__________, 2007

Skystar Bio-Pharmaceutical Company  
Rm. 10601, Jiezuo Plaza, No. 4,
Fenghui Road South
Gaoxin District, Xian Province, P.R. China

Attn:
CEO  

Re:
Restrictions on Share Transfers

Dear Sir:

Reference is made to the Securities Purchase Agreement (the “Securities Purchase
Agreement”), dated as of February 26, 2007, between Skystar Bio-Pharmaceutical
Company (the “Company”) and each of the Buyers named therein. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Securities Purchase Agreement.

The undersigned is a Principal (as that term is defined below) of the Company.
In such capacity the undersigned Principal has had access to the terms of the
Securities Purchase Agreement and the other Transaction Agreements, including
but not limited to, the Registration Rights Agreement between the Company and
the Buyers.

The term “Principal” is a person who meets any one or more of the following
criteria: (A) the undersigned signatory identified as the “Company Principal”;
(B) a spouse of the Company Principal (a “Principal’s Spouse”) who, directly or
indirectly, holds any shares of Common Stock of the Company, (C) a parent,
sibling or child of the Company Principal who resides in the household of the
Company Principal or of a Principal’s Spouse (each, a “Principal’s Relative”)
and who, directly or indirectly, holds any shares of Common Stock, or (D) any
other person or entity, including, without limitation, any for profit or
non-profit corporation, partnership and trust, whose voting rights regarding
Common Stock of the Company is subject to the direction or control of any of the
Company Principal, a Principal’s Spouse, or a Principal’s Relative.
 
 
 

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As an inducement to each Buyer’s execution, delivery and performance of the
Securities Purchase Agreement, the undersigned Principal hereby agrees as
follows:

1. Without the prior written consent of a Majority in Interest of the Holders in
each instance, the undersigned Principal and any of its Transferees (as defined
below) will not, individually or collectively with any other Principal or any
Transferee, sell or otherwise transfer or offer to sell or otherwise transfer
any shares of Common Stock directly or indirectly held by such Principal at any
time through and including the date which is the Principal’s Lock-up Date (as
defined below)1 . The foregoing provisions shall not apply, however, to any (x)
sale of shares made in response to a Tender Offer (as defined below) or (y) sale
of Excluded Shares (as defined below).
 
2. The following terms shall have the meanings indicated:

(a) The term “Principal’s Lock-up Date” means the earlier of (i) the date on
which the aggregate principal amount of all outstanding Debentures is less than
twenty-five percent (25%) of the Aggregate Purchase Price of all Debentures
actually issued prior to such date or (ii) subject to the provisions hereof, the
date which is the later of the Post Effective Lock-up Date (as defined below) or
ninety (90) days after the last date hereafter on which the Company Principal is
any one or more of the following: an officer, director or the holder (alone or
together with all other Principals signatory to this Agreement) of Beneficial
Shares (as defined below) and Excluded Shares which aggregate at least five
percent (5%) of the outstanding shares of Common Stock of the Company; provided
that this clause (ii) shall only apply for as long thereafter as such Company
Principal or any other Principal signatory to this Agreement is not an officer,
director or holder (alone or together with the Company Principal and all other
Principals signatory to this Agreement) of Beneficial Shares and Excluded Shares
which aggregate at least five percent (5%) of the outstanding shares of Common
Stock of the Company.

(b) The term “Post Effective Lock-up Date” means the date which is one hundred
eighty (180) days after the Effective Date, but not counting for such purposes
the days, if any, during which sale of Registrable Securities was suspended
after the Effective Date.2 
 
_________________
1By way of clarification: no shares (with the exception of shares referred to in
the last sentence of Section 1) are permitted to be sold by the Principal
through and including the Principal’s Lock-up Date.
2By way of illustration: If the sale of Registrable Securities was suspended for
ten (10) days in the interim, the applicable Post Effective Lock-up Date will be
one hundred ninety (190) days after the Effective Date. If on the 185th day
after the Effective Date, the sale of Registrable Securities was suspended again
for five (5) days, the Post Effective Lock-up Date will be one hundred
ninety-five (195) days after the Effective Date.
 
 
 

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(c) The term “Beneficial Shares” means the sum (i) the shares of Common Stock
actually held of record, directly or indirectly, by the undersigned, (ii) Fully
Vested Shares (as defined below), (iii) shares subject to any other then
exercisable warrant, right or option, and (iv) (to the extent such shares were
not previously included in any of the preceding provisions of clauses (i), (ii)
or (iii) of this paragraph (c), shares subsequently acquired upon the actual
exercise of any warrant, right or option held by the undersigned or any other
Principal; provided, however, that Excluded Shares shall not be deemed to be
Beneficial Shares for purposes of this Agreement.

(d) The term “Fully Vested Shares” means fully vested shares of Common Stock to
which a Principal is then entitled pursuant to a stock option or similar plan
(which plan was in effect on the date hereof), even though such option or right
has not then in fact been exercised.

(e) The term “Excluded Shares” means (i) shares acquired by the Principal in
open market transactions, (ii) shares acquired by the Principal directly or by
way of conversion of a convertible security or of exercise of a warrant, option
or other right, where such shares, convertible security or warrant, option or
other right was acquired by the Principal in a financing transaction in which
other parties unaffiliated with the Company participated on essentially the same
terms as those applicable to the Principal in such transaction, or (iii) shares
acquired by the Principal from any other Person who was not bound by a Company
Principal’s Agreement at the time of such acquisition by such Principal.

(f) The term “Tender Offer” means an unsolicited tender offer made by one or
more third parties for the purchase of at least seventy-five percent (75%) of
the Company’s outstanding shares of the Company’s Common Stock.

3. The Company may undertake such measures as it deems reasonable to enforce the
provisions of this Agreement and monitor compliance with its terms. The
undersigned Principal will cooperate with the Company in connection therewith,
including, but not limited to, providing prompt responses to Company inquiries
relating to such compliance.

4. The undersigned understands that this agreement is being provided to the
Company for the benefit of, and may be enforceable against the undersigned by,
each of the Company and each Buyer. Each Buyer is a third party beneficiary of
this agreement.
 
5.  In addition to any other damages or remedies that may be appropriate, this
agreement of the Principal shall be enforceable by injunction sought by the
Company and the Buyers or any one or more of them.
 
 
 

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6. The undersigned Company Principal represents to the Company and to each Buyer
that the signatories below represent all persons or entities which are
Principals on the date hereof.

7. Notwithstanding the foregoing restrictions, the undersigned may, without
obtaining the consent of any Buyer, effect a private transfer of all or part of
the undersigned’s Common Stock to a third party (each, a “Transferee”), provided
the Transferee agrees in writing (which shall be provided to the Company and by
the Company to each Buyer) to be bound by all of the terms hereof as if such
Transferee were an original signatory hereto (and the provisions of this
agreement shall then apply to the undersigned, such Transferee and any other of
the undersigned’s Transferees jointly).

8.  This agreement may be signed in one or more counterparts, each of which
shall be deemed an original and all of which shall constitute one and the same
agreement. 

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9.  A photocopy of this agreement shall suffice as evidence of its terms and its
enforceability against the undersigned.
 

        COMPANY PRINCIPAL:       [Print Name of Company Principal]   
   
   
    By:       [Signature]

If there are additional Principals, each should sign in one of the spaces below.
Use additional copies of this page if necessary.

            [Print Name of Principal]      [Print Name of Principal]           
By:      By:      [Signature]      [Signature]            Its:      Its:       
     

 

            [Print Name of Principal]      [Print Name of Principal]           
By:      By:      [Signature]      [Signature]            Its:      Its:       
     

 

            [Print Name of Principal]      [Print Name of Principal]           
By:      By:      [Signature]      [Signature]            Its:      Its:       
     

 
 
 

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