Unassociated Document


    Exhibit
      10.4

    
REGISTRATION
      RIGHTS AGREEMENT

    


    THIS
      REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into
      effective as of March 22, 2006, by and among China-Biotics, Inc., a Delaware
      corporation ("China-Biotics"), and the undersigned persons who have acquired
      shares of common stock of China-Biotics (the "Shareholders").

    


    BACKGROUND.
      Each Shareholder has acquired shares of common stock of China-Biotics, $.0001
      par value. China-Biotics has agreed to grant to the Shareholders the
      registration rights set out in this Agreement relating to the shares of common
      stock acquired by the Shareholders. 

    


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

    


    SECTION
      1. Definitions. For the purpose of this Agreement:

    


    
      	
              1.1

            	
              "Common
                Shares" means shares of common stock, $.0001 par value, of China-Biotics,
                as the same may be authorized and issued from time to
                time.

            


    

    
    

     

    
      	
              1.2

            	
              The
                terms "register," "registered" and "registration" refer to a registration
                effected by filing with the U.S. Securities and Exchange Commission
                (the
                "SEC") a registration statement or statements or similar documents
                in
                compliance with the Securities Act of 1933, as amended (the "Securities
                Act"), and the declaration or ordering by the SEC of the effectiveness
                of
                such registration statement, as applicable given the particular
                context.

            


    

    
    

     

    
      	
              1.2

            	
              "Registrable
                Securities" means (a) the Common Shares listed on Schedule A and
                (b) any
                Common Shares issued as a dividend, stock split or other distribution
                with
                respect to, or in exchange for, upon reclassification or in replacement
                of, the foregoing; provided that Common Shares that are considered
                to be
                Registrable Securities shall cease to be Registrable Securities (i)
                upon
                the sale thereof pursuant to an effective registration statement,
                (ii)
                upon the sale thereof pursuant to Rule 144 (or successor rule) under
                the
                Securities Act or (iii) when such Common Shares cease to be outstanding.
                In the event of any recapitalization by China-Biotics, whether by
                stock
                split, reverse stock split, stock dividend or otherwise, the number
                of
                shares of Registrable Securities shall be proportionately increased
                or
                decreased.

            


    

    
    

     

    
      	
              1.3

            	
              "Registration
                Expenses" include all expenses incurred by China-Biotics in complying
                with
                the terms of Section 2 hereof, including all registration and filing
                fees,
                printing expenses, fees and disbursements of counsel and independent
                public accountants for China-Biotics, fees and expenses incurred
                in
                connection with complying with state securities laws, fees of any
                securities exchange or automated quotation system upon which the
                Common
                Shares are to be listed, fees of National Association of Securities
                Dealers, Inc., fees of any transfer agent, registrar and depositary,
                but
                excluding Selling Expenses related to Registrable Securities held
                by each
                Shareholder.

            


    

    
    

     

    
      	
              1.5

            	
              "Selling
                Expenses" means all underwriting discounts and fees and selling
                commissions and transfer taxes, if any, attributable to the sale
                of
                securities.

            


    

    


    SECTION
      2. Shareholder Registration Rights

    


    
      	2.1	
              China-Biotics
                shall file a registration statement for all Registrable Securities
                with
                the SEC on Form SB-2  as
                soon as practical, and in any event on or before April 7,
                2006.

            


    

    


    
      	
              2.2

            	
              If,
                for any reason, any Registrable Securities are not included in the
                Registration Statement as described in Section 2.1 above, and if
                China-Biotics, at any time thereafter, proposes to register China-Biotics
                Common Shares under the Securities Act for sale to the public, either
                for
                its own account or for the account of any of its other shareholders
                (except with respect to registration statements on Forms F-4, S-8
                or such
                other form which is not available for registering China-Biotics Common
                Shares for sale to the public), each such time it will give written
                notice
                to the Shareholders of its intention so to do on or before the earlier
                of
                (a) 10 days after filing of a registration statement and (b)15 days
                prior
                to effectiveness of such registration statement. Upon the written
                request
                of the Shareholders, received by China-Biotics within 5 days after
                the
                giving of any such notice by China-Biotics, to register any of the
                Registrable Securities (which request shall state the intended method
                of
                disposition thereof), China-Biotics will use its commercially reasonable
                efforts to cause such Registrable Securities to be included in the
                securities to be covered by the registration statement proposed to
                be
                filed by China-Biotics, all to the extent requisite to permit the
                sale or
                other disposition by the Shareholders (in accordance with its written
                request) of such Registrable Securities.


            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              2.3

            	
              If
                any registration pursuant to Section 2.2 shall be, in whole or in
                part, an
                underwritten public offering of Common Shares for the account of
                China-Biotics and if the managing underwriter advises China-Biotics
                that
                the inclusion of all Common Shares proposed to be included in such
                registration could adversely affect the marketability of the offering
                or
                adversely affect the price or price range at which the Common Shares
                could
                be sold, China-Biotics will include Common Shares in the registration
                in
                the following order of priority: (i) first, all Common Shares which
                China-Biotics proposes to sell for its own account (if any) and (ii)
                second, the Registrable Securities requested by the Shareholders
                to be
                included in the registration, together with all other Common Shares
                held
                by any other shareholders, requested to be included in such registration,
                with the number of shares held by each shareholder included on a
                pro rata
                basis based upon the number of Common Shares held by such shareholder
                as a
                percent of all Common Shares requested to be included in such registration
                statement by all China-Biotics shareholders. In the event that the
                managing underwriter advises China-Biotics that an underwriters'
                over-allotment option is necessary or advisable, the preceding priority
                shall apply to the determination of which securities are to be included
                in
                the primary portion of such registration. Except as set forth above,
                there
                shall be no limit to the number of registrations that may be requested
                pursuant to Section 2.2.

            


    

    


    
      	
              2.4

            	
              China-Biotics
                shall pay all Registration Expenses in connection with each registration,
                including any Selling Expenses of China-Biotics. Each Shareholder
                shall
                pay all Selling Expenses attributable to such Shareholder’s sale of
                Registrable Securities. 

            


    

    


    SECTION
      3. Obligations of China-Biotics. 

    


    
      	
              3.1

            	
              If
                and whenever China-Biotics undertakes in accordance with Section
                2 hereof
                to effect the registration of any Registrable Securities, China-Biotics
                shall, as expeditiously as reasonably possible, comply with each
                of the
                following:

            


    

    


    
      	
              3.1.1

            	
              prepare
                and file with the SEC a registration statement on the appropriate
                form and
                use its commercially reasonable efforts to cause the registration
                statement to become effective and keep such registration statement
                effective for a period of one year from the effective date (or such
                shorter period in which all Registrable Securities have been sold
                thereunder);

            


    

    


    
      	
              3.1.2

            	
              prepare
                and file with the SEC such amendments and supplements to such registration
                statement and the prospectus used in connection with such registration
                statement as may be necessary to keep such registration statement
                effective as provided in Section 3.1.1 and to comply with the provisions
                of the Securities Act with respect to the disposition of all securities
                covered by such registration
                statement;

            


    

    


    
      	
              3.1.3

            	
              furnish
                to each Shareholder such numbers of copies of the registration statement,
                the corresponding prospectus, including a preliminary prospectus,
                and of
                each amendment and supplement (in each case, including all exhibits),
                in
                conformity with the requirements of the Securities Act, and such
                other
                documents as such Shareholder may reasonably request in order to
                facilitate the disposition of Registrable Securities owned by such
                Shareholder;

            


    

    


    
      	
              3.1.4

            	
              use
                its commercially reasonable efforts to register and qualify the
                Registrable Securities under securities laws of such jurisdictions
                or
                states in the United States as shall be reasonably necessary to facilitate
                an orderly distribution of the Registrable Securities; provided,
                however,
                that China-Biotics shall not be required in connection therewith
                or as a
                condition thereto to qualify to do business in any such jurisdiction
                in
                which, but for the requirements of this Section 3, it would not otherwise
                be obligated to be so qualified;

            


    

    


    
      	
              3.1.5

            	
              enter
                into such agreements (including an underwriting agreement, if applicable,
                containing customary terms) and take such other actions in connection
                therewith that may be reasonably required in order to expedite or
                facilitate a disposition of the Registrable
                Securities;

            


    

    


    
      	
              3.1.6

            	
              use
                its commercially reasonable efforts to cause all such securities
                covered
                by such registration statement to be listed or quoted (as the case
                may be)
                on any U.S. securities exchange or automated quotation system on
                which the
                China-Biotics Common Shares are then listed or quoted or proposed
                to be
                listed or quoted;

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              3.1.7

            	
              use
                its commercially reasonable efforts to furnish to each Shareholder
                and to
                each underwriter, if any, a signed counterpart of: (i) an opinion
                of
                counsel for China-Biotics addressed to such Shareholder and to each
                underwriter on which opinion both such Shareholder and each underwriter
                are entitled to rely and (ii) a “comfort” letter signed by the independent
                public accountants who have certified China-Biotics’ financial statements
                included in such registration statement, each in customary form and
                covering such matters of the type customarily covered by opinions
                or
                comfort letters, as the case may be. In this connection, China-Biotics
                will use its commercially reasonable efforts to have such comfort
                letters
                addressed to each Shareholder holding Registrable Securities included
                in
                such registration statement;

            


    

    


    
      	
              3.1.8

            	
              upon
                reasonable notice and during normal business hours, make available
                for
                inspection by any seller of Registrable Securities, any underwriter
                participating in any disposition pursuant to such registration statement
                and any attorney, accountant or other agent retained by any such
                seller or
                underwriter (but not more than one firm of counsel to each of such
                sellers
                and underwriters) all financial and other records, pertinent corporate
                documents and properties of China-Biotics, in each case, reasonably
                required to conduct due diligence or otherwise in connection with
                an
                underwritten offering, and use its commercially reasonable efforts
                to
                cause China-Biotics’ officers, directors, employees and independent
                accountants to supply all information reasonably requested by any
                such
                seller, underwriter, attorney, accountant or agent in connection
                with such
                registration statement; provided, however, that information that
                China-Biotics advises any such person is confidential shall not be
                disclosed unless such person signs a confidentiality agreement reasonably
                satisfactory to China-Biotics; 

            


    

    


    
      	
              3.1.9

            	
              permit
                any Shareholder which, in its reasonable judgment, might be deemed
                to be
                an underwriter or a controlling person of China-Biotics, to participate
                in
                the preparation of such registration statement and to require the
                insertion therein of materials, furnished to China-Biotics in writing,
                which in the reasonable judgment of such Shareholder and its counsel
                should be included and which are acceptable to
                China-Biotics;

            


    

    


    
      	
              3.1.10

            	
              notify
                each Shareholder, at any time when a prospectus relating thereto
                is
                required to be delivered under the Securities Act, upon occurrence
                of any
                event as a result of which, or upon China-Biotics becoming otherwise
                aware
                that, the prospectus included in such registration statement, as
                then in
                effect, is not current or includes an untrue statement of a material
                fact
                or omits to state a material fact required to be stated therein or
                necessary to make the statements therein not misleading in the light
                of
                the circumstances then existing, and, if reasonably practical, prepare
                a
                supplement or amendment to the prospectus or any such document
                incorporated therein so that thereafter the prospectus will be current
                and
                will not contain an untrue statement of material fact or omit to
                state any
                material fact necessary to make the statements therein not
                misleading;

            


    

    


    
      	
              3.1.11

            	
              in
                the event of the issuance of any stop order suspending the effectiveness
                of any registration statement or of any order suspending or preventing
                the
                use of any prospectus or suspending the qualification of any Registrable
                Securities for sale in any jurisdiction, promptly notify each Shareholder,
                and use its commercially reasonable efforts promptly to obtain the
                withdrawal of any such order; and

            


    

    


    
      	
              3.1.12

            	
              otherwise
                use its commercially reasonable efforts to comply with all applicable
                rules and regulations of the SEC with respect to any registration
                statement filed pursuant to this Agreement.


            


    

    


    
      	
              3.2

            	
              From
                and after the date of this Agreement until the termination of this
                Agreement, China-Biotics shall not, without the prior written consent
                of
                the Shareholders, enter into any agreement with any holder or prospective
                holder of any securities of the Company giving such holder or prospective
                holder any registration rights, the terms of which are more favorable
                than
                the registration rights granted to the Shareholders hereunder without
                also
                giving the Shareholders such greater
                rights.

            


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    SECTION
      4. Obligations of the Shareholders.

    


    
      	
              4.1

            	
              Each
                Shareholder agrees that, upon receipt of any notice from China-Biotics
                of
                the happening of any event described in Section 3.1.10, such Shareholder
                will forthwith discontinue disposition of such securities pursuant
                to such
                registration statement until such Shareholder's receipt of notice
                regarding the availability of copies of the supplemental or amended
                prospectus contemplated by Section 3.1.10, and, as so directed by
                China-Biotics, such Shareholder will deliver to China-Biotics (at
                China-Biotics' expense) all copies, other than permanent file copies
                then
                in such Shareholder's possession, of the prospectus covering such
                securities covered by such registration statement current at the
                time of
                receipt of such notice. In the event China-Biotics shall give any
                such
                notice, the period mentioned in Section 3.1.1 shall be extended by
                the
                number of days during the period from the date of the giving of such
                notice pursuant to Section 3.1.10 and through the date when such
                Shareholder shall have received the notice regarding the public
                availability of the supplemented or amended prospectus contemplated
                by
                Section 3.1.10. Each Shareholder agrees that upon the happening of
                an
                event described in Section 3.1.11, China-Biotics may terminate the
                offering and the registration as to unsold securities, including
                Registrable Securities, or may amend the registration statement and
                prospectus. 

            


    

    


    
      	
              4.2

            	
              In
                connection with each registration hereunder, each Shareholder will
                promptly furnish to China-Biotics in writing such information with
                respect
                to itself and the proposed distribution by it as reasonably shall
                be
                necessary and shall be requested by China-Biotics in order to comply
                with
                federal and applicable state securities
                laws.

            


    

    


    
      	4.3	
              In
                connection with each registration pursuant to Section 2 hereof involving
                an underwritten public offering, China-Biotics and each Shareholder
                agree
                to enter into a written agreement with the managing underwriter in
                such
                form and containing such provisions as are customary in the securities
                business for such an arrangement between such underwriter and companies
                of
                the China-Biotics' size and investment stature as may be reasonably
                required to facilitate the disposition of the Registrable
                Securities.

            


    

    


    
      	
              4.4
                

            	
              Each
                Shareholder shall execute and deliver to China-Biotics, contemporaneously
                with this Agreement, the completed Selling Stockholder Questionnaire
                in
                Exhibit B.

            


    

    


    SECTION
      5. Indemnification and Contribution.

    


    
      	
              5.1

            	
              In
                the event of a registration of any Registrable Securities under the
                Securities Act pursuant to this Agreement, China-Biotics will indemnify
                and hold harmless, to the full extent permitted by law, each Shareholder
                with respect to any registration, qualification, listing or compliance
                effected pursuant to this Agreement against any losses, claims, damages,
                liabilities and expenses, joint or several, to which such Shareholder
                may
                become subject under the Securities Act, the Securities Exchange
                Act of
                1934, as amended (the “Exchange Act”), or other federal and state laws or
                otherwise, insofar as such losses, claims, damages or liabilities
                (or
                actions in respect thereof) arise out of or are based upon any untrue
                statement or alleged untrue statement of any material fact contained
                in
                any registration statement under which such Registrable Securities
                were
                registered under the Securities Act pursuant to this Agreement, any
                preliminary prospectus or final prospectus contained therein, or
                any
                amendment or supplement thereof, or arise out of or are based upon
                the
                omission or alleged omission to state therein a material fact required
                to
                be stated therein or necessary to make the statements therein (in
                light of
                the circumstances under which they were made) not misleading, and
                will pay
                or reimburse eachShareholder for any legal or other expenses reasonably
                incurred by them in connection with investigating or defending any
                such
                loss, claim, damage, liability or action; provided, however, that
                China-Biotics (i) will not be liable in any such case if and to the
                extent
                that (A) any such loss, claim, damage liability or expense arises
                out of
                or is based upon an untrue statement or alleged untrue statement
                or
                omission or alleged omission so made in conformity with information
                furnished by any Shareholder or any other shareholder holding Registrable
                Securities for use in such registration statement, prospectus, amendment
                or supplement, or (B) in respect to such untrue statement or alleged
                untrue statement or omission or alleged omission with respect to
                which
                such loss, claim, damage, liability or expense directly relates,
                the final
                prospectus for such registration statement corrected in all material
                respects such untrue statement or alleged untrue statement or omission
                or
                alleged omission and notice regarding the public availability of
                such
                final prospectus was sent or given to or on behalf of any Shareholder
                (or
                otherwise delivered in accordance with applicable law or regulation)
                at or
                prior to the confirmation of the sale of Registrable Securities of
                such
                Shareholder, and (ii) will not be liable for amounts paid in settlement
                of
                any such loss, claim, damage, liability, expense or action if such
                settlement is effected without the consent of China-Biotics, such
                consent
                not to be unreasonably withheld or
                delayed.

            


    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              5.2

            	
              In
                the event of a registration of any Registrable Securities under the
                Securities Act pursuant to this Agreement, each Shareholder will
                indemnify
                and hold harmless China-Biotics, each person, if any, who controls
                China-Biotics, any underwriter retained by China-Biotics and their
                respective directors, officers, employees, advisors, agents and affiliates
                against all losses, claims, damages, liabilities and expenses, joint
                or
                several, to which China-Biotics or such other person may become subject
                under the Securities Act, the Exchange Act or other federal or state
                laws
                or otherwise, but only insofar as such losses, claims, damages or
                liabilities (or actions in respect thereof), arise out of or are
                based
                upon an untrue statement or alleged untrue statement or omission
                or
                alleged omission to state therein a material fact required to be
                stated
                therein or necessary to make the statements therein not misleading,
                made
                in reliance upon and in conformity with information pertaining to
                such
                Shareholder, furnished to China-Biotics by such Shareholder for use
                in
                such registration statement under which such Registrable Securities
                were
                registered under the Securities Act pursuant to this Agreement, or
                in any
                preliminary prospectus or final prospectus contained therein, or
                any
                amendment or supplement thereof, and will pay or reimburse China-Biotics
                and each such other person for any legal or other expenses reasonably
                incurred by them in connection with investigating or defending any
                such
                loss, claim, damage, liability or action; provided, however, that
                (i) the
                liability of such Shareholder hereunder shall be limited to the greater
                of
                (a) the proportion of any such loss, claim, damage, liability or
                expense
                which is equal to the proportion that the public offering price of
                the
                shares of Registrable Securities sold by such Shareholder under such
                registration statement bears to the total public offering price of
                all
                securities sold thereunder and (b) the amount of gross proceeds received
                by such Shareholder in the offering giving rise to such liability,
                and
                (ii) such Shareholder shall not be liable for amounts paid in settlement
                of any such loss, claim, damage, liability or action if such settlement
                is
                effected without the consent of such Shareholder, such consent not
                to be
                unreasonably withheld or delayed.

            


    

    


    
      	
              5.3

            	
              Promptly
                after receipt by an indemnified party hereunder of written notice
                of any
                claim or the commencement of any action or proceeding, such indemnified
                party shall, if a claim in respect thereof is to be made against
                the
                indemnifying party hereunder, notify the indemnifying party in writing
                thereof, but the failure to so notify the indemnifying party shall
                not
                relieve it from any liability which it may have to such indemnified
                party
                other than under this Section 5 and shall only relieve it from any
                liability which it may have to such indemnified party under this
                Section 5
                if and to the extent the indemnifying party is materially prejudiced
                by
                such omission. In case any such action shall be brought against any
                indemnified party and the indemnified party shall notify the indemnifying
                party of the commencement thereof, the indemnifying party shall be
                entitled to participate in and, to the extent it shall wish, to assume
                and
                undertake the defense thereof with counsel reasonably satisfactory
                to such
                indemnified party, and, after notice from the indemnifying party
                to such
                indemnified party of its election so to assume and undertake the
                defense
                thereof, the indemnifying party shall not be liable to such indemnified
                party under this Section 5 for any legal or other professional expenses
                subsequently incurred by such indemnified party in connection with
                the
                defense thereof other than reasonable costs of investigation and
                of
                liaison with counsel so selected; provided, however, that if the
                defendants in any such action include both the indemnified party
                and the
                indemnifying party, and the indemnified party shall have been advised
                by
                counsel in writing that there are reasonable defenses available to
                it
                which are different from or additional to those available to the
                indemnifying party, the indemnified party shall have the right to
                select a
                separate counsel and to assume such legal defenses and otherwise
                to
                participate in the defense of such action, with the reasonable fees
                and
                expenses of such separate counsel and other expenses related to such
                participation to be reimbursed by the indemnifying party; provided,
                further, that in no event shall the indemnifying party be responsible
                for
                the fees and expenses of more than one such separate counsel. No
                indemnifying party, in the defense of any such claim or litigation
                against
                an indemnified party, shall consent to entry of any judgment or enter
                into
                any settlement which does not include as an unconditional term thereof
                the
                giving by the claimant or plaintiff to such indemnified party of
                a release
                from all liability in respect of such claim or litigation, unless
                such
                indemnified party shall otherwise consent in writing, which consent
                shall
                not be unreasonably withheld or delayed. An indemnifying party who
                is not
                entitled to, or elects not to, assume the defense of a claim shall
                not be
                obligated to pay the fees and expenses of more than one counsel for
                all
                parties indemnified by such indemnifying party with respect to such
                claim,
                except as expressly provided above.

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              5.4

            	
              If
                the indemnification provided for in this Section 5 is for any reason
                held
                by a court of competent jurisdiction to be unavailable to an indemnified
                party in respect of any claims referred to therein, then the indemnifying
                party, in lieu of indemnifying such indemnified party thereunder,
                shall
                contribute to the amount paid or payable by such indemnified party
                as a
                result of such claims (i) in such proportion as is appropriate to
                reflect
                the relative benefits received by the indemnifying party and the
                indemnified party, or (ii) if the allocation provided by clause (i)
                above
                is not permitted by applicable law, in such proportion as is appropriate
                to reflect not only the relative benefits referred to in clause (i)
                above
                but also the relative fault of the indemnifying party and the indemnified
                party in connection with the action or inaction which resulted in
                such
                claims, as well as any other relevant equitable considerations. In
                connection with any registration of China-Biotics' securities, the
                relative benefits received by the indemnifying party and the indemnified
                party shall be deemed to be in the same respective proportions that
                the
                net proceeds from the offering (before deducting expenses) received
                by the
                indemnifying party and the indemnified party, in each case as set
                forth in
                the table on the cover page of the applicable prospectus, bear to
                the
                aggregate public offering price of the securities so offered. The
                relative
                fault of the indemnifying party and the indemnified party shall be
                determined by reference to, among other things, whether the untrue
                or
                alleged untrue statement of a material fact or the omission or alleged
                omission to state a material fact relates to information supplied
                by the
                indemnifying party or the indemnified party and the parties' relative
                intent, knowledge, access to information and opportunity to correct
                or
                prevent such statement or omission.

            


    

    


    SECTION
      6. Rule 144 Reporting.

    


    China-Biotics
      agrees that it will:

    


    
      	
              6.1

            	
              make
                and keep public information available, as those terms are understood
                and
                defined in Rule 144 under the Securities
                Act;

            


    

    


    
      	
              6.2

            	
              use
                its commercially reasonable efforts to file with the SEC in a timely
                manner all reports and other documents required by the SEC under
                the
                Securities Act and the Exchange Act (subject to any applicable
                extensions); 

            


    

    


    
      	
              6.3

            	
              furnish
                to each Shareholder and to the securities transfer agent for
                China-Biotics, promptly upon request, and in any event within 5 business
                days after each request, an opinion letter of counsel to China-Biotics
                in
                customary form to permit registration of a transfer of any Registrable
                Securities; provided that such Shareholder shall have provided to
                China-Biotics and its counsel any requested supporting documentation;
                and
                

            


    

    


    
      	
              6.4

            	
              furnish
                to each Shareholder promptly, upon request, a written statement by
                China-Biotics as to its compliance with the reporting requirements
                of such
                Rule 144 and of the Securities Act and the Exchange Act, a copy of
                the
                most recent annual or quarterly report of China-Biotics, and such
                other
                reports and documents so filed by China-Biotics as such Shareholder
                may
                reasonably request in availing itself of any rule or regulation of
                the
                Commission allowing such Shareholder to sell any Registrable Securities
                without registration.

            


    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    SECTION
      7. General.

    


    
      	
              7.1

            	
              Construction.
                This Agreement and the rights, duties, and obligations of the parties
                to
                this Agreement will be governed by and construed in accordance with
                the
                laws of the State of Delaware, without regard to any conflict of
                laws rule
                or principle that might refer the governance or the construction
                of this
                Agreement to the laws of another jurisdiction, and in accordance
                with the
                federal securities laws. This Agreement will at all times be construed
                as
                a whole, according to its fair meaning, and not strictly for or against
                any party. The headings of the sections contained in this Agreement
                are
                for reference purposes only and will not in any way affect the meaning,
                interpretation, or enforceability of any section, subsection, term,
                or
                provision of this Agreement. All personal pronouns used herein will
                include the other genders whether used in the masculine, feminine,
                or
                neuter gender and the singular will include the plural whenever and
                as
                often as may be appropriate. This Agreement shall be binding upon
                the
                parties and their successors and permitted
                assigns.

            


    

    


    
      	
              7.2

            	
              Entire
                Agreement. This Agreement, that certain Securities Exchange Agreement
                (“Exchange Agreement”) and Lockup Agreement (“Lockup Agreement”), each
                dated the date hereof and entered into by the parties hereto and
                the other
                parties listed therein, together constitute the entire agreement
                of the
                parties regarding the Registrable Securities and supersede all prior
                written or oral agreements, contemporaneous oral agreements,
                understandings and negotiations between the parties with respect
                to the
                Registrable Securities.

            


    

    


    
      	
              7.3

            	
              Amendments
                and Waivers; Assignment. This Agreement may not be modified, amended
                or
                waived except by written document specifically identifying this Agreement
                and signed by the parties. The rights of the Shareholders hereunder
                to
                have China-Biotics register the Registrable Securities may be assigned
                by
                such Shareholder to any person or entity which is an intended or
                permitted
                transferee under the provisions of the Securities Exchange Agreement
                and
                the Lockup Agreement (if applicable), provided that such transferee
                shall
                execute and deliver to China-Biotics a counterpart of this Agreement
                and
                shall agree to become subject to the terms
                hereof.

            


    

    


    
      	
              7.4

            	
              Notices.
                All notices, requests, demands or other communications hereunder
                shall be
                in writing and shall be deemed to have been duly given, (a) if delivered
                in person or by courier, on the date of delivery, (b) if delivered
                by
                telegraph, telex, or facsimile transmission on the date of transmission,
                or (c) if by certified or registered mail, postage prepaid, three
                (3) days
                after being mailed. All communications shall be sent to the parties
                at the
                address specified or the facsimile number given, and to the attention
                of
                the person named, set out underneath the signature of each party
                on the
                signature pages hereto.

            


    

    


    
      	
              7.5

            	
              Remedies,
                Waivers. No failure or delay on the part of any party in the exercise
                of
                any power, right or privilege hereunder shall operate as a waiver
                thereof,
                nor shall any single or partial exercise of any such power, right
                or
                privilege preclude other or further exercise thereof or of any other
                right, power or privilege. Any waiver or consent shall be effective
                only
                in the specific instance and for the specific purpose for which it
                was
                given. The parties to this Agreement acknowledge and agree that the
                breach
                of any of the terms of this Agreement will cause irreparable injury
                for
                which an adequate remedy at law is not
                available.

            


    

    


    
      	
              7.6

            	
              Severability.
                Except as otherwise specifically provided in this Agreement, if any
                provision of this Agreement is held to be illegal, invalid, or
                unenforceable under present or future laws effective during the term
                of
                this Agreement, such provision will be fully severable. This Agreement
                will be construed and enforced as if such illegal, invalid, or
                unenforceable provision had never comprised a part of this Agreement,
                and
                the remaining provisions of this Agreement will remain in full force
                and
                effect and will not be affected by the illegal, invalid, or unenforceable
                provision or by its severance from this Agreement. Furthermore, in
                lieu of
                each such illegal, invalid, or unenforceable provision, there will
                be
                added automatically, as a part of this Agreement, a provision as
                similar
                in terms to such illegal, invalid, or unenforceable provision as
                may be
                possible and be legal, valid and
                enforceable.

            


    

    


    
      	
              7.7

            	
              [Intentionally
                omitted]

            


    

    


    
      	
              7.8

            	
              Termination.
                The provisions of this Agreement shall terminate and be of no further
                effect on the earlier of (i) the mutual consent of the parties (ii)
                the
                second anniversary of this Agreement and (iii) the date that all
                Shareholders cease to own or have rights to acquire Registrable
                Securities.

            


    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              7.9

            	
              Further
                Assurances. Each party shall cooperate and take such action as may
                be
                reasonably requested by the other party in order to carry out the
                provisions and purposes of this Agreement and the transactions
                contemplated hereby.

            


    

    


    
      	
              7.10

            	
              Counterparts.
                This Agreement may be executed in counterparts, each of which shall
                be
                deemed an original, but which together shall constitute one and the
                same
                instrument.

            


    

    


    
      	
              7.11

            	
              Authority
                and Understanding. Each party warrants that such party has the full
                power
                and authority to enter into this Agreement and to grant the rights
                granted
                herein and be irrevocably bound by all terms, provisions, duties,
                obligations, covenants, and agreements contained herein. Each party
                represents and warrants to the other party that such party has read
                and
                fully understands the terms and provisions of this Agreement, has
                had an
                opportunity to review this Agreement with such party’s own legal counsel,
                and that such party has executed this Agreement based upon the advice
                of
                legal counsel.

            


    

    


    
      	
              7.12

            	
              Registration
                Rights of Other Shareholders. Nothing in this Agreement shall be
                construed
                to prohibit China-Biotics from extending registration rights substantially
                similar to those created under this Agreement to all or any other
                shareholders of China-Biotics, whether or not such shareholders are
                party
                to a registration rights agreement.


            


    

    


    
      	
              7.13

            	
              Right
                to Terminate Offering. China-Biotics shall have the right, at all
                times,
                and in its sole discretion, to withdraw a registration statement
                or to
                terminate a registration prior to the effective date, without prior
                notice
                to or consultation with
                Shareholder.

            


    

    


    SECTION
      8. DISPUTE RESOLUTION THROUGH BINDING ARBITRATION.

    


    THE
      PARTIES AGREE THAT ANY DISPUTE OR CONTROVERSY, REGARDLESS OF KIND OR CHARACTER,
      ARISING BETWEEN ANY OF THE PARTIES TO THIS AGREEMENT ARISING OUT OF THIS
      AGREEMENT, INCLUDING ANY DISPUTE OR CONTROVERSY INVOLVING THE FORMATION,
      ARBITRABILITY, TERMS, OR CONSTRUCTION OF THIS AGREEMENT, WILL BE RESOLVED
      THROUGH BINDING ARBITRATION. WITH RESPECT TO THE ARBITRATION OF ANY DISPUTE
      OR
      CONTROVERSY, EACH PARTY UNDERSTANDS THAT:

    


    A. ARBITRATION
      IS FINAL AND BINDING ON THE PARTIES;

    


    B. EACH
      PARTY IS WAIVING ITS RIGHT TO SEEK CERTAIN REMEDIES IN COURT,
INCLUDING
      THE RIGHT TO A JURY TRIAL;

    


    C. DISCOVERY
      IN ARBITRATION IS DIFFERENT AND MORE LIMITED THAN DISCOVERY IN
      LITIGATION;

     

    D. AN
      ARBITRATOR'S AWARD NEED NOT INCLUDE FACTUAL FINDINGS OR LEGAL REASONING, AND
      ANY
      PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF A RULING BY THE ARBITRATOR
      IS
      STRICTLY LIMITED.

    


    EACH
      PARTY TO THIS AGREEMENT AGREES TO SUBMIT SUCH DISPUTE OR CONTROVERSY TO
      ARBITRATION BEFORE THE AMERICAN ARBITRATION ASSOCIATION (“AAA”) WITHIN FIVE (5)
      BUSINESS DAYS AFTER RECEIVING A WRITTEN REQUEST TO DO SO FROM ANOTHER PARTY.
      IF
      ANY PARTY FAILS TO SUBMIT A DISPUTE OR CONTROVERSY TO ARBITRATION AS REQUESTED,
      THEN THE REQUESTING PARTY MAY COMMENCE THE ARBITRATION PROCEEDING. THE FEDERAL
      ARBITRATION ACT WILL GOVERN THE PROCEEDING AND ALL ISSUES RAISED BY THIS
      AGREEMENT TO ARBITRATE. EACH PARTY TO THIS AGREEMENT WILL BE BOUND BY THE
      DETERMINATION OF ANY ARBITRATOR OR ARBITRATION PANEL EMPANELED BY THE AAA TO
      ADJUDICATE THE DISPUTE. SUCH ARBITRATION SHALL BE HELD IN DALLAS, DALLAS COUNTY,
      TEXAS, WITHIN THE UNITED STATES EXCEPT AS MAY BE OTHERWISE REQUIRED BY STATUTORY
      LAW OR ANY RULE OR REGULATION OF ANY AGENCY. JUDGMENT ON ANY ARBITRATION AWARD
      MAY BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION. ANY
      PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
      PROCEEDING, TO COMPEL ARBITRATION OF ANY SUCH DISPUTE OR CONTROVERSY IN A COURT
      OF COMPETENT JURISDICTION AND, FURTHER, MAY SEEK PROVISIONAL OR ANCILLARY
      REMEDIES, INCLUDING TEMPORARY OR INJUNCTIVE RELIEF IN CONNECTION WITH SUCH
      DISPUTE OR CONTROVERSY IN A COURT OF COMPETENT JURISDICTION, PROVIDED THAT
      THE
      DISPUTE OR CONTROVERSY IS ULTIMATELY RESOLVED THROUGH BINDING ARBITRATION
      CONDUCTED IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS
      SECTION.
      IF ANY PARTY INSTITUTES LEGAL PROCEEDINGS IN AN EFFORT TO RESIST ARBITRATION
      AND
      IS UNSUCCESSFUL IN DOING SO, THE PREVAILING PARTY IS ENTITLED TO RECOVER, FROM
      THE LOSING PARTY, ITS LEGAL FEES AND OUT-OF-POCKET EXPENSES INCURRED IN
      CONNECTION WITH THE DEFENSE OF SUCH LEGAL PROCEEDINGS.

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    IN
      WITNESS HEREOF, the parties hereto have duly executed this Agreement to take
      effect on the date out above.
      THIS AGREEMENT CONTAINS A PREDISPUTE ARBITRATION AGREEMENT IN SECTION
      8.

     

    
      
        	 CHINA-BIOTICS,
                INC.	 	 	 
	 	 	 	 
	/s/ Song
                Jinan	 	 	 
	
                

                Name:
                  SONG JINAN 

                Title:
                  Chief Executive Officer and President

              	 	 	
              
	Name
Title
More
                Title	 	 	 


      


      
        	 COMPANY
                SHAREHOLDERS:	 	 	 
	 	 	 	 
	 Chinamerica
                Fund, L.P.	 	 	 Chinamerica
                Sino-biotics Acquisition, LLC
	 

                By:
                  Chinamerica Partners, LP

                Its
                  General Partner

                By:
                  Chinamerica Holdings, LLC

                Its
                  General Partner

              	 	 	 

                By:
                  Chinamerica Holdings, LLC

                Its
                  Manager

              
	 	 	 	 
	/s/ Beau
                Johnson	 	 	/s/ Beau
                Johnson
	
                

                Name: 
                  Beau Johnson  

                Title: 
                  Manager   

                Address:
                  2909 St. Andrews Drive

                Richardson,
                  Texas 75082 

                Facsimile
                  No: (972)
                  690-1306 

              	 	 	
                

                Name: 
                  Beau Johnson  

                Title: 
                  Manager   

                Address:
                  2909 St. Andrews Drive 

                Richardson,
                  Texas 75082 

                Facsimile
                  No: (972)
                  690-1306

              


      

    

     

    
      	 Pope
              Investments LLC	 	 	 Halter/Pope
              USX China Fund
	 Pope
              Asset Management, LLC, Manager	 	 	 
	 	 	 	 
	/s/ William
              P. Wells	 	 	/s/ Stephen
              Parr
	
              

              Name: 
                William P. Wells 

              Title: 
                Member 

              Address:5100
                Poplar Avenue, Suite 512

              Memphis,
                TN 38137

              Facsimile
                No: 901-763-4229

            	 	 	
              

              Name: 
                Stephen Parr

              Title: 
                Managing Member 

              Address:
                5100 Poplar Avenue, Suite 512

              Memphis,
                TN 38137

              Facsimile
                No: 
                901-763-4229

            


    

     

    
      	 BFS
              US Special Opportunities Trust PLC	 	 	 Renaissance
              US Growth Investment Trust PLC
	 	 	 	 
	/s/ Russell
              Cleveland	 	 	/s/ Russell
              Cleveland
	
              

              Name:
                Russell Cleveland
Title:
                President

              Address:
                8080 N. Central Expressway, Suite 210, Dallas, Texas 75206

              Facsimile
                No: 214-891-8291

            	 	 	
              

              Name:
                Russell
                Cleveland   

              Title:
                President

              Address:
                8080 N. Central Expressway, Suite 210, Dallas, Texas 75206

              Facsimile
                No: 214-891-8291

            


    

     

    
      
        
          [Signature
            Page to Registration Rights Agreement]

        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 Matt
              Hayden	 	 	 Charming
              Leader Group Limited
	 	 	 	 
	/s/ Matt
              Hayden	 	 	/s/ TAI
              Kwok Leung, Alexander
	
              

              Address:1298
                Prospect Street, Suite D

              LaJolla,
                CA 92037

              Phone/Facsimile
                No: 843-361-0758

            	 	 	
              

              Name: 
                TAI Kwok Leung, Alexander

              Title: 
                Director   

              Address:
                20F., Diamond Exchange Building, 8-10 Duddell Street, Hong
                Kong 

              Facsimile
                No: 853-2230-0733

            


    

     

    
      	 Po
              Ka Tsun Karlson	 	 	 Master
              Talent Group Ltd.
	 	 	 	 
	/s/ Po
              Ka Tsun Karlson	 	 	/s/ Tsui
              Mei Ling, May
	
              

              Address:
                Flat E, 28/F, Block 2, City Garden, North Point, Hong Kong

              Telephone
                No.: 852-9325 5923

              Facsimile
                No.: 852-3106 4329

            	 	 	
              

              Name:
                Tsui Mei Ling, May

              Title:
                Director

              Address:
                21/F, Centre Point, 181-185 Gloucester Road, Wan Chai, Hong
                Kong

              Telephone
                No.: 852-9191 4901

              Fax
                No.: 852-2110 4369

              Attention:
                Ms. Tsui Mei Ling, May

            


    

     

    
      	 Bright
              Boom Group Ltd.	 	 	 Fascinating
              Gain Investments
	 	 	 	 
	/s/ Tung
              Fai	 	 	/s/ TAI
              Kwok Leung, Alexander
	
              

              Name:
                Tung Fai

              Title:
                Director

              Address:
                Flat 3805, Apartment Tower, Convention Plaza, 1 Harbour Road, Wanchai,
                Hong Kong

              Telephone
                No.: 852-2824 9621

              Facsimile
                No.: 852-3106 3822

              Attention:
                Mr. Tung Fai

            	 	 	
              

              Name:
                Tai Kwok Leung, Alexander

              Title:
                Director

              Address:
                20/F, Diamond Exchange Building, 8-10 Duddell Street, Hong
                Kong

              Telephone
                No.: 852-2230 0768

              Facsimile
                No.: 852-2230 0733

              Attention:
                Mr. Alexander Tai

            


    

     

    
      	 Sharpsville
              Investments Limited	 	 	 Yui
              Ying Fai
	 	 	 	 
	/s/ Lam
              Sui Fung, Rita	 	 	/s/ Yui
              Ying Fai
	
              

              Name:
                Lam Sui Fung, Rita

              Title:
                Director

              Address:
                21/F, Centre Point, 181-185 Gloucester Road, Wan Chai, Hong
                Kong

              Telephone
                No.: 852-2905 1388

              Facsimile
                No.: 852-2905 1399

              Attention:
                Ms. Lam Siu Fung, Rita

            	 	 	
              

              Address:
                49D, Seabird Lane, Discovery Bay, Lantau, Hong Kong

              Telephone
                No.: 852-9461 8192

              Facsimile
                No.: 852-2907 9911

            


    

     

    
      
        
          [Signature
            Page to Registration Rights Agreement]

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    


    Outstanding
      Registrable Securities

    


    
      	
              Shareholder

            	 	
              Number

            	 
	
              Chinamerica
                Fund, L.P.

            	 	 	
              1,147,585
                

            	 
	
              Chinamerica
                Sino-biotics Acquisitions LLC

            	 	 	
              461,255
                

            	 
	
              Pope
                Investments LLC

            	 	 	
              855,240
                

            	 
	
              Halter/Pope
                USX China Fund

            	 	 	
              36,900

            	 
	
              Matt
                Hayden

            	 	 	
              55,351
                

            	 
	
              BFS
                US Special Opportunities Trust PLC

            	 	 	
              92,251

            	 
	
              Renaissance
                US Growth Investment Trust PLC

            	 	 	
              92,251

            	 
	
              Po
                Ka Tsun Karlson

            	 	 	
              221,000
                

            	 
	
              Master
                Talent Group Ltd.

            	 	 	
              221,000
                

            	 
	
              Bright
                Boom Group Ltd.

            	 	 	
              221,000
                

            	 
	
              Charming
                Leader Group Limited

            	 	 	
              734,850
                

            	 
	
              Fascinating
                Gain Investments

            	 	 	
              734,850
                

            	 
	
              Sharpsville
                Investments Limited

            	 	 	
              500,650
                

            	 
	
              Yiu
                Ying Fai

            	 	 	
              290,650
                

            	 
	
              Total

            	 	 	
              5,664,833