However, if a stockholder's beneficial ownership of China Biologic's common stock as of the time of this announcement of the stockholder rights plan and associated dividend declaration is at or above the 10 percent threshold, that stockholder's existing ownership percentage would be grandfathered, but the rights would become exercisable if at any time after this announcement the stockholder increases its ownership percentage by two percent or more without the prior approval of the company's board of directors.

In addition, if after a person or group acquires 10 percent or more of China Biologic's outstanding common stock, China Biologic merges into another company, an acquiring entity merges into China Biologic or China Biologic sells or transfers more than 50 percent of its assets, cash flow or earning power, then each right will entitle its holder to purchase, for the exercise price, a number of shares of common stock of the person engaging in the transaction having a then-current market value of twice the exercise price.

The acquiring person will not be entitled to exercise these rights. China Biologic's board may redeem the rights for $0.001 per right at any time before an event that causes the rights to become exercisable.