholder an amount in cash equal to the Market Price
      of such fractional share of Common Stock on the date of exercise.

    

    Section
      10. Adjustment
      to Expiration Date.
      The
      Expiration Date of the Warrant shall be adjusted as follows:

    

    (a) If
      the
      Company fails to cause any Registration Statement covering Registrable
      Securities (unless otherwise defined herein, capitalized terms are as defined
      in
      the Registration Rights Agreement relating to the Warrant Shares, dated as
      of
      even date herewith (the “Registration Rights Agreement”)), to be declared
      effective prior to the applicable dates set forth therein, or if any of the
      events specified in Section 2(c)(ii) of the Registration Rights Agreement
      occurs, and the Blackout Period (whether alone, or in combination with any
      other
      Blackout Period) continues for more than 60 days in any 12 month period, or
      for
      more than a total of 90 days, then the Expiration Date of this Warrant shall
      be
      extended one day for each day beyond the 60-day or 90-day limits, as the case
      may be, that the Blackout Period continues.

    

    (b) If
      a
      Warrantholder exercises its right to put the shares of Common Stock it purchased
      in the Offering back to the Company, pursuant to the terms and conditions of
      a
      Put Agreement, dated as of even date herewith (the “Put Agreement”), among the
      Company and the initial holders of the Company Warrants (as defined below),
      such
      Warrantholder’s right to exercise the Warrants shall be suspended, pending the
      satisfaction of the Company’s obligations to pay the Warrantholder the
      repurchase price for such shares (the “Repurchase Price”). Upon receipt of the
      Repurchase Price in full by the Warrantholder, the Warrantholder’s right to
      exercise the Warrants shall automatically and permanently terminate and expire,
      and the Warrants shall be immediately cancelled on the books of the
      Company.

    

    Section
      11. Benefits.
      Nothing
      in this Warrant shall be construed to give any person, firm or corporation
      (other than the Company and the Warrantholder) any legal or equitable right,
      remedy or claim, it being agreed that this Warrant shall be for the sole and
      exclusive benefit of the Company and the Warrantholder.

    

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

       

    

    Section
      12. Notices
      to Warrantholder.
      Upon
      the happening of any event requiring an adjustment of the Warrant Price, the
      Company shall promptly give written notice thereof to the Warrantholder at
      the
      address appearing in the records of the Company, stating the adjusted Warrant
      Price and the adjusted number of Warrant Shares resulting from such event and
      setting forth in reasonable detail the method of calculation and the facts
      upon
      which such calculation is based. Failure to give such notice to the
      Warrantholder or any defect therein shall not affect the legality or validity
      of
      the subject adjustment.

    

    Section
      13. Identity
      of Transfer Agent.
      The
      Transfer Agent for the Common Stock is Interwest Transfer Company, Inc., 1981
      East Murray Holladay Road, Suite 100, P.O. Box 17136, Salt Lake City, UT 84117.
      Upon the appointment of any subsequent transfer agent for the Common Stock
      or
      other shares of the Company’s capital stock issuable upon the exercise of the
      rights of purchase represented by the Warrant, the Company will mail to the
      Warrantholder a statement setting forth the name and address of such transfer
      agent.

    

    Section
      14. Notices.
      Unless
      otherwise provided, any notice required or permitted under this Warrant shall
      be
      given in writing and shall be deemed effectively given as hereinafter described
      (i) if given by personal delivery, then such notice shall be deemed given upon
      such delivery, (ii) if given by telex or facsimile, then such notice shall
      be
      deemed given upon receipt of confirmation of complete transmittal, (iii) if
      given by mail, then such notice shall be deemed given upon the earlier of (A)
      receipt of such notice by the recipient or (B) three days after such notice
      is
      deposited in first class mail, postage prepaid, and (iv) if given by an
      internationally recognized overnight air courier, then such notice shall be
      deemed given one business day after delivery to such carrier. All notices shall
      be addressed as follows: if to the Warrantholder, at its address as set forth
      in
      the Company’s books and records and, if to the Company, at the address as
      follows, or at such other address as the Warrantholder or the Company may
      designate by ten days’ advance written notice to the other:

    

    If
      to the
      Company:

    

    China
      Sky
      One Medical, Inc.

    Room
      1706, No. 30 Di Wang Building

    Gan
      Shui
      Road, Nandang District, Harbin

    People’s
      Republic of China 150001

       Attn:
      Liu
      Yan-Qing, Chairman

       Fax:
      +
      86-451-8700-9121

     

    With
      a
      copy to:

    

    Hodgson
      Russ LLP

    1540
      Broadway, 24th
      Floor

    New
      York,
      NY 10036

    Attn:
      Jeffrey A. Rinde, Esq.

    Fax:
      (212) 751-0928

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

       

    

    Section
      15. Registration
      Rights.
      The
      initial Warrantholder is entitled to the benefit of certain registration rights
      with respect to the shares of Common Stock issuable upon the exercise of this
      Warrant as provided in the Registration Rights Agreement, and any subsequent
      Warrantholder may be entitled to such rights.

    

    Section
      16. Successors.
      All the
      covenants and provisions hereof by or for the benefit of the Warrantholder
      shall
      bind and inure to the benefit of its respective successors and assigns
      hereunder. 

    

    Section
      17. Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.
      This
      Warrant shall be governed by, and construed in accordance with, the internal
      laws of the State of New York, without reference to the choice of law provisions
      thereof. The Company and, by accepting this Warrant, the Warrantholder, each
      irrevocably submits to the exclusive jurisdiction of the courts of the State
      of
      New York located in New York County and the United States District Court for
      the
      Southern District of New York for the purpose of any suit, action, proceeding
      or
      judgment relating to or arising out of this Warrant and the transactions
      contemplated hereby. Service of process in connection with any such suit, action
      or proceeding may be served on each party hereto anywhere in the world by the
      same methods as are specified for the giving of notices under this Warrant.
      The
      Company and, by accepting this Warrant, the Warrantholder, each irrevocably
      consents to the jurisdiction of any such court in any such suit, action or
      proceeding and to the laying of venue in such court. The Company and, by
      accepting this Warrant, the Warrantholder, each irrevocably waives any objection
      to the laying of venue of any such suit, action or proceeding brought in such
      courts and irrevocably waives any claim that any such suit, action or proceeding
      brought in any such court has been brought in an inconvenient forum.
EACH
      OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES
      ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
      WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
      WAIVER.

    

    Section
      18. Call
      Provision.

    

    (a) In
      the
      event that (i) the closing price of a share of Common Stock as traded on the
      Over-the-Counter Bulletin Board (or such other exchange or stock market on
      which
      the Common Stock may then be listed or quoted) equals or exceeds $18.75
      (appropriately adjusted for any stock split, reverse stock split, stock dividend
      or other reclassification or combination of the Common Stock occurring after
      the
      date hereof) for at least ten (10) consecutive trading days during which the
      Registration Statement (as defined in the Registration Rights Agreement) has
      been effective (the “Trading
      Condition”),
      and
      (ii) the Company has realized an Adjusted EPS (as defined below) for the fiscal
      year ending December 31, 2008 of greater than or equal to $1.75 per share
      (the “FY08
      Performance Threshold”),
      as
      set forth in the audited financial statements of the Company for the period
      ending December 31, 2008, the Company, upon ten (10) days prior written
      notice (the “Notice
      Period”)
      given
      to the Warrantholder within three business days immediately following the end
      of
      such ten (10) trading day period, may call this Warrant at a redemption price
      equal to $0.001 per share of Common Stock then purchasable pursuant to this
      Warrant (the “Call
      Option”);
      provided that (i) the Company simultaneously calls all Company Warrants (as
      defined below) on the same terms, (ii) all of the shares of Common Stock
      issuable hereunder either (A) are registered pursuant to an effective
      Registration Statement (as defined in the Registration Rights Agreement) which
      has not been suspended and for which no stop order is in effect, and pursuant
      to
      which the Warrantholder is able to sell such shares of Common Stock at all
      times
      during the Notice Period or (B) no longer constitute Registrable Securities
      (as
      defined in the Registration Rights Agreement) and (iii) this Warrant is fully
      exercisable for the full amount of Warrant Shares covered hereby.
      Notwithstanding any such notice by the Company, the Warrantholder shall have
      the
      right to exercise all, but not less than all, of this Warrant prior to the
      end
      of the Notice Period. For the purpose of this Section 18(a), “Adjusted EPS”
means the net income (or loss) of the Company and its subsidiaries for such
      period, determined on a consolidated basis divided by 16,907,696 shares;
provided,
      however,
      that
      (i) the Adjusted EPS for such period will be increased by any cash charges
      related to the Offering (as defined in the Purchase Agreement) and non-cash
      charges incurred as a result of the Offering (due to non-cash amortization
      on
      warrants charged to the Company’s results of operation, if any), and (ii) if the
      Offering does not close on or before January 7, 2008 (the “Closing
      Deadline”),
      the
      FY08 Performance Threshold will be decreased in an amount equal to 2% for each
      7-day period, or pro rata for any portion thereof, following the Closing
      Deadline, until such time as the Offering is consummated.

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

       

    

    Section
      19. No
      Rights as Stockholder.
      Prior
      to the exercise of this Warrant, the Warrantholder shall not have or exercise
      any rights as a stockholder of the Company by virtue of its ownership of this
      Warrant.

    

    Section
      20. Amendment;
      Waiver.
      This
      Warrant is one of a series of Warrants of like tenor issued by the Company
      pursuant to the Purchase Agreement and initially covering an aggregate of up
      to
      900,000 shares of Common Stock (collectively, the “Company
      Warrants”).
      Except as otherwise set forth herein, any term of this Warrant may be amended
      or
      waived (including the adjustment provisions included in Section 8 of this
      Warrant) only upon the written consent of the Company and the holders of Company
      Warrants representing at least 66.67% of the number of shares of Common Stock
      then subject to all outstanding Company Warrants (the “Majority
      Holders”);
      provided,
      that
      (x) any such amendment or waiver must apply to all Company Warrants; and (y)
      the
      number of Warrant Shares subject to this Warrant, the Warrant Price and the
      Expiration Date may not be amended, and the right to exercise this Warrant
      may
      not be altered or waived in any manner adverse to the Warrantholder, without
      the
      written consent of the Warrantholder.

    

    Section
      21. Section
      Headings.
      The
      section headings in this Warrant are for the convenience of the Company and
      the
      Warrantholder and in no way alter, modify, amend, limit or restrict the
      provisions hereof.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as
      of
      the ___ day of January, 2008.

    

    CHINA
      SKY
      ONE MEDICAL, INC.

    

    

    

    By:___________________________

    Name:
      

    Title:
      

    

    

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    

    APPENDIX
      A

    CHINA
      SKY
      ONE MEDICAL, INC.

    WARRANT
      EXERCISE FORM

    

    To
      China
      Sky One Medical, Inc.:

    

    The
      undersigned hereby irrevocably elects to exercise the right of purchase
      represented by the within Warrant (“Warrant”) for, and to purchase thereunder by
      the payment of the Warrant Price and surrender of the Warrant, _______________
      shares of Common Stock (“Warrant Shares”) provided for therein, and requests
      that certificates for the Warrant Shares be issued as follows: 

    _______________________________

    Name

    ________________________________

    Address

    ________________________________

    ________________________________

    Federal
      Tax ID or Social Security No.

    

    and
      delivered by (certified
      mail to the above address, or 

    (electronically
      (provide DWAC Instructions: _________________), 

    or
      

    (other
      (specify): ________________________________________). 

    

    and,
      if
      the number of Warrant Shares shall not be all the Warrant Shares purchasable
      upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
      Shares purchasable upon exercise of this Warrant be registered in the name
      of
      the undersigned Warrantholder or the undersigned’s Assignee as below indicated
      and delivered to the address stated below.

    

    Dated:
      ___________________, ____

    

    Note:
      The
      signature must correspond with  Signature:______________________________

    the
      name
      of the Warrantholder as written

    on
      the
      first page of the Warrant in
      every                                   
______________________________

    particular,
      without alteration or
      enlargement                             
Name
      (please print)

    or
      any
      change whatever, unless the Warrant 

    has
      been
      assigned.                                                                        
______________________________

                                                                                                              
      ______________________________

                                                                                                              
      Address

                                                                                                              
      ______________________________

      
      Federal Identification or

      
Social
      Security No.

    

      
      Assignee: 

      
      _______________________________

      
      _______________________________

      
      _______________________________

    

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

       

    

    APPENDIX
      B

    CHINA
      SKY
      ONE MEDICAL, INC.

    NET
      ISSUE
      ELECTION NOTICE

    

    

    

    To:
      China
      Sky One Medical, Inc.

    Date:[_________________________]

    

    

    The
      undersigned hereby elects under Section
      3(c)
      of this
      Warrant to surrender the right to purchase [____________] shares of Common
      Stock
      pursuant to this Warrant and hereby requests the issuance of [_____________]
      shares of Common Stock. The certificate(s) for the shares issuable upon such
      net
      issue election shall be issued in the name of the undersigned or as otherwise
      indicated below.

    

    

    _________________________________________

    Signature

    _________________________________________

    Name
      for
      Registration

    _________________________________________

    
      Mailing
        Address

       

      
        
          
          

        

        
          -16-SECURITIES
      PURCHASE AGREEMENT

    

    

    THIS
      SECURITIES PURCHASE AGREEMENT
      (“Agreement”)
      is
      made as of the 31st day of January, 2008, by and among China Sky One Medical,
      Inc., a Nevada corporation, with an address at Room 1706, No. 30 Di Wang
      Building, Gan Shui Road, Nandang District, Harbin, People’s Republic of China
      150001 (the “Company”),
      and
      the Investors set forth on the signature pages affixed hereto (each an
“Investor”
and
      collectively the “Investors”).

    

    Recitals:

    

    A. The
      Company and the Investors are executing and delivering this Agreement in
      connection with an offering of securities of the Company (the “Offering”)
      in
      reliance upon the exemption from securities registration afforded by the
      provisions of Regulation D (“Regulation
      D”),
      as
      promulgated by the United States Securities and Exchange Commission (the
“SEC”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”);
      and

    

    B. The
      Investors wish to purchase from the Company, and the Company wishes to sell
      and
      issue to the Investors, in one or more Closings to occur on or prior to February
      15, 2008 (provided the Minimum Units have been sold on or before January 31,
      2008), upon the terms and conditions stated in this Agreement, units of
      securities of the Company aggregating a minimum of $25,000,000 and a maximum
      of
      $30,000,000 (the “Units”),
      each
      Unit to consist of:

    

    (i) one
      (1)
      share of the Company’s Common Stock, $0.001 par value per share (the
“Common
      Stock”);
      and

    

    (ii) a
      warrant, in substantially the form attached hereto as Exhibit
      A,
      to
      purchase that number of shares of the Company’s Common Stock equal to thirty
      (30%) percent of the principal dollar amount of the Units purchased, divided
      by
      the Unit Purchase Price (rounded to the nearest whole share), at an exercise
      price of $12.50 per share; 

    

    C. The
      purchase price shall be $10.00 per Unit (the “Unit
      Purchase Price”);
      and

    

    D. Pursuant
      to its terms: (a) not less than an aggregate of 2,500,000 Units (the
“Minimum
      Units”),
      consisting of (i) 2,500,000 Shares of Common Stock and (ii) Warrants to purchase
      750,000 shares of Common Stock; and (b) not more than an aggregate of 3,000,000
      Units, consisting of (i) 3,000,000 shares of Common Stock, and (ii) Warrants
      to
      purchase 900,000 shares of Common Stock (the “Maximum
      Units”),
      may
      be sold in this Offering; and

    

    E. Contemporaneous
      with the sale of the Shares and the Warrants, the parties hereto will execute
      and deliver a Registration Rights Agreement, in substantially the form attached
      hereto as Exhibit
      B
      (the
“Registration
      Rights Agreement”),
      pursuant to which the Company will agree to provide certain registration rights
      under the 1933 Act, as amended, and the rules and regulations promulgated
      thereunder, and applicable state securities laws.

     

    
      
         

      

      
        -
          1
          -

        
          

        

      

      
         

      

    

     

    In
      consideration of the mutual promises made herein and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties hereto agree as follows:

    

    1. Definitions.
      In
      addition to those terms defined above and elsewhere in this Agreement, for
      the
      purposes of this Agreement, the following terms shall have the meanings set
      forth below:

    

    “Affiliate”
means,
      with respect to any Person, any other Person which directly or indirectly
      through one or more intermediaries Controls, is controlled by, or is under
      common control with, such Person.

    

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

    

    “Common
      Stock”
means
      the Company’s common stock, par value $0.001 per share, and any securities into
      which the common stock may be reclassified.

    

    “Company’s
      Knowledge”
means
      the actual knowledge of the executive officers (as defined in Rule 405 under
      the
      1933 Act) of the Company, after due inquiry.

    

    “Confidential
      Information”
means
      trade secrets, confidential information and know-how (including but not limited
      to ideas, formulae, compositions, processes, procedures and techniques, research
      and development information, computer program code, performance specifications,
      support documentation, drawings, specifications, designs, business and marketing
      plans, and customer and supplier lists and related information).

    

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

    

    “CSKI
      Shareholder”
means
      Liu Yan-Qing.

    

    “Effective
      Date”
means
      the date on which the initial Registration Statement is declared effective
      by
      the SEC.

    

    “Effectiveness
      Deadline”
means
      the date on which the initial Registration Statement is required to be declared
      effective by the SEC under the terms of the Registration Rights
      Agreement.

    

    “Escrow
      Agent”
means
      Capital One, N.A.

     

    
      
         

      

      
        -
          2
          -

        
          

        

      

      
         

      

    

     

    “Escrow
      Agreement”
means
      the Escrow Agreement the Company, Pope, as Investor Agent, and the Escrow Agent
      will enter into at the Closing, in substantially the form attached hereto as
      Exhibit
      C.

    

    “Intellectual
      Property”
means
      all of the following: (i) patents, patent applications, patent disclosures
      and
      inventions (whether or not patentable and whether or not reduced to practice);
      (ii) trademarks, service marks, trade dress, trade names, corporate names,
      logos, slogans and Internet domain names, together with all goodwill associated
      with each of the foregoing; (iii) copyrights and copyrightable works; (iv)
      registrations, applications and renewals for any of the foregoing; and (v)
      proprietary computer software (including but not limited to data, data bases
      and
      documentation).

    

    “Lock-Up
      Agreement”
means
      the Lock-Up Agreement the Company and the Majority Stockholders will enter
      into
      at the Closing, in substantially the form attached hereto as Exhibit
      D.

    

    “Majority
      Stockholders”
means
      the CSKI Shareholder and Han Ziao-Yan. 

    

    “Make
      Good Agreement”
means
      the Make Good Agreement the Company, the CSKI Shareholder and Pope, as Investor
      Agent, will enter into at the Closing, in substantially the form attached hereto
      as Exhibit
      E.

    

    “Make
      Good Escrow Agreement”
means
      the Make Good Agreement the Company, the CSKI Shareholder, Pope, as Investor
      Agent, and the Transfer Agent will enter into at the Closing, in substantially
      the form attached hereto as Exhibit
      F.

    

    “Material
      Adverse Effect”
means
      a
      material adverse effect on (i) the assets, liabilities, results of operations,
      condition (financial or otherwise), business, or prospects of the Company and
      its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform
      its obligations under the Transaction Documents.

    

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

    

    “Pope”
      means Pope
      Asset
      Management, LLC, a Tennessee Registered Investment Advisor.

    

    “Purchase
      Price”
means
      a
      minimum of $25,000,000 and a maximum of $30,000,000.

    

    “Put
      Agreement”
means
      the Put Agreement the parties hereto will enter into at the Closing, in
      substantially the form attached hereto as Exhibit
      G.

     

    
      
         

      

      
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    “Registration
      Statement”
has
      the
      meaning set forth in the Registration Rights Agreement.

    

    “SEC
      Filings”
has
      the
      meaning set forth in Section 4.6.

    

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

    

    “Shares”
means
      the shares of Common Stock included in the Units and to be purchased in
      connection with the Offering.

    

    “Subsidiary”
of
      any
      Person means another Person, an amount of the voting securities, other voting
      ownership or voting partnership interests of which is sufficient to elect at
      least a majority of its Board of Directors or other governing body (or, if
      there
      are no such voting interests, 50% or more of the equity interests of which)
      is
      owned directly or indirectly by such first Person.

    

    “Transaction
      Documents”
means
      this Agreement, the Warrant, the Registration Rights Agreement, the Escrow
      Agreement, the Lock-Up Agreement, the Make Good Agreement, the Make Good Escrow
      Agreement, the Put Agreement and certain other papers, agreements, documents,
      instruments and certificates necessary to carry out the purposes
      thereof.

    

    “Transfer
      Agent”
means
      Interwest Transfer Company, Inc., the Company’s transfer agent.

    

    “Warrants”
means
      the warrants to purchase shares of Common Stock to be included in the Units
      purchased in connection with the Offering.

    

    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon the exercise of the
      Warrants.

    

    “1933
      Act”
has
      the
      meaning set forth in the Recitals above.

    

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

    

    2. Purchase
      and Sale of the Units.
      

    

    2.1 Purchase
      and Sale. Subject
      to the terms and conditions of this Agreement, on each Closing Date, the
      applicable Investors shall severally, and not jointly, purchase, and the Company
      shall sell and issue to such Investors, the Units of the securities consisting
      of the Shares and the Warrants in the respective amounts set forth opposite
      the
      Investors’ names on the signature pages attached hereto in exchange for each
      Investor’s pro rata share of the Purchase Price as specified in Section 3 below;
provided,
      however,
      that
      not less than $25,000,000 and not more than $30,000,000 of Units, in the
      aggregate, shall be purchased in this Offering.

    

    2.2 Appointment
      of Investor Agent. 

     

    
      
         

      

      
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    (a) The
      Investors hereby irrevocably appoint Pope as their agent (the “Investor
      Agent”)
      for
      the purposes specified in this Agreement. Without prior notice to any Investor,
      the Investor Agent shall have full, exclusive and irrevocable authority on
      behalf of each of the Investors to (i) execute and deliver the Escrow Agreement,
      Make Good Agreement and Make Good Escrow Agreement and (ii) perform the services
      set forth in the Escrow Agreement, Make Good Agreement and Make Good Escrow
      Agreement. The foregoing authorization is granted and conferred by the Investors
      in consideration of the grant of such authorization by each of the other
      Investors and in consideration of the agreements and covenants of the Company
      contained herein. In consideration of, and except as provided by, the foregoing,
      this authorization granted to the Investor Agent shall be absolute and
      unconditional and shall only be terminated by upon thirty (30) days prior
      written notice to the Company by Investors holding greater than fifty (50%)
      percent of the Shares, such notice to include the name of a replacement agent
      reasonably acceptable the Company.

    

    (b) The
      Investors hereby covenant and agree, jointly and severally, to reimburse,
      indemnify and hold the Investor Agent harmless from and against any and all
      losses, claims, damages, liabilities and expenses (including without limitation
      reasonable attorney fees and disbursements and other expenses incurred in
      connection with investigating, preparing or defending any action, claim or
      proceeding, pending or threatened and the costs of enforcement thereof) which,
      without gross negligence or willful misconduct on the part of Investor Agent,
      may be paid, incurred or suffered by the Investor Agent in its capacity as
      Investor Agent, or to which the Investor Agent may become subject, arising
      out
      of or incident to its actions taken as Investor Agent, or any agreement,
      document or instrument executed in connection therewith, or the administration
      of the Investor Agent’s duties under or pursuant to the Escrow Agreement, Make
      Good Agreement or Make Good Escrow Agreement, or as a result of the Investor
      Agent defending itself against any claim or liability resulting from the
      Investor Agent’s actions as Investor Agent. This Section 2(b) shall survive the
      termination of this Agreement, the Escrow Agreement, the Make Good Agreement
      and
      the Make Good Escrow Agreement.

    

    3. Closing.
      Each
      Investor shall deliver, or cause to be delivered, their pro rata share of the
      Purchase Price to the Escrow Agent, in immediately available funds, to be held
      and disbursed by the Escrow Agent as provided in the Escrow Agreement. The
      Escrow Agent shall promptly notify the Company of its receipt of the aggregate
      Unit Purchase Price from any Investor and shall deposit such amount in an
      interest bearing account, as further set forth in the Escrow Agreement. The
      Company shall deliver certificates representing the Shares and Warrants to
      the
      Escrow Agent to be held and disbursed by the Escrow Agent as provided in the
      Escrow Agreement. The Escrow Agent shall promptly notify the Investor Agent
      of
      its receipt of the Shares and Warrants for each Investor. The Unit Purchase
      Price, Shares and Warrants are hereafter referred to collectively as, the
“Escrow
      Property”).
      The
      Escrow Agent shall hold the Escrow Property in accordance with the terms and
      conditions of the Escrow Agreement. On the date (each a “Closing
      Date”)
      the
      Escrow Agent receives joint written instructions from the Company and the
      Investor Agent directing the manner in which the Escrow Agent shall distribute
      all or any portion of the Purchase Price, plus any interest earned thereon,
      and
      the Shares and Warrants, and provided each of the conditions set forth in
      Section 6 hereof have been satisfied or waived by the appropriate party or
      parties, the Escrow Property shall be released to the Investor(s) and the
      Company, as applicable (each, a “Closing”).
      The
      Closing(s) shall take place at the offices of Hodgson Russ LLC, 1540 Broadway,
      24th
      Floor,
      New York, New York 10036, or at such other location and on such other date
      as
      the Company and the Investors shall mutually agree.

     

    
      
         

      

      
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    The
      Company shall have the right to conduct multiple Closings; provided, however,
      that (i) on the first Closing date the Company shall receive a minimum
      investment of at least $25,000,000 and shall sell the Minimum Units, (ii) any
      Investor making an investment in the Shares and Warrants shall become a party
      to
      this Agreement and the additional Transaction Documents, as applicable, (iii)
      any additional Closing(s) shall occur on or prior to February 15, 2008, and
      (iv)
      the Company shall not have the right to receive an aggregate investment in
      connection with this Offering of more than $30,000,000, or to sell more than
      the
      Maximum Units.

    

    4. Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Investors that, except as set
      forth in the schedules delivered herewith (collectively, the “Disclosure
      Schedules”):

    

    4.1 Organization,
      Good Standing and Qualification.
      Each of
      the Company and its Subsidiaries is a corporation duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      incorporation and has all requisite corporate power and authority to carry
      on
      its business as now conducted and to own its properties. Each of the Company
      and
      its Subsidiaries is duly qualified to do business as a foreign corporation
      and
      is in good standing in each jurisdiction in which the conduct of its business
      or
      its ownership or leasing of property makes such qualification or leasing
      necessary unless the failure to so qualify has not had and could not reasonably
      be expected to have a Material Adverse Effect. The Company’s Subsidiaries are
      listed on Schedule
      4.1
      hereto.

    

    4.2 Authorization.
      The
      Company has full power and authority and,
      except
      as described in Schedule
      4.2,
      has
      taken
      all requisite action on the part of the Company, its officers, directors and
      stockholders necessary for (i) the authorization, execution and delivery of
      the
      Transaction Documents, (ii) the authorization of the performance of all
      obligations of the Company hereunder or thereunder, and (iii) the authorization,
      issuance (or reservation for issuance) and delivery of the
      Securities.
      The
      Transaction Documents constitute the legal, valid and binding obligations of
      the
      Company, enforceable against the Company in accordance with their terms, subject
      to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
      and
      similar laws of general applicability, relating to or affecting creditors’
rights generally.

    

    4.3 Capitalization.
      Schedule
      4.3
      sets
      forth (a) the authorized capital stock of the Company on the date hereof; (b)
      the number of shares of capital stock issued and outstanding; (c) the number
      of
      shares of capital stock issuable pursuant to the Company’s stock plans; and (d)
      the number of shares of capital stock issuable and reserved for issuance
      pursuant to securities (other than the Securities) exercisable for, or
      convertible into or exchangeable for any shares of capital stock of the Company.
      All of the issued and outstanding shares of the Company’s capital stock have
      been duly authorized and validly issued and are fully paid, nonassessable and
      free of pre-emptive rights and were issued in full compliance with applicable
      state and federal securities law and any rights of third parties. Except as
      described on Schedule
      4.3,
      all of
      the issued and outstanding shares of capital stock of each Subsidiary have
      been
      duly authorized and validly issued and are fully paid, nonassessable and free
      of
      pre-emptive rights, were issued in full compliance with applicable state and
      federal securities law and any rights of third parties and are owned by the
      Company, beneficially and of record, subject to no lien, encumbrance or other
      adverse claim. Except as described on Schedule
      4.3,
      no
      Person is entitled to pre-emptive or similar statutory or contractual rights
      with respect to any securities of the Company. Except as described on
Schedule
      4.3,
      there
      are no outstanding warrants, options, convertible securities or other rights,
      agreements or arrangements of any character under which the Company or any
      of
      its Subsidiaries is or may be obligated to issue any equity securities of any
      kind and except as contemplated by this Agreement, neither the Company nor
      any
      of its Subsidiaries is currently in negotiations for the issuance of any equity
      securities of any kind. Except as described on Schedule
      4.3,
      and
      except for the Registration Rights Agreement, there are no voting agreements,
      buy-sell agreements, option or right of first purchase agreements or other
      agreements of any kind among the Company and any of the securityholders of
      the
      Company relating to the securities of the Company held by them. Except as
      described on Schedule
      4.3
      and
      except as provided in the Registration Rights Agreement, no Person has the
      right
      to require the Company to register any securities of the Company under the
      1933
      Act, whether on a demand basis or in connection with the registration of
      securities of the Company for its own account or for the account of any other
      Person.

     

    
      
         

      

      
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          6
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    Except
      as
      described on Schedule
      4.3,
      the
      issuance and sale of the Securities hereunder will not obligate the Company
      to
      issue shares of Common Stock or other securities to any other Person (other
      than
      the Investors) and will not result in the adjustment of the exercise,
      conversion, exchange or reset price of any outstanding security.

    

    Except
      as
      described on Schedule
      4.3,
      the
      Company does not have outstanding stockholder purchase rights or “poison pill”
or any similar arrangement in effect giving any Person the right to purchase
      any
      equity interest in the Company upon the occurrence of certain
      events.

    

    4.4 Valid
      Issuance.
      The
      Shares have been duly and validly authorized and, when issued and paid for
      pursuant to this Agreement, will be validly issued, fully paid and
      nonassessable, and shall be free and clear of all encumbrances and restrictions
      (other than those created by the Investors), except for restrictions on transfer
      set forth in the Transaction Documents. The Warrants have been duly and validly
      authorized. Upon the due exercise of the Warrants, the Warrant Shares will
      be
      validly issued, fully paid and non-assessable free and clear of all encumbrances
      and restrictions, except for restrictions on transfer set forth in the
      Transaction Documents or imposed by applicable securities laws and except for
      those created by the Investors. The Company has reserved a sufficient number
      of
      shares of Common Stock for issuance upon the exercise of the Warrants, free
      and
      clear of all encumbrances and restrictions, except for restrictions on transfer
      set forth in the Transaction Documents or imposed by applicable securities
      laws
      and except for those created by the Investors.

    

    4.5 Consents.
      Except
      as described in Schedule
      4.5,
      the
      execution, delivery and performance by the Company of the Transaction Documents,
      and the offer, issuance and sale of the Securities, require no consent of,
      action by or in respect of, or filing with, any Person, governmental body,
      agency, or official other than filings that have been made pursuant to
      applicable state securities laws and post-sale filings pursuant to applicable
      state and federal securities laws or any other notices required thereby, all
      of
      which the Company undertakes to file within the applicable time periods. Subject
      to the accuracy of the representations and warranties of each Investor set
      forth
      in Section 5 hereof, the Company has taken all action necessary to exempt (i)
      the issuance and sale of the Securities, (ii) the issuance of the Warrant Shares
      upon due exercise of the Warrants, and (iii) the other transactions contemplated
      by the Transaction Documents from the provisions of any stockholder rights
      plan
      or other “poison pill” arrangement, any anti-takeover, business combination or
      control share law or statute binding on the Company or to which the Company
      or
      any of its assets and properties may be subject and any provision of the
      Company’s Amended and Restated Certificate of Incorporation or Bylaws that is or
      could reasonably be expected to become applicable to the Investors as a result
      of the transactions contemplated hereby, including without limitation, the
      issuance of the Securities and the ownership, disposition or voting of the
      Securities by the Investors or the exercise of any right granted to the
      Investors pursuant to this Agreement or the other Transaction
      Documents.

     

    
      
         

      

      
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    4.6 Delivery
      of SEC Filings; Business.
      The
      Company has made available to the Investors through the EDGAR system, true
      and
      complete copies of the Company’s Amendment No. 1 to the Annual Report on Form
      10-KSB for the fiscal year ended December 31, 2006 (the “10-KSB/A”),
      and
      all other reports filed by the Company pursuant to the 1934 Act since the filing
      of the 10-KSB/A and prior to the date hereof (collectively, the “SEC
      Filings”).
      Except as indicated in the SEC Filings, the SEC Filings are the only filings
      required of the Company pursuant to the 1934 Act for such period. The Company
      and its Subsidiaries are engaged in all material respects only in the business
      described in the SEC Filings and the SEC Filings contain a complete and accurate
      description in all material respects of the business of the Company and its
      Subsidiaries, taken as a whole.

    

    4.7 Use
      of
      Proceeds.
      The net
      proceeds from this Offering will be used primarily for: (a) acquisitions, (b)
      new product marketing, (c) expenses related to the Offering and the Registration
      Statement, and (d) general working capital purposes.

    

    4.8 No
      Material Adverse Change.
      Since
      September 30, 2007, except as identified and described on Schedule
      4.8,
      there
      has not been:

    

    (a) any
      change in the consolidated assets, liabilities, financial condition or operating
      results of the Company from that reflected in the financial statements included
      in the Company’s Quarterly Report of Form 10-QSB for the fiscal quarter ended
      September 30, 2007, except for changes in the ordinary course of business which
      have not had and could not reasonably be expected to have a Material Adverse
      Effect, individually or in the aggregate;

    

    (b) any
      declaration or payment of any dividend, or any authorization or payment of
      any
      distribution, on any of the capital stock of the Company, or any redemption
      or
      repurchase of any securities of the Company;

     

    
      
         

      

      
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          8
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    (c) any
      material damage, destruction or loss, whether or not covered by insurance to
      any
      assets or properties of the Company or its Subsidiaries;

    

    (d) any
      waiver, not in the ordinary course of business, by the Company or any Subsidiary
      of a material right or of a material debt owed to it;

    

    (e) any
      satisfaction or discharge of any lien, claim or encumbrance or payment of any
      obligation by the Company or a Subsidiary, except in the ordinary course of
      business and which is not material to the assets, properties, financial
      condition, operating results or business of the Company and its Subsidiaries
      taken as a whole (as such business is presently conducted and as it is proposed
      to be conducted);

    

    (f) any
      change or amendment to the Company’s Certificate of Incorporation or Bylaws, or
      material change to any material contract or arrangement by which the Company
      or
      any Subsidiary is bound or to which any of their respective assets or properties
      is subject;

    

    (g) any
      material labor difficulties or labor union organizing activities with respect
      to
      employees of the Company or any Subsidiary;

    

    (h) any
      material transaction entered into by the Company or a Subsidiary other than
      in
      the ordinary course of business; 

    

    (i) the
      loss
      of the services of any key employee, or material change in the composition
      or
      duties of the senior management of the Company or any Subsidiary;

    

    (j) the
      loss
      or threatened loss of any customer which has had or could reasonably be expected
      to have a Material Adverse Effect; or

    

    (k) any
      other
      event or condition of any character that has had or could reasonably be expected
      to have a Material Adverse Effect.

    

    4.9 SEC
      Filings.

    

    (a) At
      the
      time of filing thereof, the SEC Filings complied as to form in all material
      respects with the requirements of the 1934 Act and did not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements made therein, in the light of the circumstances
      under which they were made, not misleading.

     

    (b) To
      the
      Company’s Knowledge, each registration statement and any amendment thereto filed
      by the Company pursuant to the 1933 Act and/or 1934 Act, and the rules and
      regulations thereunder, as of the date such statement or amendment became
      effective, complied as to form in all material respects with the 1933 Act and/or
      1934 Act, and did not contain any untrue statement of a material fact or omit
      to
      state any material fact required to be stated therein or necessary in order
      to
      make the statements made therein not misleading; and each prospectus filed
      pursuant to Rule 424(b) under the 1933 Act, as of its issue date and as of
      the
      closing of any sale of securities pursuant thereto did not contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary in order to make the statements made therein, in
      the
      light of the circumstances under which they were made, not
      misleading.

     

    
      
         

      

      
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    4.10 No
      Conflict, Breach, Violation or Default.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the issuance and sale of the Securities will not conflict with or result
      in
      a breach or violation of any of the terms and provisions of, or constitute
      a
      default under (i) the Company’s Certificate of Incorporation or the Company’s
      Bylaws, both as in effect on the date hereof (true and complete copies of which
      have been made available to the Investors), or (ii)(a) any statute, rule,
      regulation or order of any governmental agency or body or any court, domestic
      or
      foreign, having jurisdiction over the Company, any Subsidiary or any of their
      respective assets or properties, or (b) any agreement or instrument to which
      the
      Company or any Subsidiary is a party or by which the Company or a Subsidiary
      is
      bound or to which any of their respective assets or properties is
      subject.

    

    4.11 Tax
      Matters.
      The
      Company and each Subsidiary has timely prepared and filed all tax returns
      required to have been filed by the Company or such Subsidiary with all
      appropriate governmental agencies and timely paid all taxes shown thereon or
      otherwise owed by it. The charges, accruals and reserves on the books of the
      Company in respect of taxes for all fiscal periods are adequate in all material
      respects, and there are no material unpaid assessments against the Company
      or
      any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of
      any additional taxes, penalties or interest for any fiscal period or audits
      by
      any federal, state or local taxing authority except for any assessment which
      is
      not material to the Company and its Subsidiaries, taken as a whole. All taxes
      and other assessments and levies that the Company or any Subsidiary is required
      to withhold or to collect for payment have been duly withheld and collected
      and
      paid to the proper governmental entity or third party when due. There are no
      tax
      liens or claims pending or, to the Company’s Knowledge, threatened against the
      Company or any Subsidiary or any of their respective assets or property. Except
      as described on Schedule
      4.11,
      there
      are no outstanding tax sharing agreements or other such arrangements between
      the
      Company and any Subsidiary or other corporation or entity.

    

    4.12 Title
      to Properties.
      Except
      as disclosed in Schedule
      4.12,
      the
      Company and each Subsidiary has good and marketable title to all real properties
      and all other properties and assets owned by it, in each case free from liens,
      encumbrances and defects that would materially affect the value thereof or
      materially interfere with the use made or currently planned to be made thereof
      by them; and except as disclosed in Schedule
      4.12,
      the
      Company and each Subsidiary holds any leased real or personal property under
      valid and enforceable leases with no exceptions that would materially interfere
      with the use made or currently planned to be made thereof by them.

    

    4.13 Certificates,
      Authorities and Permits.
      The
      Company and each Subsidiary possess adequate certificates, authorities or
      permits issued by appropriate governmental agencies or bodies necessary to
      conduct the business now operated by it, and neither the Company nor any
      Subsidiary has received any notice of proceedings relating to the revocation
      or
      modification of any such certificate, authority or permit that, if determined
      adversely to the Company or such Subsidiary, could reasonably be expected to
      have a Material Adverse Effect, individually or in the aggregate.

     

    
      
         

      

      
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    4.14 Labor
      Matters.

     

    (a) Except
      as
      set forth on Schedule
      4.14,
      the
      Company is not a party to or bound by any collective bargaining agreements
      or
      other agreements with labor organizations. The Company has not violated in
      any
      material respect any laws, regulations, orders or contract terms, affecting
      the
      collective bargaining rights of employees, labor organizations or any laws,
      regulations or orders affecting employment discrimination, equal opportunity
      employment, or employees’ health, safety, welfare, wages and hours.

     

    (b) (i)
      There
      are no labor disputes existing, or to the Company’s Knowledge, threatened,
      involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts
      or any other disruptions of or by the Company’s employees, (ii) there are no
      unfair labor practices or petitions for election pending or, to the Company’s
      Knowledge, threatened before any governmental agency or labor commission
      relating to the Company’s employees, (iii) no demand for recognition or
      certification heretofore made by any labor organization or group of employees
      is
      pending with respect to the Company, and (iv) to the Company’s Knowledge, the
      Company enjoys good labor and employee relations with its employees and labor
      organizations.

     

    (c) The
      Company is, and at all times has been, in compliance in all material respects
      with all applicable laws respecting employment (including laws relating to
      classification of employees and independent contractors) and employment
      practices, terms and conditions of employment, wages and hours, and immigration
      and naturalization.

     

    (d) Except
      as
      disclosed in the SEC Filings or as described on Schedule
      4.14,
      the
      Company is not a party to, or bound by, any employment or other contract or
      agreement that contains any severance, termination pay or change of control
      liability or obligation, including, without limitation, any “excess parachute
      payment,” as defined in Section 2806(b) of the Internal Revenue
      Code.

    

    (e) Except
      as
      specified in Schedule
      4.14,
      to the
      Company’s Knowledge, none of the Company’s employees is a Person who is either a
      United States citizen or a permanent resident entitled to work in the United
      States. To the Company’s Knowledge, the Company has no liability for the
      improper classification by the Company of such employees as independent
      contractors or leased employees prior to the Closing.

     

    
      
         

      

      
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    4.15 Intellectual
      Property. Except
      as
      specified in Schedule
      4.15:

    

    (a) All
      Intellectual Property of the Company and its Subsidiaries is currently in
      compliance with all legal requirements (including timely filings, proofs and
      payments of fees) and is valid and enforceable. No Intellectual Property of
      the
      Company or its Subsidiaries which is necessary for the conduct of Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted or as
      currently proposed to be conducted has been or is now involved in any
      cancellation, dispute or litigation, and, to the Company’s Knowledge, no such
      action is threatened. No patent of the Company or its Subsidiaries has been
      or
      is now involved in any interference, reissue, re-examination or opposition
      proceeding.

    

    (b) All
      of
      the licenses and sublicenses and consent, royalty or other agreements concerning
      Intellectual Property which are necessary for the conduct of the Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted or as
      currently proposed to be conducted to which the Company or any Subsidiary is
      a
      party or by which any of their assets are bound (other than  generally
      commercially available, non-custom, off-the-shelf software application programs
      having a retail acquisition price of less than $10,000 per license)
      (collectively, “License
      Agreements”)
      are
      valid and binding obligations of the Company or its Subsidiaries that are
      parties thereto and, to the Company’s Knowledge, the other parties thereto,
      enforceable in accordance with their terms, except to the extent that
      enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
      moratorium, fraudulent conveyance or other similar laws affecting the
      enforcement of creditors’ rights generally, and there exists no event or
      condition which will result in a material violation or breach of or constitute
      (with or without due notice or lapse of time or both) a default by the Company
      or any of its Subsidiaries under any such License Agreement.

    

    (c) The
      Company and its Subsidiaries own or have the valid right to use all of the
      Intellectual Property that is necessary for the conduct of the Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted or as
      currently proposed to be conducted and for the ownership, maintenance and
      operation of the Company’s and its Subsidiaries’ properties and assets, free and
      clear of all liens, encumbrances, adverse claims or obligations to license
      all
      such owned Intellectual Property and Confidential Information, other than
      licenses entered into in the ordinary course of the Company’s and its
      Subsidiaries’ businesses. The Company and its Subsidiaries have a valid and
      enforceable right to use all third party Intellectual Property and Confidential
      Information used or held for use in the respective businesses of the Company
      and
      its Subsidiaries.

    

    (d) To
      the
      Company’s Knowledge, the conduct of the Company’s and its Subsidiaries’
businesses as currently conducted does not infringe or otherwise impair or
      conflict with (collectively, “Infringe”)
      any
      Intellectual Property rights of any third party or any confidentiality
      obligation owed to a third party, and, to the Company’s Knowledge, the
      Intellectual Property and Confidential Information of the Company and its
      Subsidiaries which are necessary for the conduct of Company’s and each of its
      Subsidiaries’ respective businesses as currently conducted or as currently
      proposed to be conducted are not being Infringed by any third party. There
      is no
      litigation or order pending or outstanding or, to the Company’s Knowledge,
      threatened or imminent, that seeks to limit or challenge or that concerns the
      ownership, use, validity or enforceability of any Intellectual Property or
      Confidential Information of the Company and its Subsidiaries and the Company’s
      and its Subsidiaries’ use of any Intellectual Property or Confidential
      Information owned by a third party, and, to the Company’s Knowledge, there is no
      valid basis for the same.

     

    
      
         

      

      
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    (e) The
      consummation of the transactions contemplated hereby and by the other
      Transaction Documents will not result in the alteration, loss, impairment of
      or
      restriction on the Company’s or any of its Subsidiaries’ ownership or right to
      use any of the Intellectual Property or Confidential Information which is
      necessary for the conduct of Company’s and each of its Subsidiaries’ respective
      businesses as currently conducted or as currently proposed to be
      conducted.

    

    (f) The
      Company and its Subsidiaries have taken reasonable steps to protect the
      Company’s and its Subsidiaries’ rights in their Intellectual Property and
      Confidential Information. Each employee, consultant and contractor who has
      had
      access to Confidential Information which is necessary for the conduct of
      Company’s and each of its Subsidiaries’ respective businesses as currently
      conducted or as currently proposed to be conducted has executed an agreement
      to
      maintain the confidentiality of such Confidential Information and has executed
      appropriate agreements that are substantially consistent with the Company’s
      standard forms thereof, except where the failure to do so has not had and could
      not reasonably be expected to have a Material Adverse Effect, individually
      or in
      the aggregate. Except under confidentiality obligations, there has been no
      material disclosure of any of the Company’s or its Subsidiaries’ Confidential
      Information to any third party.

    

    4.16 Environmental
      Matters.
      Except
      as specified in Schedule
      4.16,
      to the
      Company’s Knowledge, neither the Company nor any Subsidiary (i) is in violation
      of any statute, rule, regulation, decision or order of any governmental agency
      or body or any court, domestic or foreign, relating to the use, disposal or
      release of hazardous or toxic substances or relating to the protection or
      restoration of the environment or human exposure to hazardous or toxic
      substances (collectively, “Environmental
      Laws”),
      (ii)
      owns or operates any real property contaminated with any substance that is
      subject to any Environmental Laws, (iii) is liable for any off-site disposal
      or
      contamination pursuant to any Environmental Laws, or (iv) is subject to any
      claim relating to any Environmental Laws, which violation, contamination,
      liability or claim has had or could reasonably be expected to have a Material
      Adverse Effect, individually or in the aggregate; and there is no pending or,
      to
      the Company’s Knowledge, threatened investigation that might lead to such a
      claim.

    

    4.17 Litigation.
      Except
      as described on Schedule
      4.17,
      there
      are no pending actions, suits or proceedings against or affecting the Company,
      its Subsidiaries or any of its or their properties; and to the Company’s
      Knowledge, no such actions, suits or proceedings are threatened or
      contemplated.

    

    4.18 Financial
      Statements.
      The
      financial statements included in each SEC Filing present fairly, in all material
      respects, the consolidated financial position of the Company as of the dates
      shown and its consolidated results of operations and cash flows for the periods
      shown, and such financial statements have been prepared in conformity with
      United States generally accepted accounting principles applied on a consistent
      basis (“GAAP”)
      (except as may be disclosed therein or in the notes thereto, and, in the case
      of
      quarterly financial statements, as permitted by Form 10-QSB under the 1934
      Act).
      Except as set forth in the financial statements of the Company included in
      the
      SEC Filings filed prior to the date hereof or as described on Schedule
      4.18,
      neither
      the Company nor any of its Subsidiaries has incurred any liabilities, contingent
      or otherwise, except those incurred in the ordinary course of business,
      consistent (as to amount and nature) with past practices since the date of
      such
      financial statements, none of which, individually or in the aggregate, have
      had
      or could reasonably be expected to have a Material Adverse Effect.

     

    
      
         

      

      
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    4.19 Insurance
      Coverage.
      Except
      as set forth on Schedule
      4.19,
      the
      Company and each Subsidiary maintains in full force and effect insurance
      coverage that is customary for comparably situated companies for the business
      being conducted and properties owned or leased by the Company and each
      Subsidiary, and the Company reasonably believes such insurance coverage to
      be
      adequate against all liabilities, claims and risks against which it is customary
      for comparably situated companies to insure.

    

    4.20 Brokers
      and Finders.
      No
      Person will have, as a result of the transactions contemplated by the
      Transaction Documents, any valid right, interest or claim against or upon the
      Company, any Subsidiary or an Investor for any commission, fee or other
      compensation pursuant to any agreement, arrangement or understanding entered
      into by or on behalf of the Company, other than as described in Schedule
      4.20.

    

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

    

    4.22 No
      Integrated Offering.
      Neither
      the Company nor any of its Affiliates, nor any Person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any Company
      security or solicited any offers to buy any security, under circumstances that
      would adversely affect reliance by the Company on Section 4(2) for the exemption
      from registration for the transactions contemplated hereby or would require
      registration of the Securities under the 1933 Act.

    

    4.23 Private
      Placement.
      The
      offer and sale of the Securities to the Investors as contemplated hereby is
      exempt from the registration requirements of the 1933 Act.

    

    4.24 Questionable
      Payments.
      Neither
      the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of
      their respective current or former stockholders, directors, officers, employees,
      agents or other Persons acting on behalf of the Company or any Subsidiary,
      has
      on behalf of the Company or any Subsidiary or in connection with their
      respective businesses: (a) used any corporate funds for unlawful contributions,
      gifts, entertainment or other unlawful expenses relating to political activity;
      (b) made any direct or indirect unlawful payments to any governmental officials
      or employees from corporate funds; (c) established or maintained any unlawful
      or
      unrecorded fund of corporate monies or other assets; (d) made any false or
      fictitious entries on the books and records of the Company or any Subsidiary;
      (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or
      other unlawful payment of any nature; or (f) taken any actions that would
      violate the U.S. Foreign Corrupt Practices Act of 1977, as amended.

     

    
      
         

      

      
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    4.25 Transactions
      with Affiliates.
      Except
      as disclosed in the SEC Filings or as disclosed on Schedule
      4.25,
      none of
      the officers or directors of the Company and, to the Company’s Knowledge, none
      of the employees of the Company is presently a party to any transaction with
      the
      Company or any Subsidiary (other than as holders of stock options and/or
      warrants, and for services as employees, officers and directors), including
      any
      contract, agreement or other arrangement providing for the furnishing of
      services to or by, providing for rental of real or personal property to or
      from,
      or otherwise requiring payments to or from any officer, director or such
      employee or, to the Company’s Knowledge, any entity in which any officer,
      director, or any such employee has a substantial interest or is an officer,
      director, trustee or partner.

    

    4.26 Internal
      Controls.
      The
      Company is
      in
      material compliance with the provisions of the Sarbanes-Oxley Act of 2002
      currently applicable to the Company. The Company and
      the
      Subsidiaries maintain a system of internal accounting controls sufficient to
      provide reasonable assurance that (i) transactions are executed in accordance
      with management’s general or specific authorizations, (ii) transactions are
      recorded as necessary to permit preparation of financial statements in
      conformity with GAAP and to maintain asset accountability, (iii) access to
      assets is permitted only in accordance with management’s general or specific
      authorization, and (iv) the recorded accountability for assets is compared
      with
      the existing assets at reasonable intervals and appropriate action is taken
      with
      respect to any differences. The Company has established disclosure controls
      and
      procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) for the Company
      and
      designed such disclosure controls and procedures to ensure that material
      information relating to the Company, including the Subsidiaries, is made known
      to the certifying officers by others within those entities, particularly during
      the period in which the Company’s most recently filed periodic report under the
      1934 Act, as the case may be, is being prepared. The Company’s certifying
      officers have evaluated the effectiveness of the Company's controls and
      procedures as of the end of the period covered by the most recently filed
      periodic report under the 1934 Act (such date, the “Evaluation
      Date”).
      The
      Company presented in its most recently filed periodic report under the 1934
      Act
      the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no significant
      changes in the Company’s internal controls (as such term is defined in Item 308
      of Regulation S-B) or, to the Company’s Knowledge, in other factors that could
      significantly affect the Company’s internal controls. The Company maintains and
      will continue to maintain a standard system of accounting established and
      administered in accordance with GAAP and the applicable requirements of the
      1934
      Act.

    

    4.27 Disclosures.
      Neither
      the Company nor any Person acting on its behalf has provided the Investors
      or
      their agents or counsel with any information that constitutes or might
      constitute material, non-public information. The written materials delivered
      to
      the Investors in connection with the transactions contemplated by the
      Transaction Documents do not contain any untrue statement of a material fact
      or
      omit to state a material fact necessary in order to make the statements
      contained therein, in light of the circumstances under which they were made,
      not
      misleading.

     

    
      
         

      

      
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    5. Representations
      and Warranties of the Investors.
      Each of
      the Investors hereby severally, and not jointly, represents and warrants to
      the
      Company that:

    

    5.1 Organization
      and Existence.
      Such
      Investor is an individual or a validly existing corporation, limited
      partnership, or limited liability company and has all requisite individual,
      corporate, partnership or limited liability company power and authority to
      invest in the Securities pursuant to this Agreement.

    

    5.2 Authorization.
      The
      execution, delivery and performance by such Investor of the Transaction
      Documents to which such Investor is a party have been duly authorized and will
      each constitute the valid and legally binding obligation of such Investor,
      enforceable against such Investor in accordance with their respective terms,
      subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
      moratorium and similar laws of general applicability, relating to or affecting
      creditors’ rights generally.

    

    5.3 Purchase
      Entirely for Own Account.
      The
      Securities to be received by such Investor hereunder will be acquired for such
      Investor’s own account, not as nominee or agent, and not with a view to the
      resale or distribution of any part thereof in violation of the 1933 Act, and
      such Investor has no present intention of selling, granting any participation
      in, or otherwise distributing the same in violation of the 1933 Act
      without
      prejudice, however, to such Investor’s right at all times to sell or otherwise
      dispose of all or any part of such Securities in compliance with applicable
      federal and state securities laws.
      Nothing
      contained herein shall be deemed a representation or warranty by such Investor
      to hold the Securities for any period of time. Such
      Investor
      is not a broker-dealer registered with the SEC under the 1934 Act or an entity
      engaged in a business that would require it to be so registered.

    

    5.4 Investment
      Experience.
      Such
      Investor acknowledges that it can bear the economic risk and complete loss
      of
      its investment in the Securities and has such knowledge and experience in
      financial or business matters that it is capable of evaluating the merits and
      risks of the investment contemplated hereby.

    

    5.5 Disclosure
      of Information.
      Such
      Investor has had an opportunity to receive all information related to the
      Company requested by it and to ask questions of and receive answers from the
      Company regarding the Company, its business and the terms and conditions of
      the
      offering of the Securities. Such Investor acknowledges receipt of copies of
      the
      SEC Filings. Neither such inquiries nor any other due diligence investigation
      conducted by such Investor shall modify, amend or affect such Investor’s right
      to rely on the Company’s representations and warranties contained in this
      Agreement.

    

    5.6 Restricted
      Securities.
      Such
      Investor understands that the Securities are characterized as “restricted
      securities” under the U.S. federal securities laws inasmuch as they are being
      acquired from the Company in a transaction not involving a public offering
      and
      that under such laws and applicable regulations such securities may be resold
      without registration under the 1933 Act only in certain limited
      circumstances.

     

    
      
         

      

      
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          16
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    5.7 Legends.
      It is
      understood that, except as provided below, certificates evidencing the
      Securities may bear the following or any similar legend:

    

    (a) “The
      securities represented hereby may not be transferred unless (i) such securities
      have been registered for sale pursuant to the 1933 Act, as amended, (ii) such
      securities may be sold pursuant to Rule 144(k), or (iii) the Company has
      received an opinion of counsel reasonably satisfactory to it that such transfer
      may lawfully be made without registration under the 1933 Act, as amended, or
      qualification under applicable state securities laws.”

    

    (b) If
      required by the authorities of any state in connection with the issuance of
      sale
      of the Securities, the legend required by such state authority.

    

    5.8 Accredited
      Investor.
      Such
      Investor is an “accredited investor” within the meaning of Rule 501(a) of
      Regulation D promulgated under the 1933 Act for the reasons checked on
Schedule
      1
      hereto.

    

    5.9 No
      General Solicitation.
      Such
      Investor did not learn of the investment in the Securities as a result of any
      public advertising or general solicitation.

    

    5.10 Brokers
      and Finders.
      No
      Person will have, as a result of the transactions contemplated by the
      Transaction Documents, any valid right, interest or claim against or upon the
      Company, any Subsidiary or an Investor for any commission, fee or other
      compensation pursuant to any agreement, arrangement or understanding entered
      into by or on behalf of such Investor.

    

    5.11 Prohibited
      Transactions.
      During
      the last thirty (30) days prior to the date hereof, neither such Investor nor
      any Affiliate of such Investor which (x) had knowledge of the transactions
      contemplated hereby, (y) has or shares discretion relating to such Investor’s
      investments or trading or information concerning such Investor’s investments,
      including in respect of the Securities, or (z) is subject to such Investor’s
      review or input concerning such Affiliate’s investments or trading
      (collectively, “Trading
      Affiliates”)
      has,
      directly or indirectly, effected or agreed to effect any short sale, whether
      or
      not against the box, established any “put equivalent position” (as defined in
      Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted
      any
      other right (including, without limitation, any put or call option) with respect
      to the Common Stock or with respect to any security that includes, relates
      to or
      derived any significant part of its value from the Common Stock or otherwise
      sought to hedge its position in the Securities (each, a “Prohibited
      Transaction”).
      Prior
      to the latest to occur of (i) the termination of this Agreement, (ii) the
      Company’s exercise of the Call Option (as defined in Section 18 of the
      Warrants), or (iii) the conclusion of the Effectiveness Period (as defined
      in
      Section 2 of the Registration Rights Agreement), such Investor shall not, and
      shall cause its Trading Affiliates not to, engage, directly or indirectly,
      in a
      Prohibited Transaction. Such Investor acknowledges that the representations,
      warranties and covenants contained in this Section 5.11 are being made for
      the
      benefit of the Investors as well as the Company and that each of the other
      Investors shall have an independent right to assert any claims against such
      Investor arising out of any breach or violation of the provisions of this
      Section 5.11.

     

    
      
         

      

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

    

    6.
       Conditions
      to Closing.

    

    6.1 Conditions
      to the Investors’ Obligations.
      The
      obligation of each Investor to purchase the Shares and the Warrants at the
      Closing is subject to the fulfillment to such Investor’s satisfaction, on or
      prior to the Closing Date, of the following conditions, any of which may be
      waived by such Investor (as to itself only):

    

    (a) The
      representations and warranties made by the Company in Section 4 hereof qualified
      as to materiality shall be true and correct at all times prior to and on the
      Closing Date, except to the extent any such representation or warranty expressly
      speaks as of a specific date, in which case such representation or warranty
      shall be true and correct as of such date, and, the representations and
      warranties made by the Company in Section 4 hereof not qualified as to
      materiality shall be true and correct in all material respects at all times
      prior to and on the Closing Date, except to the extent any such representation
      or warranty expressly speaks as of a specific date, in which case such
      representation or warranty shall be true and correct in all material respects
      as
      of such specific date. 

    

    (b) The
      Company shall have performed in all material respects all obligations and
      covenants herein required to be performed by it on or prior to the Closing
      Date.

    

    (c) The
      Company shall have obtained any and all consents, permits, approvals,
      registrations and waivers necessary
      or appropriate for consummation of the purchase and sale of the Shares and
      the
      Warrants and the consummation of the other transactions contemplated by the
      Transaction Documents to be consummated on or prior to the Closing Date, all
      of
      which shall be in full force and effect.

    

    (d) The
      Company shall have executed and delivered the Warrants, the Registration Rights
      Agreement and the Put Agreement.

    

    (e) The
      Company and the Escrow Agent shall have executed and delivered the Escrow
      Agreement.

    

    (f) The
      Company and the CSKI Shareholder shall have executed and delivered the Make
      Good
      Agreement, and the Company, the CSKI Shareholder and the Transfer Agent shall
      have executed and delivered the Make Good Escrow Agreement.

     

    
      
         

      

      
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    (g) The
      Company and the Majority Stockholders shall have executed and delivered the
      Lock-Up Agreement.

    

    (h) No
      judgment, writ, order, injunction, award or decree of or by any court, or judge,
      justice or magistrate, including any bankruptcy court or judge, or any order
      of
      or by any governmental authority, shall have been issued, and no action or
      proceeding shall have been instituted by any governmental authority, enjoining
      or preventing the consummation of the transactions contemplated hereby or in
      the
      other Transaction Documents.

    

    (i) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Chief Executive Officer or its Chief Financial Officer, dated as of the
      Closing Date, certifying to the fulfillment of the conditions specified in
      subsections (a), (b) and (c) of this Section 6.1.

    

    (j) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Secretary, dated as of the Closing Date, certifying the resolutions adopted
      by the Board of Directors of the Company approving the transactions contemplated
      by this Agreement and the other Transaction Documents and the issuance of the
      Securities, certifying the current versions of the Amended and Restated
      Certificate of Incorporation and Bylaws of the Company and certifying as to
      the
      signatures and authority of persons signing the Transaction Documents and
      related documents on behalf of the Company.

    

    (k) The
      Investors shall have received an opinion from Hodgson Russ LLP, the Company’s
      counsel, dated as of the Closing Date, in form and substance reasonably
      acceptable to the Investors and addressing such legal matters as the Investors
      may reasonably request.

    

    (l) No
      stop
      order or suspension of trading shall have been imposed by the SEC or any other
      governmental or regulatory body with respect to public trading in the Common
      Stock.

    

    (m) The
      Company shall have received not less than $25,000,000, or greater than
      $30,000,000, in the aggregate.

    

    6.2 Conditions
      to Obligations of the Company.
      The
      Company’s obligation to sell and issue the Shares and the Warrants at the
      Closing is subject to the fulfillment to the satisfaction of the Company on
      or
      prior to the Closing Date of the following conditions, any of which may be
      waived by the Company:

    

    (a) The
      representations and warranties made by the Investors in Section 5 hereof, other
      than the representations and warranties contained in Sections 5.3, 5.4, 5.5,
      5.6, 5.7, 5.8 and 5.9 (the “Investment
      Representations”),
      shall
      be true and correct in all material respects when made, and shall be true and
      correct in all material respects on the Closing Date with the same force and
      effect as if they had been made on and as of said date. The Investment
      Representations shall be true and correct in all respects when made, and shall
      be true and correct in all respects on the Closing Date with the same force
      and
      effect as if they had been made on and as of said date. The Investors shall
      have
      performed in all material respects all obligations and covenants herein required
      to be performed by them on or prior to the Closing Date.

     

    
      
         

      

      
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    (b) The
      Investors shall have executed and delivered the Registration Rights Agreement
      and the Put Agreement.

    

    (c) The
      Investor Agent and the Escrow Agent shall have executed and delivered the Escrow
      Agreement.

    

    (d) The
      Investor Agent and the CSKI Shareholder shall have executed and delivered the
      Make Good Agreement, and the Investor Agent, the CSKI Shareholder and the
      Transfer Agent shall have executed and delivered the Make Good Escrow
      Agreement.

    

    (e) The
      Majority Stockholders shall have executed and delivered the Lock-Up
      Agreement.   

    

    (f) No
      judgment, writ, order, injunction, award or decree of or by any court, or judge,
      justice or magistrate, including any bankruptcy court or judge, or any order
      of
      or by any governmental authority, shall have been issued, and no action or
      proceeding shall have been instituted by any governmental authority, enjoining
      or preventing the consummation of the transactions contemplated hereby or in
      the
      other Transaction Documents.

    

    (g) The
      Company shall have received not less than $25,000,000, or greater than
      $30,000,000, in the aggregate.

    

    6.3 Termination
      of Obligations to Effect Closing; Effects.

    

    (a) The
      outstanding obligations of the Company, on the one hand, and the Investors,
      on
      the other hand, to effect the Closing shall terminate as follows:

    

    (i) Upon
      the
      mutual written consent of the Company and the Investors;

    

    (ii) By
      the
      Company if any of the conditions set forth in Section 6.2 shall have become
      incapable of fulfillment, and shall not have been waived by the
      Company;

    

    (iii) By
      an
      Investor (with respect to itself only) if any of the conditions set forth in
      Section 6.1 shall have become incapable of fulfillment, and shall not have
      been
      waived by the Investor; 

    

    (iv) By
      the
      Company if the Closing of the sale of the Minimum Units has not occurred on
      or
      prior to January 7, 2008;

     

    
      
         

      

      
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          20
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    (v) In
      the
      event that the Company elects to extend the date of the Closing of the sale
      of
      the Minimum Units (or such earlier date, if applicable), by either the Company,
      or any Investor (with respect to itself only), if the Closing of the Sale of
      the
      Minimum Units has not occurred on or prior to January 31, 2008; or

    

    (vi) Automatically,
      with respect to any Units not previously sold, on February 15,
      2008.

    

    provided,
      however,
      that,
      except in the case of clause (i) above, the party seeking to terminate its
      obligation to effect the Closing shall not then be in breach of any of its
      representations, warranties, covenants or agreements contained in this Agreement
      or the other Transaction Documents if such breach has resulted in the
      circumstances giving rise to such party’s seeking to terminate its obligation to
      effect the Closing.

    

    (b) In
      the
      event of termination by any Investor of its obligations to effect the Closing
      pursuant to this Section 6.3, written notice thereof shall forthwith be given
      to
      the other Investors and the other Investors shall have the right to terminate
      their obligations to effect such Closing upon written notice to the Company
      and
      the other Investors. Nothing in this Section 6.3 shall be deemed to release
      any
      party from any liability for any breach by such party of the terms and
      provisions of this Agreement or the other Transaction Documents or to impair
      the
      right of any party to compel specific performance by any other party of its
      obligations under this Agreement or the other Transaction
      Documents.

    

    7. Covenants
      and Agreements of the Company.

    

    7.1 Reservation
      of Common Stock.
      The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued shares of Common Stock, solely for the purpose of providing for the
      exercise of the Warrants, such number of shares of Common Stock as shall from
      time to time equal the Warrant Shares issuable from time to time.

    

    7.2 Reports.
      The
      Company will furnish to the Investors and/or their assignees such information
      relating to the Company and its Subsidiaries as from time to time may reasonably
      be requested by the Investors and/or their assignees; provided, however, that
      the Company shall not disclose material nonpublic information to the Investors,
      or to advisors to or representatives of the Investors, unless prior to
      disclosure of such information the Company identifies such information as being
      material nonpublic information and provides the Investors, such advisors and
      representatives with the opportunity to accept or refuse to accept such material
      nonpublic information for review and any Investor wishing to obtain such
      information enters into an appropriate confidentiality agreement with the
      Company with respect thereto.

    

    7.3 No
      Conflicting Agreements.
      The
      Company will not take any action, enter into any agreement or make any
      commitment that would conflict or interfere in any material respect with the
      Company’s obligations to the Investors under the Transaction
      Documents.

    

    7.4 Insurance.
      The
      Company shall not materially reduce the insurance coverages described in Section
      4.19.

     

    
      
         

      

      
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          21
          -

        
          

        

      

      
         

      

    

     

    7.5 Compliance
      with Laws.
      The
      Company will comply in all material respects with all applicable laws, rules,
      regulations, orders and decrees of all governmental authorities.

    

    7.6 Listing
      of Underlying Shares and Related Matters.
      If the
      Company applies to have its Common Stock or other securities traded on any
      stock
      exchange or market, it shall include in such application the Shares and the
      Warrant Shares and will take such other action as is necessary to cause such
      Common Stock to be so listed. Thereafter, the Company will use commercially
      reasonable efforts to continue the listing and trading of its Common Stock
      on
      such exchange or market and, in accordance, therewith, will use commercially
      reasonable efforts to comply in all respects with the Company’s reporting,
      filing and other obligations under the bylaws or rules of such exchange or
      market, as applicable.

    

    7.7 Termination
      of Covenants.
      The
      provisions of Sections 7.2 through 7.4 shall terminate and be of no further
      force and effect on the date on which the Company’s obligations under the
      Registration Rights Agreement to register or maintain the effectiveness of
      any
      registration covering the Registrable Securities (as such term is defined in
      the
      Registration Rights Agreement) shall terminate.

    

    7.8 Investor
      Relations Firm.
      The
      Company will continue to utilize the services of its current investor relations
      firm, or an investor relations firm of equal or greater reputation.

    

    7.9 Chief
      Financial Officer.
      The
      Company will appoint an English speaking Chief Financial Officer within three
      (3) to six (6) months following the final Closing Date.

    

    7.10 Removal
      of Legends.
      Upon
      the earlier of (i) registration for resale pursuant to the Registration Rights
      Agreement or (ii) Rule 144(k) becoming available the Company shall (A) deliver
      to the transfer agent for the Common Stock (the “Transfer
      Agent”)
      irrevocable instructions that the Transfer Agent shall reissue a certificate
      representing shares of Common Stock without legends upon receipt by such
      Transfer Agent of the legended certificates for such shares, together with
      either (1) a customary representation by the Investor that Rule 144(k) applies
      to the shares of Common Stock represented thereby or (2) a statement by the
      Investor that such Investor has sold the shares of Common Stock represented
      thereby in accordance with the Plan of Distribution contained in the
      Registration Statement, and (B) cause its counsel to deliver to the Transfer
      Agent one or more blanket opinions to the effect that the removal of such
      legends in such circumstances may be effected under the 1933 Act. From and
      after
      the earlier of such dates, upon an Investor’s written request, the Company shall
      promptly cause certificates evidencing the Investor’s Securities to be replaced
      with certificates which do not bear such restrictive legends, and Warrant Shares
      subsequently issued upon due exercise of the Warrants shall not bear such
      restrictive legends provided the provisions of either clause (i) or clause
      (ii)
      above, as applicable, are satisfied with respect to such Warrant Shares, as
      applicable. When the Company is required to cause unlegended certificates to
      replace previously issued legended certificates, if unlegended certificates
      are
      not delivered to an Investor within three (3) Business Days of submission by
      that Investor of legended certificate(s) to the Transfer Agent as provided
      above
      (or to the Company, in the case of the Warrants), the Company shall be liable
      to
      the Investor for liquidated damages in an amount equal to 1.5% of the aggregate
      purchase price of the Securities evidenced by such certificate(s) for each
      thirty (30) day period (or portion thereof) beyond such three (3) Business
      Day
      that the unlegended certificates have not been so delivered.

     

    
      
         

      

      
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          22
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    7.11 Right
      of First Refusal.
      Until
      eighteen (18) months after the Closing Date or the effective date of the
      Registration Statement, whichever is later, Pope shall be given not less than
      ten (10) business days prior written notice of any proposed sale by the Company
      of its common stock or other securities or debt obligations, except (i)
      securities issued or issuable to officers, directors, or full-time employees
      of
      the Company pursuant to stock grants, stock purchases and/or stock option plans
      or any other stock incentive program, agreement, or arrangement approved by
      all
      of the disinterested members of the Company’s board of directors, (ii)
      securities issued as full or partial consideration in connection with a
      strategic merger, consolidation, or purchase of substantially all of the
      securities or assets of another corporation or entity, (iii) securities issued
      in connection with bank financing or equipment leasing transactions, (iv) shares
      of Common Stock issued upon exercise of the Warrants or pursuant to the
      provisions of this Section 7.11, and (v) as has been described in the SEC
      Filings filed with the SEC or delivered to the Investors prior to the Closing
      Date (collectively the foregoing are “Excepted
      Issuances”).
      With
      respect to each additional issuance, other than Excepted Issuances, Pope shall
      have the right during the ten (10) business days following receipt of the notice
      to purchase up to a maximum of $15,000,000 of such amount of offered common
      stock, debt or other securities in accordance with the terms and conditions
      set
      forth in the notice of sale. In the event such terms and conditions are modified
      during the notice period, Pope shall be given prompt notice of such modification
      and shall have the right during the ten (10) business days following the notice
      of modification, whichever is longer, to exercise such right. 

    

    7.12 Right
      of Minimum Investment Amount.
      Pope
      shall be entitled to receive an allocation of a minimum of $10,000,000 and
      a
      maximum of $20,000,000 of Units sold in this Offering. 

    

    7.13 Adjustments
      Upon Certain Events.
      

    

    (a) For
      the
      purposes of this Section 7.13, the following words and terms shall have the
      following meanings:

     

    “Approved
      Stock Plan”
means
      any employee benefit plan which has been approved by the Board of Directors
      of
      the Company, pursuant to which the Company’s securities may be issued to any
      employee, officer or director for services provided by the Company.

     

    “Excluded
      Securities”
means,
      provided such security is issued at a price which is greater than the Unit
      Purchase Price following: (a) any issuance by the Company of securities in
      connection with a strategic partnership or joint venture (the primary purpose
      of
      which is not to raise equity capital), (b) any issuance by the Company of
      securities as consideration for a merger or consolidation or the acquisition
      of
      a business, product, license, or other assets of another person or entity and
      (c) options to purchase shares of Common Stock, provided (i) such options are
      issued after the date of this Agreement pursuant to the Approved Stock Plan
      and
      (ii) the aggregate number of shares of Common Stock issuable upon exercise
      of
      the options shall not exceed 5% of the Company’s total issued and outstanding
      shares of Common Stock as at the time of issuance. 

     

    
      
         

      

      
        -
          23
          -

        
          

        

      

      
         

      

    

     

    “Other
      Securities”
means
      (A) those options and warrants of the Company issued prior to, and outstanding
      on, the Closing Date, (B) the shares of Common Stock issuable on exercise of
      such options and warrants, provided such options and warrants are not amended
      after the Closing Date, (C) the shares of Common Stock issuable upon exercise
      of
      the Warrants, and (D) the Escrow Shares, as such term is defined in the Make
      Good Agreement executed concurrently herewith. 

     

    (b) Adjustment
      to the Number of Shares. If
      and
      whenever, within twelve (12) months of the date of this Agreement, the Company
      issues or sells, or is deemed to have issued or sold, any shares of Common
      Stock, or securities convertible into or exercisable for shares of Common Stock,
      or modifies any of the foregoing which may be outstanding (other than (a)
      Excluded Securities, and (b) shares of Common Stock which are issued or deemed
      to have been issued by the Company in connection with an Approved Stock Plan
      or
      upon exercise or conversion of the Other Securities) to any person or entity
      at
      a price per share, or conversion or exercise price per share less than the
      Unit
      Purchase Price, then the Company shall issue, for each such occasion additional
      shares of its Common Stock to the Investor in such number so that the average
      per share purchase price of the shares of Common Stock purchased by the Investor
      hereunder shall automatically be reduced to such other lower price per share
      (in
      each case, the “Additional
      Shares”).
      The
      delivery to the Investor of the Additional Shares shall be not later than the
      closing date of the transaction giving rise to the requirement for the Company
      to issue such Additional Shares. The Investor is hereby granted the registration
      rights described in the Registration Rights Agreement in relation to such
      Additional Shares. For the purposes of the issuances and adjustments described
      in this Section 7.13(b), the issuance of any security of the Company, or of
      any
      warrant, right or option to purchase Common Stock, shall result in the issuance
      of Additional Shares of Common Stock upon the issuance of such convertible
      security, warrant, right or option and again at any time upon any subsequent
      issuances of shares of Common Stock upon exercise of such conversion or purchase
      rights if such issuance is at a price lower than the Unit Purchase Price.

    

    8. Survival
      and Indemnification.

    

    8.1 Survival.
      The
      representations, warranties, covenants and agreements contained in this
      Agreement shall survive the Closing of the transactions contemplated by this
      Agreement.

    

    8.2 Indemnification.
      The
      Company agrees to indemnify and hold harmless each Investor and its Affiliates
      and their respective directors, officers, employees and agents from and against
      any and all losses, claims, damages, liabilities and expenses (including without
      limitation reasonable attorney fees and disbursements and other expenses
      incurred in connection with investigating, preparing or defending any action,
      claim or proceeding, pending or threatened and the costs of enforcement thereof)
      (collectively, “Losses”)
      to
      which such Person may become subject as a result of any breach of
      representation, warranty, covenant or agreement made by or to be performed
      on
      the part of the Company under the Transaction Documents, and will reimburse
      any
      such Person for all such amounts as they are incurred by such
      Person.

     

    
      
         

      

      
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          24
          -

        
          

        

      

      
         

      

    

     

    8.3 Conduct
      of Indemnification Proceedings.
      Promptly
      after receipt by any Person (the “Indemnified
      Person”)
      of
      notice of any demand, claim or circumstances which would or might give rise
      to a
      claim or the commencement of any action, proceeding or investigation in respect
      of which indemnity may be sought pursuant to Section 8.2, such Indemnified
      Person shall promptly notify the Company in writing and the Company shall assume
      the defense thereof, including the employment of counsel reasonably satisfactory
      to such Indemnified Person, and shall assume the payment of all fees and
      expenses; provided,
      however, that
      the
      failure of any Indemnified Person so to notify the Company shall not relieve
      the
      Company of its obligations hereunder except to the extent that the Company
      is
      materially prejudiced by such failure to notify. In any such proceeding, any
      Indemnified Person shall have the right to retain its own counsel, but the
      fees
      and expenses of such counsel shall be at the expense of such Indemnified Person
      unless: (i) the Company and the Indemnified Person shall have mutually agreed
      to
      the retention of such counsel; or (ii) in the reasonable judgment of counsel
      to
      such Indemnified Person representation of both parties by the same counsel
      would
      be inappropriate due to actual or potential differing interests between them.
      The Company shall not be liable for any settlement of any proceeding effected
      without its written consent, which consent shall not be unreasonably withheld,
      but if settled with such consent, or if there be a final judgment for the
      plaintiff, the Company shall indemnify and hold harmless such Indemnified Person
      from and against any loss or liability (to the extent stated above) by reason
      of
      such settlement or judgment. Without the prior written consent of the
      Indemnified Person, which consent shall not be unreasonably withheld, the
      Company shall not effect any settlement of any pending or threatened proceeding
      in respect of which any Indemnified Person is or could have been a party and
      indemnity could have been sought hereunder by such Indemnified Party, unless
      such settlement includes an unconditional release of such Indemnified Person
      from all liability arising out of such proceeding.

    

    9. Miscellaneous.

    

    9.1 Successors
      and Assigns.
      This
      Agreement may not be assigned by a party hereto without the prior written
      consent of the Company or the Investors, as applicable, provided, however,
      that
      an Investor may assign its rights and delegate its duties hereunder in whole
      or
      in part to an Affiliate or to a third party acquiring some or all of its
      Securities in a private transaction without the prior written consent of the
      Company or the other Investors, after notice duly given by such Investor to
      the
      Company provided, that no such assignment or obligation shall affect the
      obligations of such Investor hereunder. The provisions of this Agreement shall
      inure to the benefit of and be binding upon the respective permitted successors
      and assigns of the parties. Nothing in this Agreement, express or implied,
      is
      intended to confer upon any party other than the parties hereto or their
      respective successors and assigns any rights, remedies, obligations, or
      liabilities under or by reason of this Agreement, except as expressly provided
      in this Agreement.

     

    
      
         

      

      
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          25
          -

        
          

        

      

      
         

      

    

     

    9.2 Counterparts;
      Faxes.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument. This Agreement may also be executed via facsimile, which shall
      be
      deemed an original.

    

    9.3 Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

    

    9.4 Notices.
      Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given as hereinafter
      described (i) if given by personal delivery, then such notice shall be deemed
      given upon such delivery, (ii) if given by telex or telecopier, then such notice
      shall be deemed given upon receipt of confirmation of complete transmittal,
      (iii) if given by mail, then such notice shall be deemed given upon the earlier
      of (A) receipt of such notice by the recipient or (B) three days after such
      notice is deposited in first class mail, postage prepaid, and (iv) if given
      by
      an internationally recognized overnight air courier, then such notice shall
      be
      deemed given one Business Day after delivery to such carrier. All notices shall
      be addressed to the party to be notified at the address as follows, or at such
      other address as such party may designate by ten days’ advance written notice to
      the other party:

    

    If
      to the
      Company:

    

    China
      Sky
      One Medical, Inc.

    Room
      1706, No. 30 Di Wang Building, Gan Shui Road,

    Nandang
      District, Harbin, People’s Republic of China 150001

    Attn:
      Liu
      Yan-Qing, Chairman 

    Fax:
      +
      86-451-8700-9121

     

    With
      a
      copy to:

    

    Hodgson
      Russ LLP

    1540
      Broadway, 24th Floor

    New
      York,
      NY 10036

    Attn:
      Jeffrey A. Rinde, Esq.

    Fax:
      (212) 751-0928

    

    If
      to the
      Investors:

    

    to
      the
      addresses set forth on the signature pages hereto.

    

    9.5 Expenses.
      The
      parties hereto shall pay their own costs and expenses in connection herewith.
      Such expenses shall be paid not later than the Closing. The Company shall
      reimburse the Investors upon demand for all reasonable out-of-pocket expenses
      incurred by the Investors, including without limitation reimbursement of
      attorneys’ fees and disbursements, in connection with any amendment,
      modification or waiver of this Agreement or the other Transaction Documents,
      in
      an aggregate of up to US$________. In the event that legal proceedings are
      commenced by any party to this Agreement against another party to this Agreement
      in connection with this Agreement or the other Transaction Documents, the party
      or parties which do not prevail in such proceedings shall severally, but not
      jointly, pay their pro rata share of the reasonable attorneys’ fees and other
      reasonable out-of-pocket costs and expenses incurred by the prevailing party
      in
      such proceedings.

     

    
      
         

      

      
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          26
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    9.6 Amendments
      and Waivers.
      Any
      term of this Agreement may be amended and the observance of any term of this
      Agreement may be waived (either generally or in a particular instance and either
      retroactively or prospectively), only with the written consent of the Company
      and the Investors. Any amendment or waiver effected in accordance with this
      paragraph shall be binding upon each holder of any Securities purchased under
      this Agreement at the time outstanding, each future holder of all such
      Securities, and the Company. Notwithstanding the foregoing, no consideration
      shall be offered or paid by the Company to any Investor to amend or consent
      to a
      waiver or modification of any provision of any of this Agreement unless the
      same
      consideration also is offered to all of the holders of the Shares and/or
      Warrants.

    

    9.7 Publicity.
      No
      public release or announcement concerning the transactions contemplated hereby
      shall be issued by the Company or the Investors without the prior consent of
      the
      Company (in the case of a release or announcement by the Investors) or the
      Investors (in the case of a release or announcement by the Company) (which
      consents shall not be unreasonably withheld), except as such release or
      announcement may be required by law or the applicable rules or regulations
      of
      any securities exchange or securities market, in which case the Company or
      the
      Investors, as the case may be, shall allow the Investors or the Company, as
      applicable, to the extent reasonably practicable in the circumstances,
      reasonable time to comment on such release or announcement in advance of such
      issuance. 

    

    9.8 Severability.
      Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof but shall be interpreted as if it were written so as to be
      enforceable to the maximum extent permitted by applicable law, and any such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction. To the extent
      permitted by applicable law, the parties hereby waive any provision of law
      which
      renders any provision hereof prohibited or unenforceable in any
      respect.

    

    9.9 Entire
      Agreement.
      This
      Agreement, including the Exhibits and the Disclosure Schedules, and the other
      Transaction Documents constitute the entire agreement among the parties hereof
      with respect to the subject matter hereof and thereof and supersede all prior
      agreements and understandings, both oral and written, between the parties with
      respect to the subject matter hereof and thereof.

    

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

     

    
      
         

      

      
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          27
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    9.11 Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof. Each of the parties hereto irrevocably submits to the exclusive
      jurisdiction of the courts of the State of New York located in New York County
      and the United States District Court for the Southern District of New York
      for
      the purpose of any suit, action, proceeding or judgment relating to or arising
      out of this Agreement and the transactions contemplated hereby. Service of
      process in connection with any such suit, action or proceeding may be served
      on
      each party hereto anywhere in the world by the same methods as are specified
      for
      the giving of notices under this Agreement. Each of the parties hereto
      irrevocably consents to the jurisdiction of any such court in any such suit,
      action or proceeding and to the laying of venue in such court. Each party hereto
      irrevocably waives any objection to the laying of venue of any such suit, action
      or proceeding brought in such courts and irrevocably waives any claim that
      any
      such suit, action or proceeding brought in any such court has been brought
      in an
      inconvenient forum. EACH
      OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
      LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
      CONSULTED SPECIFICALLY AS TO THIS WAIVER.

    

    9.12 Independent
      Nature of Investors' Obligations and Rights.
      The
      obligations of each Investor under any Transaction Document are several and
      not
      joint with the obligations of any other Investor, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor under any Transaction Document. The decision of each Investor to
      purchase Securities pursuant to the Transaction Documents has been made by
      such
      Investor independently of any other Investor. Nothing contained herein or in
      any
      Transaction Document, and no action taken by any Investor pursuant thereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      Each
      Investor acknowledges that no other Investor has acted as agent for such
      Investor in connection with making its investment hereunder and that no Investor
      will be acting as agent of such Investor in connection with monitoring its
      investment in the Securities or enforcing its rights under the Transaction
      Documents. Each Investor shall be entitled to independently protect and enforce
      its rights, including, without limitation, the rights arising out of this
      Agreement or out of the other Transaction Documents, and it shall not be
      necessary for any other Investor to be joined as an additional party in any
      proceeding for such purpose. The Company acknowledges that each of the Investors
      has been provided with the same Transaction Documents for the purpose of closing
      a transaction with multiple Investors and not because it was required or
      requested to do so by any Investor.

    

    9.13 Acceptance
      of Investment.
      Except
      as otherwise set forth herein, at any time prior to the Closing Date, the
      Company, in its sole discretion, may (i) accept or reject any Investor’s
      purchase of Shares and Warrants in whole or in part, or (ii) allot to any
      Investor a lesser number of Shares and Warrants than the number of Shares set
      forth on the Investor’s signature page attached hereto.

    

    [signature
      page follows]

     

    
      
         

      

      
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          28
          -

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties have executed this Agreement or caused their duly authorized officers
      to
      execute this Agreement as of the date first above written.

     

    
      	 	 	 
	 	CHINA
              SKY
              ONE MEDICAL, INC. 
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

	 	Title 

    

     

    
      
         

      

      
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          29
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    SECURITIES
      PURCHASE AGREEMENT

    COUNTERPART
      SIGNATURE PAGE

     

    By
      signing below, the undersigned agrees to the terms of the Securities Purchase
      Agreement and to purchase the number of Shares and Warrants set forth
      below.

     

    
      	 	
              INVESTOR:

            
	
              Number
                of Shares being purchased:

               

              ___________________________________

            	
              ___________________________________

               

              By:________________________________

              Name:

              Title:

            
	
              Warrant
                Shares:

               

              ___________________________________

            
	 	
              Address:__________________________

              _______________________

              Facsimile:__________________________

              with
                a copy to:

               

               

               

            
	
              Aggregate
                Purchase Price:

               

              ___________________________________

            
	 	
              Please
                complete the following:

            
	 	
              1.

            	
              The
                exact name that your Shares and Warrants are to be registered in
                (this is
                the name that will appear on your Share and Warrant certificates).
                You may
                use a nominee name if appropriate:

            	__________________________________
	 	
              2.

            	
              The
                relationship between the Investors of the Shares and Warrants and
                the
                Registered Holder listed in response to item 1 above:

            	__________________________________
	 	
              3.

            	
              The
                mailing address and facsimile number of the Registered Holder listed
                in
                response to item 1 above (if different from above):

            	
              __________________________________

              __________________________________

              Facsimile:__________________________

            
	 	
              4.

            	
              (For
                United States Investors:)
                The Social Security Number or Tax Identification Number of the Registered
                Holder listed in the response to item 1 above:

            	__________________________________

    

     

    
      
         

      

      
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          30
          -

        
          

        

      

      
         

      

    

     

    Exhibit
      A

    

    (Form
      of Warrant)

    

     

    
      
         

      

      
        -
          31
          -

        
          

        

      

      
         

      

    

     

    Exhibit
      B

    

    (Form
      of Registration Rights Agreement)

    

     

    
      
         

      

      
        -
          32
          -

        
          

        

      

      
         

      

    

     

    Exhibit
      C

    

    (Form
      of Escrow Agreement)

    

     

    
      
         

      

      
        -
          33
          -

        
          

        

      

      
         

      

    

     

    Exhibit
      D

    

    (Form
      of Lock-Up Agreement)

     

     

    
      
         

      

      
        -
          34
          -

        
          

        

      

      
         

      

    

     

    Exhibit
      E

    

    (Form
      of Make Good Agreement)

    

     

    
      
         

      

      
        -
          35
          -

        
          

        

      

      
         

      

    

     

    Exhibit
      F

    

    (Form
      of Make Good Escrow Agreement)

    

     

    
      
         

      

      
        -
          36
          -

        
          

        

      

      
         

      

    

     

    Exhibit
      G

    

    (Form
      of Put Agreement)

    

     

    
      
         

      

      
        -
          37
          -

        
          

        

      

      
         

      

    

     

    SCHEDULE
      1

    

    Accredited
      Investor Status

    

    

    Please
      initial below the items which apply to your status as an Accredited
      Investor.

    

    

      
        	
                __________

              	
                An
                  individual having a net worth with spouse (excluding automobiles,
                  principal residence and furnishings) at the time of purchase, individually
                  or jointly, in excess of $1,000,000.

              
	 	 
	
                __________

              	
                An
                  individual whose individual net income was in excess of $200,000
                  in each
                  of the two most recent years, or whose joint net income with his
                  or her
                  spouse was in excess of $300,000 in each of those years, and who
                  reasonably expects his individual or joint income with such investor’s
                  spouse to reach such level in the current year.

              
	 	 
	
                __________

              	
                A
                  corporation or partnership, not formed for the specific purpose
                  of
                  acquiring the purchased securities, having total assets in excess
                  of
                  $5,000,000.

              
	 	 
	
                __________

              	
                A
                  small business investment company licensed by the U.S. Small Business
                  Administration under section 301(c) or (d) of the Small Business
                  Investment Act of 1958.

              
	 	 
	
                __________

              	
                A
                  self-directed benefit plan within the meaning of ERISA, with investment
                  decisions made solely by persons who are accredited investors as
                  defined
                  in Rule 501(2) of Regulations D.

              
	 	 
	
                __________

              	
                A
                  trust with total assets in excess of $5,000,000 not formed for
                  the
                  specific purpose of acquiring the purchased securities, whose purchase
                  is
                  directed by a sophisticated person (i.e., a person who has such
                  knowledge
                  and experience in financial and business matters that he, she or
                  it is
                  capable of evaluating the merits and risks of an investment in
                  the
                  purchased securities).

              
	 	 
	
                __________

              	
                An
                  entity in which all of the equity owners are accredited
                  investors.

              
	 	 
	
                __________

              	
                Other
                  (describe):
                  _____________________________________________________________________________

                __________________________________________________________________________________________

                __________________________________________________________________________________________

              

      

    

     

    
      
         

      

      
        -
          38
          -

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