Unassociated Document


    Exhibit
      10.3

    PUT
      AGREEMENT

    


    This
      Put
      Agreement (the “Agreement”)
      is
      entered into as of March 22, 2006 by and among China-Biotics, Inc., a Delaware
      corporation (“China-Biotics”),
      Sinosmart Group Inc., a British Virgin Islands corporation (the “Company”),
      and
      the persons and entities listed on the signature pages hereto (the “Shareholders”).

     

    RECITALS

     

    A. Pursuant
      to a Subscription Agreement dated as of the date hereof (the “Subscription
      Agreement”)
      among
      the Company and the Shareholders, the Shareholders have agreed to purchase,
      and
      the Company has agreed to issue to each Shareholder, Ordinary Shares of the
      Company, $1.00 par value (the “Ordinary
      Shares”),
      for
      aggregate consideration (the “Consideration”)
      of
      $5,067,700
      (the
“Private
      Placement”).

     

    B.
       At
      the
      closing of the Private Placement, which is occurring on the same date as the
      execution and delivery of this Agreement, the Company is directing that a
      portion of the Consideration be deposited into an escrow account to be released
      in accordance with the terms that certain Escrow Agreement dated as of the
      date
      hereof (the “Escrow
      Agreement”)
      among
      the Company, Chinamerica Fund, L.P. and Gateway National Bank, N.A., as escrow
      agent (the “Escrow
      Agent”).

     

    C. Immediately
      after the consummation of the Private Placement, the Company and the
      Shareholders are entering into, and consummating the transactions contemplated
      by, a Securities Exchange Agreement dated as of the date hereof with
      China-Biotics, Inc. (“China-Biotics”)
      and
      the other persons and entities listed on the signature pages thereto, whereby
      all of the shareholders of the Company are exchanging all of the Ordinary Shares
      for shares of common stock of China-Biotics (the “Exchange”).
      In
      the Exchange, the Shareholders are receiving an aggregate of 1,870,000 shares
      of
      common stock of China-Biotics (the “Exchange
      Shares”).

     

    D. China-Biotics
      is entering into a Registration Rights Agreement on the date hereof with the
      Shareholders and certain other parties whereby it will be obligated to file
      a
      registration statement (the “Registration
      Statement”)
      with
      the U.S. Securities and Exchange Commission (the “SEC”)
      with
      respect to the resale of the Exchange Shares and certain other shares owned
      by
      the Shareholders and such other parties.

     

    INTENDING
      TO BE LEGALLY BOUND, and in consideration of the premises and the mutual
      representations, warranties, covenants, and agreements contained herein, the
      parties hereto hereby agree as follows:

     

    1. Put
      Right.

    


    a. Exercise
      of Put Right.
      If
      China-Biotics does not file the Registration Statement with the SEC on or before
      April 14, 2006, the Company shall become obligated to purchase all of the
      Exchange Shares upon delivery of a written notice (the “Purchase
      Notice”)
      from
      Chinamerica Fund, L.P. to the Escrow Agent in the form of Exhibit C to the
      Escrow Agreement, with a copy to China-Biotics. The purchase price (the
“Purchase
      Price”)
      for
      the Exchange Shares purchased pursuant to this Section 1 shall be $5,059,842.
      

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    b. Payment
      of Purchase Price.
      Upon
      the valid delivery of a Purchase Notice hereunder (i) all voting rights and
      other rights with respect the Exchange Shares shall transfer to China-Biotics,
      (ii) Preston Gates & Ellis LLP will automatically be irrevocably authorized
      to deliver any certificates representing the Exchange Shares in its possession
      to China-Biotics and (iii) China-Biotics shall deliver to the Company any other
      certificates representing the Exchange Shares not in the possession of Preston
      Gates & Ellis LLP. As set forth in the Escrow Agreement, upon delivery to
      the Escrow Agent of the Purchase Notice signed by Chinamerica Fund, L.P., the
      Escrow Agent shall disburse cash to the persons set forth in the Purchase Notice
      in an aggregate amount equal to the Purchase Price (or such lesser amount as
      remains in the escrow account established pursuant thereto).

    


    2. Delivery
      of Purchase Notice.
      Each
      Shareholder agrees that Chinamerica Fund, L.P. is hereby authorized to deliver
      a
      Purchase Notice on its behalf to the Escrow Agent and China-Biotics exercising
      the put right evidenced herein with respect to all of the Exchange Shares it
      owns if China-Biotics does not file the Registration Statement with the SEC
      on
      or before April 14, 2006, and that China-Biotics may rely on any Purchase Notice
      delivered by Chinamerica Fund, L.P. as evidence of such Shareholder’s desire and
      intent to exercise such put right with respect to such Exchange
      Shares.

     

    3. Amendment
      and Modification.
      Subject
      to applicable law, this Agreement may be amended, supplemented or modified
      only
      in a writing duly executed by all of the parties hereto.

     

    4. Waiver
      of Compliance; Consents.
      Any
      failure of a party to comply with any obligation, covenant, agreement or
      condition herein may be expressly waived in writing by the Company and
      China-Biotics, on the one hand, and the Shareholders, on the other, but such
      waiver or failure to insist upon strict compliance with such obligation,
      covenant, agreement or condition shall not operate as a waiver of, or estoppel
      with respect to, any subsequent or other failure. No single or partial exercise
      of a right or remedy shall preclude any other or further exercise thereof or
      of
      any other right or remedy hereunder. Whenever this Agreement requires or permits
      the consent by or on behalf of a party, such consent shall be given in writing
      in the same manner as for waivers of compliance.

     

    5. No
      Third Party Beneficiaries.
      Nothing
      in this Agreement shall entitle any person or entity (other than a party hereto
      and his, her or its respective successors and assigns permitted hereby) to
      any
      claim, cause of action, remedy or right of any kind.

     

    6. Notices.
      All
      notices, requests, demands and other communications required or permitted
      hereunder shall be made in writing pursuant to the notice provisions set forth
      in Section 17 of the Subscription Agreement.

     

    7. Assignment.
      This
      Agreement and all of the provisions hereof shall be binding upon and inure
      to
      the benefit of the parties hereto and their respective successors and permitted
      assigns, but neither this Agreement nor any of the rights, interests or
      obligations hereunder shall be assigned (whether voluntarily, involuntarily,
      by
      operation of law or otherwise) by any of the parties hereto without the prior
      written consent of the other parties.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    8. Governing
      Law.
      This
      Agreement and the legal relations among the parties hereto shall be governed
      by
      and construed in accordance with the internal substantive laws of Delaware
      (without regard to the laws of conflict that might otherwise apply) as to all
      matters, including matters of validity, construction, effect, performance and
      remedies.

     

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

     

    10 Headings.
      The
      table of contents and the headings of the sections and subsections of this
      Agreement are inserted for convenience only and shall not constitute a part
      hereof.

     

    11 Entire
      Agreement.
      This
      Agreement, the Escrow Agreement and any other writings referred to in this
      Agreement together they embody the entire agreement and understanding of the
      parties hereto in respect of the transactions contemplated by this Agreement.
      This Agreement supersedes all prior agreements and understandings between the
      parties with respect to the transaction or transactions contemplated by this
      Agreement. 

     

    12 Severability.
      The
      provisions of this Agreement will be deemed severable and the invalidity or
      unenforceability of any provision will not affect the validity or enforceability
      of the other provisions hereof; provided that if any provision of this
      Agreement, as applied to any party hereto or to any circumstance, is adjudged
      by
      an governmental authority, arbitrator, or mediator not to be enforceable in
      accordance with its terms, the parties hereto agree that the governmental
      authority, arbitrator, or mediator making such determination will have the
      power
      to modify the provision in a manner consistent with its objectives such that
      it
      is enforceable, and/or to delete specific words or phrases, and in its reduced
      form, such provision will then be enforceable and will be enforced.

     

    (remainder
      of page left intentionally blank)

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed as of the day and year first above written.

     

    
      	 SINOSMART
              GROUP INC.	 	 	 CHINA-BIOTICS,
              INC.
	 	 	 	 
	/s/ Song
              Jinan	 	 	/s/ Song
              Jinan
	
              
                

              

              SONG
                JINAN

            	 	 	
              

              Song Jinan
	Title:
              Director	 	 	Chief
              Executive Officer and President


    

     

    
      
        	 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

              	 	 	
                

                Name: 
                  Beau Johnson   

                Title: 
                  Manager

              


      



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

              Name: 
                William P. Wells 

              Title: 
                Member

            	 	 	
              

              Name: 
                Stephen Parr 

              Title:  President 

            


    

     

    
      
        	 BFS
                US Special Opportunities Trust PLC	 	 	 Renaissance
                US Growth Investment Trust PLC
	
                 

                By:
                  RENN Capital Group, Inc.
        Its
                  Investment Advisor

                 

              	 	 	 
                
                By:
                  RENN Capital Group, Inc.
        Its
                  Investment Advisor

              
	 	 	 	 
	/s/ Russell
                Cleveland	 	 	/s/ Russell
                Cleveland
	
                

                Name:
                  Russell Cleveland     

                Title: President

              	 	 	
                

                Name:
                  Russell Cleveland     

                Title: President

              


      


      
        	 Matt
                Hayden	 	 	 
	 	 	 	 
	/s/ Matt
                Hayden	 	 	
              
	
                

              	 	 	
              


      

    

     

    
      
        [Signature
          Page to Put Agreement]