__________,
      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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    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.

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    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. 

    


    [Balance
      of page intentionally left blank]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
       

    

    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: