Document:

REGISTRATION
      RIGHTS AGREEMENT

    

    THIS
      REGISTRATION RIGHTS AGREEMENT,
      dated as
      of February 26, 2007 (this "Agreement"), is made by and between SKYSTAR
      BIO-PHARMACEUTICAL COMPANY,
      a
      Nevada corporation with headquarters located at Rm. 10601, Jiezuo Plaza, No.
      4,
      Fenghui Road South, Gaoxin District, Xian Province, P.R. China (the “Company”),
      and each entity named on a signature page hereto (each, an “Initial Investor”)
      (each agreement with an Initial Investor being deemed a separate and independent
      agreement between the Company and such Initial Investor, except that each
      Initial Investor acknowledges and consents to the rights granted to each other
      Initial Investor under such agreement).

     

    WITNESSETH:

    

    WHEREAS,
      upon
      the terms and subject to the conditions of the Securities Purchase Agreement
      of
      even date herewith between the Initial Investor and the Company (the “Securities
      Purchase Agreement”; capitalized terms not otherwise defined herein shall have
      the meanings ascribed to them in the Securities Purchase Agreement), the Company
      has agreed to issue and sell to the Initial Investors the Debentures and the
      Warrants; and

    

    WHEREAS,
      the
      Debentures are convertible into shares of Common Stock (the “Conversion Shares”;
      which term, for purposes of this Agreement, shall include shares of Common
      Stock
      of the Company issuable in lieu of accrued interest through the Maturity Date
      of
      the Debentures, as that term is defined in and as contemplated by the
      Debentures) upon the terms and subject to the conditions contained in the
      Debentures; and 

    

    WHEREAS,
      the
      Warrant Shares may be issued upon the exercise of the Warrants; and

    

    WHEREAS,
      to
      induce the Initial Investor to execute and deliver the Securities Purchase
      Agreement, the Company has agreed to provide certain registration rights under
      the Securities Act of 1933, as amended, and the rules and regulations
      thereunder, or any similar successor statute (collectively, the “Securities
      Act”), with respect to the Registrable Securities (as defined
      below);

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Initial Investor hereby agree as
      follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    1. Definitions. As
      used
      in this Agreement, the following terms shall have the following
      meanings:

    

    “Applicable
      Conversion Price” means, on the relevant date, the lower of the Voluntary
      Conversion Price or the Payment Conversion Price.

    

    “Company
      Counsel” means Richardson & Patel LLP.

    

    “Effective
      Date” means the date the SEC declares a Registration Statement covering
      Registrable Securities and otherwise meeting the conditions contemplated hereby
      to be effective.

    

    “Held
      Shares Value” means, for shares of Common Stock acquired by the Investor upon a
      conversion of a Debenture within the thirty (30) days preceding the Restricted
      Sale Date, but not yet sold by the Investor (“Held Shares”), the principal
      amount of the Debentures converted into such Conversion Shares; provided,
      however, that if the Investor effected more than one such conversion during
      such
      thirty (30) day period and sold less than all of such shares, the sold shares
      shall be deemed to be derived first from the conversions in the sequence of
      such
      conversions (that is, for example, until the number of shares from the first
      of
      such conversions have been sold, all shares shall be deemed to be from the
      first
      conversion; thereafter, from the second conversion until all such shares are
      sold).

    

    “Initial
      Required Filing Date” means the date as soon as practicable after the Closing
      Date but no later than the forty-five (45) days after the Closing
      Date.

    

    “Increased
      Shares” means the good faith estimate of the number of shares which the Company
      anticipates will be issuable to the Holder as a result of either or both an
      adjustment to the Conversion Price resulting from the application of Section
      4(g) of the Securities Purchase Agreement.

    

    “Increased
      Shares Required Filing Date” means, with respect to the filing of any Additional
      Registration Statement (as defined below) the date which is the later of (i)
      the
      date which is thirty (30) days after the Increased Shares Registration Date
      or
      (ii) the earliest date the SEC will accept the filing of an Additional
      Registration Statement.

    

    “Investor”
      means the Initial Investor and any permitted transferee or assignee who agrees
      to become bound by the provisions of this Agreement in accordance with Section
      9
      hereof and who holds Debentures or Registrable Securities.

    

    “Issued
      Principal Amount” means the original principal amount of the
      Debentures.

    

    “Other
      Issuable Shares” means the good faith estimate of the Company of the number of
      the Increased Shares, which the Company anticipates, as of the date of the
      filing of the Registration Statement and any amendment thereto, will be issuable
      to the Holder pursuant to the provisions of the Transaction
      Agreements.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Permitted
      Suspension Period” means one or more periods aggregating not more than
      forty-five (45) days during any consecutive 12-month period during which the
      Holder’s right to sell Registrable Securities under the Registration Statement
      is suspended, provided, however, that each of such periods shall neither (i)
      be
      for more than twenty (20) days nor (ii) begin less than ten (10) Trading Days
      after the last day of the preceding suspension period (whether or not such
      last
      day was during or after a Permitted Suspension Period).

    

    “Potential
      Material Event” means any of the following: (i) the possession by the Company of
      material information not ripe for disclosure in a registration statement, which
      shall be evidenced by determinations in good faith by the Board of Directors
      of
      the Company that disclosure of such information in the registration statement
      would be detrimental to the business and affairs of the Company; or (ii) any
      material engagement or activity by the Company which would, in the good faith
      determination of the Board of Directors of the Company, be adversely affected
      by
      disclosure in a registration statement at such time, which determination shall
      be accompanied by a good faith determination by the Board of Directors of the
      Company that the registration statement would be materially misleading absent
      the inclusion of such information.

    

    “Register,”
      “Registered,” and “Registration” refer to a registration effected by preparing
      and filing a Registration Statement or Statements in compliance with the
      Securities Act and pursuant to Rule 415 under the Securities Act or any
      successor rule providing for offering securities on a continuous basis (“Rule
      415"), and the declaration or ordering of effectiveness of such Registration
      Statement by the SEC.

     

    "Registrable
      Securities" means, collectively, the Conversion Shares and the Other Issuable
      Shares, but does not include any shares of Common Stock which may be sold by
      the
      Holder pursuant to Rule 144 without volume or other restrictions or
      limits.

    

    “Registration
      Statement” means a registration statement of the Company under the Securities
      Act covering Registrable Securities on Form SB-2, if the Company is then
      eligible to file using such form, and if not eligible, on Form S-1 or other
      appropriate form.

    

    “Required
      Effective Date” means, initially, the Initial Required Effective Date or the
      Increased Required Effective Date (as those terms are defined below), as the
      case may be.

    

    “Required
      Filing Date” means initially, the Initial Required Filing Date or the Increased
      Shares Required Filing Date, as the case may be.

    

    “Restricted
      Sale Date” means the first date, other than a date during a Permitted Suspension
      Period (as defined below), on which the Investor is restricted from making
      sales
      of Registrable Securities pursuant to any previously effective Registration
      Statement.

    

    “Rule
      144" has the meaning ascribed to it in Section 8 hereof. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    2. Registration.

    

    (a) Mandatory
      Registration. 

     

    (i) The
      Company shall prepare and file with the SEC, as soon as practicable after the
      Closing Date but no later than the Initial Required Filing Date, a Registration
      Statement registering for resale by the Investor a sufficient number of shares
      of Common Stock for the Initial Investors to sell the Registrable Securities.
      Notwithstanding the requirement to register all Registrable Securities, the
      Company’s obligation to register the Registrable Securities shall initially be
      satisfied by the registration of the Initial Number of Shares to Be Registered
      (as defined below). The “Initial Number of Shares to Be Registered” is a number
      of shares of Common Stock which is at least equal to the sum of (x) the number
      of shares into which the Debentures and all interest thereon through their
      respective Maturity Dates would be convertible at the time of filing of such
      Registration Statement (assuming for such purposes that all Debentures had
      been
      eligible to be converted, and had been converted, into Conversion Shares in
      accordance with their terms, and that all interest was paid in shares, whether
      or not such eligibility, accrual of interest or conversion had in fact occurred
      as of such date) based on the Applicable Conversion Price in effect on, or
      within three (3) Trading Days prior to, the date the Registration Statement
      is
      filed (or subsequently amended), and (y) the number of Other Issuable Shares
      as
      of the date of the filing of the Registration Statement or any amendment
      thereto; provided, however, that for purposes of this provision, the Initial
      Number of Shares to Be Registered in the initial Registration Statement shall
      not be greater than the number of such shares which the SEC permits to be
      included in such Registration Statement. Unless otherwise specifically agreed
      to
      in writing in advance by a Majority in Interest of the Holders, the Registration
      Statement (X) shall include only the Registrable Securities, (Y) shall not
      restrict or limit the prices at which the shares sold by the selling
      stockholders thereunder may be sold, and (Z) shall also state that, in
      accordance with Rule 416 and 457 under the Securities Act, it also covers such
      indeterminate number of additional shares of Common Stock as may become issuable
      upon conversion of the Debentures, or issuances of Other Issuable Securities
      covered by such Registration Statement to prevent dilution resulting from stock
      splits, stock dividends or similar transactions.

    

    (ii) The
      Company will use its reasonable best efforts to cause such Registration
      Statement to be declared effective on a date (the “Initial Required Effective
      Date”) which is no later than the earlier of (X) five (5) days after oral or
      written notice by the SEC that it may be declared effective or (Y) ninety (90)
      days after the Closing Date (unless the SEC provides a full review of the
      Registration Statement, in which event it will be one hundred twenty (120)
      days
      after the Closing Date). Notwithstanding the foregoing, failure to cause the
      Registration Statement to become effective will be construed as an Event of
      Default under Section 14(i)(e) of the Debenture held by the Investor; but the
      foregoing proviso shall not limit or restrict the right of a Holder to declare
      an Event of Default under the Note if there is a Special Registration Default
      (as defined in the Debenture.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (iii) If
      at any
      time (an “Increased Registered Shares Date”), the number of shares of Common
      Stock represented by the Registrable Securities, issued or to be issued as
      contemplated by the Transaction Agreements, exceeds the aggregate number of
      shares of Common Stock then registered or sought to be registered in a
      Registration Statement which has not yet been declared effective (it being
      acknowledged that the date of an adjustment in the Conversion Price pursuant
      to
      Section 4(g) of the Securities Purchase Agreement is an Increased Registered
      Shares Date), the Company shall either 

    

    (X)
      amend
      the relevant Registration Statement filed by the Company pursuant to the
      preceding provisions of this Section 2, if such Registration Statement has
      not
      been declared effective by the SEC at that time, to register the Increased
      Number of Shares to Be Registered (as defined below). The “Increased Number of
      Shares to Be Registered” is a number of shares of Common Stock which is at least
      equal to (A) the number of shares theretofore issued on conversion of the
      Debentures (including any interest paid on conversion by the issuance of
      Conversion Shares) and held by each Holder, plus (B) the sum of (x) the number
      of shares into which the unconverted Debentures and all interest thereon through
      their respective Maturity Dates would be convertible at the time of filing
      of
      such Registration Statement or amendment (assuming for such purposes that all
      Debentures, reduced by any previously converted Debentures, had been eligible
      to
      be converted, and had been converted, into Conversion Shares in accordance
      with
      their terms and that all interest thereon was paid in shares, whether or not
      such eligibility, accrual of interest or conversion had in fact occurred as
      of
      such date) based on the Applicable Conversion Price in effect on, or within
      three (3) Trading Days prior to, the date the amendment to the Registration
      Statement is filed, and (y) the number of Other Issuable Shares as of the date
      of the filing of the Registration Statement or any amendment thereto; provided,
      however, that for purposes of this provision, the Increased Number of Shares
      to
      Be Registered shall not be greater than the number of such shares which the
      SEC
      permits to be included in the amended Registration Statement or the Additional
      Registration Statement, defined below), or

    

    (Y)
      if
      such Registration Statement has been declared effective by the SEC at that
      time,
      file with the SEC an additional Registration Statement (an “Additional
      Registration Statement”) to register the number of shares equal to the excess of
      the Increased Number of Shares to Be Registered (where the number of shares
      determined by clause (x) is based on the Applicable Conversion Price in effect
      on, or within three (3) Trading Days prior to, the date the additional
      Registration Statement (or any amendment thereto) is filed, over the aggregate
      number of shares of Common Stock already registered. The Company shall prepare
      and file the Additional Registration Statement by the Increased Shares Required
      Filing Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    The
      Company will use its reasonable best efforts to cause such Registration
      Statement to be declared effective on a date (each, an “Increased Required
      Effective Date”) which is no later than (q) with respect to a Registration
      Statement under clause (X) of this subparagraph (iii), the Initial Required
      Effective Date and (r) with respect to an Additional Registration Statement,
      the
      earlier of (I) five (5) days after notice by the SEC that it may be declared
      effective or (II) sixty (60) days after the Increased Shares Required Filing
      Date, unless the SEC provides a full review of the Additional Registration
      Statement, in which event it will be ninety (90) days after the Increased Shares
      Required Filing Date.

    

    (iv) Anything
      in this Agreement or any other Transaction Agreement to the contrary
      notwithstanding, the Company agrees to file a registration statement (a “Warrant
      Share Registration Statement”) to register the resale of Warrant Shares
      (including shares issuable on exercise of any Added Warrants) as promptly as
      possible after (x) all of the Conversion Shares and Other Registrable Shares
      have been registered (or as part of a Registration Statement covering the
      balance of such shares) or (y) the SEC indicates a policy which would allow
      for
      such shares to be registered contemporaneously with any other shares registered
      under the same or a different registration statement and to use its best efforts
      to have such Warrant Share Registration Statement declared effective as soon
      as
      practicable thereafter. 

    

    (v) Shares
      included in a registration statement contemplated by this Agreement shall be
      allocated among the Investors, if more than one, based on their respective
      Buyer’s Allocable Shares. 

    

    (b) Payments
      by the Company.

     

    (i) If
      the
      Registration Statement or an Additional Registration Statement covering the
      Registrable Securities is not filed as contemplated by this Agreement with
      the
      SEC by the relevant Required Filing Date, the Company will make payment to
      the
      Initial Investor in such amounts and at such times as shall be determined
      pursuant to this Section 2(b). 

    

    (ii) If
      the
      Registration Statement covering the Registrable Securities is not effective
      by
      the relevant Required Effective Date or if there is a Restricted Sale Date,
      then
      the Company will make payments to the Initial Investor in such amounts and
      at
      such times as shall be determined pursuant to this Section 2(b).

    

    (iii) The
      amount (the “Periodic Amount”) to be paid by the Company to the Initial Investor
      shall be determined as of each Computation Date (as defined below) and such
      amount shall be equal to the Periodic Amount Percentage (as defined below)
      of
      the Issued Principal Amount of all Debentures, for the period from the date
      following the relevant Required Filing Date or the Required Effective Date
      or a
      Restricted Sale Date, as the case may be, to the first relevant Computation
      Date, and thereafter to each subsequent Computation Date (each such period,
      a
“Computation Period”). The “Periodic Amount Percentage” means two percent (2) of
      the Purchase Price of such Issued Principal Amount for each Computation Period
      (and pro rata for any Computation Period which is less than thirty [30] days).
      Anything in the preceding provisions of this paragraph (iii) to the contrary
      notwithstanding, after the relevant Effective Date the Issued Principal Amount
      shall be deemed to refer to the sum of (X) the principal amount of all such
      Debentures not yet converted and (Y) the Held Shares Value for such Debentures.
      By way of illustration and not in limitation of the foregoing, if the
      Registration Statement is filed on or before the Required Filing Date, but
      is
      not declared effective until seventy-five (75) days after the Initial Required
      Effective Date, the Periodic Amount will aggregate five percent (5%) of the
      Issued Principal Amount (2% for days 1-30, plus 2% for days 31-60, plus 1%
      for
      days 61-75). Anything herein to the contrary notwithstanding Periodic Amounts
      shall cease to accrue, (1) with respect to any outstanding Debenture, as of
      the
      date the Conversion Shares issuable thereunder are no longer Registrable
      Securities and (2) with respect to Held Shares used in determining the Held
      Shares Value, if any, as of the date such shares are no longer Registrable
      Securities.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (iv) Each
      Periodic Amount, if any, will be payable by the Company in cash or other
      immediately available funds to the Investor on the third Trading Day after
      

    

    (A)
      with
      respect to Periodic Amounts for Computation Periods ending on or before the
      relevant Effective Date, (i) the earlier of the Effective Date or the date
      which
      is thirty days after the relevant Required Effective Date (each, a “First
      Specified Periodic Payment Date”) and (ii) if relevant, the last day of each
      Computation Period after the First Specified Periodic Payment Date,
      and

    

    (B)
      with
      respect to all Periodic Amounts accruing after the Effective Date, the last
      day
      of the relevant Computation Period,

    

    in
      each
      case, without requiring demand therefor by the Investor. 

    

    (v) Notwithstanding
      the preceding provisions of this Section 2(b), if the Company timely files
      a
      Registration Statement or an Additional Registration Statement, which, as may
      be
      relevant, complies with the provisions of Section 2(a) of this Agreement and
      the
      SEC raises issues relating to the applicability of Rule 415 to the number of
      shares sought to be registered under such Registration Statement, the provisions
      regarding the accrual of Periodic Amounts shall be suspended for one full
      Computation Period from the date of the Company’s receipt of such communication
      from the SEC. 

    

    (vi) The
      parties acknowledge that the damages which may be incurred by the Investor
      if
      the Registration Statement is not filed by the Required Filing Date or the
      Registration Statement has not been declared effective by a Required Effective
      Date, including if the right to sell Registrable Securities under a previously
      effective Registration Statement is suspended or the shares of the Company’s
      stock are not listed on the Principal Trading Market, may be difficult to
      ascertain. The parties agree that, subject to the provisions of Section 11(k),
      the amounts payable pursuant to the foregoing provisions of this Section 2(b)
      represent a reasonable estimate on the part of the parties, as of the date
      of
      this Agreement, of the amount of such damages.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (vii) Notwithstanding
      the foregoing, the amounts payable by the Company pursuant to this provision
      shall not be payable to the extent any delay in the filing or effectiveness
      of
      the Registration Statement occurs because of an act of, or a failure to act
      or
      to act timely by the Initial Investor or its counsel or any Holder named as
      a
      selling stockholder in the Registration Statement.

    

    (viii) "Computation
      Date" means (A) the date which is the earlier of (1) thirty (30) days after
      the
      Required Filing Date, the Required Effective Date or a Restricted Sale Date,
      as
      the case may be, or (2) the date after the Required Filing Date, the Required
      Effective Date or Restricted Sale Date on which the Registration Statement
      is
      filed (with respect to payments due as contemplated by Section 2(b)(i) hereof)
      or is declared effective or has its restrictions removed or the shares of the
      Company’s stock are listed on the Principal Trading Market (with respect to
      payments due as contemplated by Section 2(b)(ii) hereof), as the case may be,
      and (B) each date which is the earlier of (1) thirty (30) days after the
      previous Computation Date or (2) the date after the previous Computation Date
      on
      which the Registration Statement is filed (with respect to payments due as
      contemplated by Section 2(b)(i) hereof) or is declared effective or has its
      restrictions removed or the shares of the Company’s stock are listed on the
      Principal Trading Market (with respect to payments due as contemplated by
      Section 2(b)(ii) hereof), as the case may be.

    

    3. Obligations
      of the Company.
      In
      connection with the registration of the Registrable Securities, the Company
      shall do each of the following:

    

    (a) Prepare
      promptly, and file with the SEC by any Required Filing Date a Registration
      Statement with respect to not less than the number of Registrable Securities
      provided in Section 2(a) above, and thereafter use its reasonable best efforts
      to cause such Registration Statement relating to Registrable Securities to
      become effective by the relevant Required Effective Date and keep the
      Registration Statement effective at all times during the period (the
“Registration Period”) continuing until the earlier of (i) the date when the
      Investors may sell all Registrable Securities under Rule 144 without volume
      or
      other restrictions or limits, (ii) the date the Investors no longer own any
      of
      the Registrable Securities, which Registration Statement (including any
      amendments or supplements thereto and prospectuses contained therein) shall
      not
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein,
      in
      light of the circumstances in which they were made, not misleading;

    

    (b) Prepare
      and file with the SEC such amendments (including post-effective amendments)
      and
      supplements to the Registration Statement and the prospectus used in connection
      with the Registration Statement as may be necessary to keep the Registration
      Statement effective at all times during the Registration Period, and, during
      the
      Registration Period, comply with the provisions of the Securities Act with
      respect to the disposition of all Registrable Securities of the Company covered
      by the Registration Statement until such time as all of such Registrable
      Securities have been disposed of in accordance with the intended methods of
      disposition by the seller or sellers thereof as set forth in the Registration
      Statement;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (c) Permit
      a
      single firm of counsel designated by the Initial Investors (which, until further
      notice, shall be deemed to be Krieger & Prager llp,
      Attn:
      Ronald Nussbaum, Esq., which firm has requested to receive such notification;
      each, an “Investor’s Counsel”) to review the Registration Statement and all
      amendments and supplements thereto a reasonable period of time (but not less
      than three (3) Trading Days) prior to their filing with the SEC, and not file
      any document in a form to which such counsel reasonably objects;

     

    (d) Notify
      the Placement Agent (with a copy to the Investor’s Counsel) immediately (and, in
      the case of (i)(A) below, not less than three (3) Trading Days prior to such
      filing) and (if requested by any such person) confirm such notice in writing
      no
      later than one (1) Trading Day following the day (i)(A) when a Prospectus or
      any
      Prospectus supplement or post-effective amendment to the Registration Statement
      is proposed to be filed; (B) whenever the SEC notifies the Company whether
      there
      will be a “review” of such Registration Statement; (C) whenever the Company
      receives (or a representative of the Company receives on its behalf) any oral
      or
      written comments from the SEC in respect of a Registration Statement (copies
      or,
      in the case of oral comments, summaries of such comments shall be promptly
      furnished by the Company to the Investor’s Counsel); and (D) with respect to the
      Registration Statement or any post-effective amendment, when the same has become
      effective; (ii) of any request by the SEC or any other Federal or state
      governmental authority for (A) amendments or supplements to the Registration
      Statement or Prospectus, (B) additional information not pertaining to the
      Investors or (C) additional information pertaining to the Investors; (iii)
      of
      the issuance by the SEC of any stop order suspending the effectiveness of the
      Registration Statement covering any or all of the Registrable Securities or
      the
      initiation of any proceedings for that purpose; (iv) if at any time any of
      the
      representations or warranties of the Company contained in any agreement
      (including any underwriting agreement) contemplated hereby ceases to be true
      and
      correct in all material respects; (v) of the receipt by the Company of any
      notification with respect to the suspension of the qualification or exemption
      from qualification of any of the Registrable Securities for sale in any
      jurisdiction, or the initiation or threatening of any proceeding for such
      purpose; and (vi) of the occurrence of any event that to the best knowledge
      of
      the Company makes any statement made in the Registration Statement or Prospectus
      or any document incorporated or deemed to be incorporated therein by reference
      untrue in any material respect or that requires any revisions to the
      Registration Statement, Prospectus or other documents so that, in the case
      of
      the Registration Statement or the Prospectus, as the case may be, it will not
      contain any untrue statement of a material fact or omit to state any 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. In
      addition, the Company shall communicate with the Investor’s Counsel with regard
      to its proposed written responses to the comments contemplated in clause (i)(C)
      of this Section 3(d), so that, to the extent practicable, the Investor’s Counsel
      shall have the opportunity to comment thereon;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (e) Unless
      such filing is publicly available on the SEC’s EDGAR system (via the SEC’s web
      site at no additional charge), furnish to each Investor and to Investor’s
      Counsel (i) promptly after the same is prepared and publicly distributed, filed
      with the SEC, or received by the Company, one (1) copy of the Registration
      Statement, each preliminary prospectus and prospectus, and each amendment or
      supplement thereto, and (ii) such number of copies of a prospectus, and all
      amendments and supplements thereto and such other documents, as such Investor
      may reasonably request in order to facilitate the disposition of the Registrable
      Securities owned by such Investor;

    

    (f) As
      promptly as practicable after becoming aware thereof, notify each Investor
      of
      the happening of any event of which the Company has knowledge, as a result
      of
      which the prospectus included in the Registration Statement, as then in effect,
      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,
      in light of the circumstances under which they were made, not misleading, and
      use its best efforts promptly to prepare a supplement or amendment to the
      Registration Statement or other appropriate filing with the SEC to correct
      such
      untrue statement or omission, and, unless such filing is publicly available
      on
      the SEC’s EDGAR system (via the SEC’s web site at no additional charge), deliver
      a number of copies of such supplement or amendment to each Investor as such
      Investor may reasonably request;

    

    (g) As
      promptly as practicable after becoming aware thereof, notify each Investor
      who
      holds Registrable Securities being sold (or, in the event of an underwritten
      offering, the managing underwriters) of the issuance by the SEC of a Notice
      of
      Effectiveness or any notice of effectiveness or any stop order or other
      suspension of the effectiveness of the Registration Statement at the earliest
      possible time;

    

    (h) As
      promptly as practicable after becoming aware thereof, notify each Investor
      who
      holds Registrable Securities of the fact that the ability of the Investor to
      sell Registrable Securities under the Registration Statement will soon be
      unavailable as a result of the impending cessation or expiration of the
      effectiveness of the Registration Statement, for which notice should be given
      at
      least twenty (20) days in advance, except that the Company's obligation under
      this clause shall be satisfied if the Company has previously given written
      notice of such date to such Investor and such date has not changed since the
      date of such written notice.

    

    (i) Comply
      with Regulation FD or any similar rule or regulation regarding the dissemination
      of information regarding the Company, and in furtherance of the foregoing,
      and
      not in limitation thereof, and notwithstanding anything to the contrary in
      this
      Agreement or in any of the other Transaction Agreements, without the prior
      written consent of the Investor in each instance, not disclose to the Investor
      any non-public material information regarding the Company;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (j) Notwithstanding
      the foregoing, if at any time or from time to time after the date of
      effectiveness of the Registration Statement, the Company notifies the Investors
      in writing that the effectiveness of the Registration Statement is suspended
      for
      any reason, whether due to a Potential Material Event or otherwise, the
      Investors shall not offer or sell any Registrable Securities, or engage in
      any
      other transaction involving or relating to the Registrable Securities, from
      the
      time of the giving of such notice until such Investor receives written notice
      from the Company that such the effectiveness of the Registration Statement
      has
      been restored, whether because the Potential Material Event has been disclosed
      to the public or it no longer constitutes a Potential Material Event or
      otherwise; provided, however,
      that the
      Company may not so suspend the right to such holders of Registrable Securities
      during the periods the Registration Statement is required to be in effect other
      than during a Permitted Suspension Period (and the applicable provisions of
      Section 2(b) shall apply with respect to any such suspension other than during
      a
      Permitted Suspension Period);

    

    (k) Use
      its
      reasonable efforts to secure and maintain the designation of all the Registrable
      Securities covered by the Registration Statement on the Principal Trading Market
      and the quotation of the Registrable Securities on the Principal Trading
      Market;

    

    (l) Provide
      a
      transfer agent (“Transfer Agent”) and registrar, which may be a single entity,
      for the Registrable Securities not later than the initial Effective Date;

    

    (m) Cooperate
      with the Investors who hold Registrable Securities being offered to facilitate
      the timely preparation and delivery of certificates for the Registrable
      Securities to be offered pursuant to the Registration Statement and enable
      such
      certificates for the Registrable Securities to be in such denominations or
      amounts as the case may be, as the Investors may reasonably request, and, within
      five (5) Trading Days after a Registration Statement which includes Registrable
      Securities is ordered effective by the SEC, the Company shall deliver, and
      shall
      cause legal counsel selected by the Company to deliver, to the Transfer Agent
      for the Registrable Securities (with copies to the Investors whose Registrable
      Securities are included in such Registration Statement) an appropriate
      instruction and opinion of such counsel, which shall include, without
      limitation, directions to the Transfer Agent to issue certificates of
      Registrable Securities(including certificates for Registrable Securities to
      be
      issued after the Effective Date and replacement certificates for Registrable
      Securities previously issued) without legends or other restrictions, subject
      to
      compliance with applicable law and other rules and regulations, including,
      without limitation, prospectus delivery requirements;

    

    (n) Take
      all
      other reasonable administrative steps and actions (including the participation
      of Company counsel) necessary to expedite and facilitate disposition by the
      Investor of the Registrable Securities pursuant to the Registration Statement;
      provided, however, that the foregoing does not require that the Company take
      any
      steps whatsoever regarding the identification or selection of a broker to sell
      the Registrable Securities, the identification of buyers of the Registrable
      Securities, or the negotiation of the sale terms of the Registrable Securities;
      and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (o) Not
      file
      any other registration statement (other than the Registration Statement and
      amendments thereto and except for (i) registration statements on Form S-8 and
      post-effective amendments thereto and (ii) post-effective amendments to a
      registration statement which had been declared effective prior to the Closing
      Date) during the period commencing on the Closing Date and ending on the
      Effective Date.

    

    4. Obligations
      of the Investors.
      In
      connection with the registration of the Registrable Securities, the Investors
      shall have the following obligations:

    

    (a) Each
      Investor, by such Investor's acceptance of the Registrable Securities, agrees
      to
      cooperate with the Company to provide factual information regarding the Investor
      as reasonably requested by the Company in connection with the preparation and
      filing of the Registration Statement hereunder, unless such Investor has
      notified the Company in writing of such Investor's election to exclude all
      of
      such Investor's Registrable Securities from the Registration Statement;
      and

    

    (b) Each
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(f), (g) or (i) above,
      such Investor will immediately discontinue disposition of Registrable Securities
      pursuant to the Registration Statement covering such Registrable Securities
      until such Investor's receipt of the copies of the supplemented or amended
      prospectus contemplated by Section 3(f), (g) or (i), and, if so directed by
      the
      Company, such Investor shall deliver to the Company (at the expense of the
      Company) or destroy (and deliver to the Company a certificate of destruction)
      all copies in such Investor's possession, of the prospectus covering such
      Registrable Securities current at the time of receipt of such
      notice.

    

    5. Expenses
      of Registration.
      All
      reasonable expenses (other than underwriting discounts and commissions of the
      Investor) incurred in connection with registrations, filings or qualifications
      pursuant to Section 3, but including, without limitation, all registration,
      listing, and qualifications fees, printers and accounting fees, the fees and
      disbursements of counsel for the Company shall be borne by the Company. In
      addition, a fee for a single counsel for the Investors (as a group and not
      individually) equal to $5,000 for the review of each Registration Statement
      and
      $2,300 for the review of each post-effective amendment to a Registration
      Statement shall be borne by the Company.

    

    6. Indemnification.
      In the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (a) To
      the
      extent permitted by law, the Company will indemnify and hold harmless each
      Investor who holds such Registrable Securities, the directors, if any, of such
      Investor, the officers, if any, of such Investor, and each Buyer Control Person
      (each, an “Indemnified Party”), against any losses, claims, damages, liabilities
      or expenses (joint or several) incurred (collectively, “Claims”) to which any of
      them may become subject under the Securities Act, Securities Exchange Act of
      1934, as amended (the “Exchange Act”), or otherwise, insofar as such Claims (or
      actions or proceedings, whether commenced or threatened, in respect thereof)
      arise out of or are based upon any of the following statements, omissions or
      violations in the Registration Statement, or any post-effective amendment
      thereof, or any prospectus included therein: (i) any untrue statement or alleged
      untrue statement of a material fact contained in the Registration Statement
      or
      any post-effective amendment thereof or the omission or alleged omission to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements therein not misleading, (ii) any untrue statement or alleged
      untrue statement of a material fact contained in the final prospectus (as
      amended or supplemented, if the Company files any amendment thereof or
      supplement thereto with the SEC) or the omission or alleged omission to state
      therein any material fact necessary to make the statements made therein, in
      light of the circumstances under which the statements therein were made, not
      misleading or (iii) any violation or alleged violation by the Company of the
      Securities Act, the Exchange Act, any state securities law or any rule or
      regulation under the Securities Act, the Exchange Act or any state securities
      law (the matters in the foregoing clauses (i) through (iii) being, collectively
      referred to as “Violations”). Subject to clause (b) of this Section 6, the
      Company shall reimburse the Investors, promptly as such expenses are incurred
      and are due and payable, for any legal fees or other reasonable expenses
      incurred by them in connection with investigating or defending any such Claim.
      Notwithstanding anything to the contrary contained herein, the indemnification
      agreement contained in this Section 6(a) shall not (I) apply to any Claim
      arising out of or based upon a Violation which occurs in reliance upon and
      in
      conformity with information furnished in writing to the Company by or on behalf
      of such Indemnified Party expressly for use in connection with the preparation
      of the Registration Statement, any such amendment thereof or supplement thereto
      or prospectus, if such prospectus (or supplement or amendment thereto) was
      timely made available by the Company pursuant to Section 3(b) hereof; (II)
      be
      available to the extent such Claim is based on a failure of the Investor to
      deliver or cause to be delivered the prospectus made available by the Company
      or
      the amendment or supplement thereto made available by the Company; (III) be
      available to the extent such Claim is based on the delivery of a prospectus
      by
      the Investor after receiving notice from the Company under Section 3(f), (g)
      or
      (i) hereof (other than a notice regarding the effectiveness of the Registration
      Statement or any amendment or supplement thereto), or (IV) apply to amounts
      paid
      in settlement of any Claim if such settlement is effected without the prior
      written consent of the Company, which consent shall not be unreasonably withheld
      or delayed. The Investor will indemnify the Company and its officers, directors
      and agents (each, an “Indemnified Party”) against any claims arising out of or
      based upon a Violation which occurs in reliance upon and in conformity with
      information furnished in writing to the Company, by or on behalf of such
      Investor, expressly for use in connection with the preparation of the
      Registration Statement or the amendment or supplement thereto, subject to such
      limitations and conditions as are applicable to the indemnification provided
      by
      the Company pursuant to this Section 6. Such indemnity shall remain in full
      force and effect regardless of any investigation made by or on behalf of the
      Indemnified Party and shall survive the transfer of the Registrable Securities
      by the Investors pursuant to Section 9.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (b) Promptly
      after receipt by an Indemnified Party under this Section 6 of notice of the
      commencement of any action (including any governmental action), such Indemnified
      Party shall, if a Claim in respect thereof is to be made against any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof and the indemnifying party shall
      have
      the right to participate in, and, to the extent the indemnifying party so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel satisfactory to the indemnifying
      party (provided such counsel shall not have a conflict of interest with the
      Indemnified Party and provided that all defenses available to the Indemnified
      Party can be maintained without prejudicing the rights of the indemnifying
      party). In case any such action is brought against any Indemnified Party, and
      it
      notifies the indemnifying party of the commencement thereof, the indemnifying
      party will be entitled to participate in, and, to the extent that it may wish,
      jointly with any other indemnifying party similarly notified, assume the defense
      thereof, subject to the provisions herein stated and after notice from the
      indemnifying party to such Indemnified Party of its election so to assume the
      defense thereof, the indemnifying party will not be liable to such Indemnified
      Party under this Section 6 for any legal or other reasonable out-of-pocket
      expenses subsequently incurred by such Indemnified Party in connection with
      the
      defense thereof other than reasonable costs of investigation, unless the
      indemnifying party shall not pursue the action to its final conclusion. The
      Indemnified Party shall have the right to employ separate counsel in any such
      action and to participate in the defense thereof, but the fees and reasonable
      out-of-pocket expenses of such counsel shall not be at the expense of the
      indemnifying party if the indemnifying party has assumed the defense of the
      action with counsel as provided above. The failure to deliver written notice
      to
      the indemnifying party within a reasonable time of the commencement of any
      such
      action shall not relieve such indemnifying party of any liability to the
      Indemnified Party under this Section 6, except to the extent that the
      indemnifying party is prejudiced in its ability to defend such action. The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as such
      expense, loss, damage or liability is incurred and is due and payable; provided,
      however, that the Investor shall not obligated to make any indemnification
      payment to the Company under this Section 6 unless and until there has been
      a
      final adjudication of liability on the part of the Investor.

    

    7. Contribution.
      To the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided,
      however,
      that
      (a) no contribution shall be made under circumstances where the maker would
      not
      have been liable for indemnification under the fault standards set forth in
      Section 6; (b) no seller of Registrable Securities guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Securities Act)
      shall be entitled to contribution from any seller of Registrable Securities
      who
      was not guilty of such fraudulent misrepresentation; and (c) except where the
      seller has committed fraud (other than a fraud by reason of the information
      included or omitted from the Registration Statement as to which the Company
      has
      not given notice as contemplated under Section 3 hereof) or intentional
      misconduct, contribution by any seller of Registrable Securities shall be
      limited in amount to the net amount of proceeds received by such seller from
      the
      sale of such Registrable Securities.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    8. Reports
      under Securities Act and Exchange Act.
      With a
      view to making available to Investor the benefits of Rule 144 promulgated under
      the Securities Act or any other similar rule or regulation of the SEC that
      may
      at any time permit Investor to sell securities of the Company to the public
      without Registration (“Rule 144”), the Company agrees, subject to the provisions
      of Section 4 (d) of the Securities Purchase Agreement, to:

    

    (a) make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144;

    

    (b) file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Securities Act and the Exchange Act; and

    

    (c) furnish
      to the Investor so long as the Investor owns Registrable Securities, promptly
      upon reasonable request, (i) a written statement by the Company that it has
      complied with the reporting requirements of Rule 144, the Securities Act and
      the
      Exchange Act, (ii) if not available on the SEC’s EDGAR system, a copy of the
      most recent annual or quarterly report of the Company and such other reports
      and
      documents so filed by the Company and (iii) such other information as may be
      reasonably requested to permit the Investor to sell such securities pursuant
      to
      Rule 144 without Registration; and

    

    (d) at
      the
      request of any Investor holding Registrable Securities (a “Holder”), give its
      Transfer Agent instructions (supported by an opinion of Company Counsel or
      other
      counsel to the Company, if required or requested by the Transfer Agent) to
      the
      effect that, upon the Transfer Agent’s receipt from such Holder of

     

    (i)
      a
      certificate (a “Rule 144 Certificate”) certifying (A) that the Holder’s holding
      period (as determined in accordance with the provisions of Rule 144) for the
      shares of Registrable Securities which the Holder proposes to sell (the
“Securities Being Sold”) is not less than (1) year and (B) as to such other
      matters as may be appropriate in accordance with Rule 144 under the Securities
      Act, and 

    

    (ii)
      an
      opinion of counsel acceptable to the Company (for which purposes it is agreed
      that the initial Investor’s Counsel shall be deemed acceptable if not given by
      Company Counsel) that, based on the Rule 144 Certificate, Securities Being
      Sold
      may be sold pursuant to the provisions of Rule 144, even in the absence of
      an
      effective Registration Statement, 

    

    the
      Transfer Agent is to effect the transfer of the Securities Being Sold and issue
      to the buyer(s) or transferee(s) thereof one or more stock certificates
      representing the transferred Securities Being Sold without any restrictive
      legend and without recording any restrictions on the transferability of such
      shares on the Transfer Agent’s books and records (except to the extent any such
      legend or restriction results from facts other than the identity of the Holder,
      as the seller or transferor thereof, or the status, including any relevant
      legends or restrictions, of the shares of the Securities Being Sold while held
      by the Holder). If the Transfer Agent reasonably requires any additional
      documentation at the time of the transfer, the Company shall deliver or cause
      to
      be delivered all such reasonable additional documentation as may be necessary
      to
      effectuate the issuance of an unlegended certificate. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    9. Assignment
      of the Registration Rights.
      The
      rights to have the Company register Registrable Securities pursuant to this
      Agreement and the rights of the Investor under Section 8 hereof shall be
      automatically assigned by the Investor to any transferee of the Registrable
      Securities (excluding any transfer of such Registrable Securities by a sale
      pursuant to an effective Registration Statement or pursuant to Rule 144) or
      of
      all or any portion of any unconverted Debentures or, to the extent relevant,
      to
      a Warrant Share Registration Statement, shares issued or issuable on exercise
      of
      Warrants, but , only if the Company is, within a reasonable time after such
      transfer or assignment, furnished with written notice of (a) the name and
      address of such transferee or assignee, (b) the securities with respect to
      which
      such registration rights are being transferred or assigned, and (c) written
      evidence of the transferee’s assumption of the Investor’s obligations under this
      Agreement. Notwithstanding the foregoing, the Company shall have no obligation
      to amend any then effective Registration Statement covering the resale of such
      transferred Registrable Securities or, to the extent relevant, transferred
      shares issued on exercise of Warrants or shares issuable on the exercise of
      transferred Warrants to include the transferee as a selling shareholder of
      such
      shares, if inclusion of the transferee would require a post-effective amendment
      to such Registration Statement. 

    

    10. Amendment
      of Registration Rights.
      Any
      provision of this Agreement may be amended and the observance thereof may be
      waived (either generally or in a particular instance and either retroactively
      or
      prospectively), only with the written consent of the Company and Investors
      who
      represent a Majority in Interest of the Holders as of the relevant date. Any
      amendment or waiver effected in accordance with this Section 10 shall be binding
      upon each Investor and the Company.

     

    11. Miscellaneous.

    

    (a) A
      person
      or entity is deemed to be a holder of Registrable Securities whenever such
      person or entity owns of record such Registrable Securities. If the Company
      receives conflicting instructions, notices or elections from two or more persons
      or entities with respect to the same Registrable Securities, the Company shall
      act upon the basis of instructions, notice or election received from the
      registered owner of such Registrable Securities.

    

    (b) Notices
      required or permitted to be given hereunder shall be given in the manner
      contemplated by the Securities Purchase Agreement, (i) if to the Company or
      to
      the Initial Investor, to their respective address contemplated by the Securities
      Purchase Agreement, and (ii) if to any other Investor, at such address as such
      Investor shall have provided in writing to the Company, or at such other address
      as each such party furnishes by notice given in accordance with this Section
      11(b).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (c) Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

    

    (d) This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of New York for contracts to be wholly performed in such state and
      without giving effect to the principles thereof regarding the conflict of laws.
      Each of the parties consents to the exclusive jurisdiction of the federal courts
      whose districts encompass any part of the County of New York or the state courts
      of the State of New York sitting in the County of New York in connection with
      any dispute arising under this Agreement and hereby waives, to the maximum
      extent permitted by law, any objection, including any objection based
      on
      forum non coveniens,
      to the
      bringing of any such proceeding in such jurisdictions.

    

    (e) The
      Company and the Investor hereby waive a trial by jury in any action, proceeding
      or counterclaim brought by either of the parties hereto against the other in
      respect of any matter arising out of or in connection with this Agreement or
      any
      of the other Transaction Agreements.

     

    (f) If
      any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement or the validity or
      enforceability of this Agreement in any other jurisdiction.

    

    (g) Subject
      to the requirements of Section 9 hereof, this Agreement shall inure to the
      benefit of and be binding upon the successors and assigns of each of the parties
      hereto.

    

    (h) All
      pronouns and any variations thereof refer to the masculine, feminine or neuter,
      singular or plural, as the context may require.

    

    (i) The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning thereof.

    

    (j) This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by telephone line facsimile transmission of a copy of this Agreement
      bearing the signature of the party so delivering this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (k) The
      Company acknowledges that any failure by the Company to perform its obligations
      under Section 3(a) hereof, or any delay in such performance, whether or not
      as a
      result of the Company’s negligence, failure to act or otherwise, could result in
      loss to the Investors, and the Company agrees that, in addition to any other
      liability the Company may have by reason of such failure or delay, the Company
      shall be liable for all direct damages caused by any such failure or delay,
      unless the same is the result of force majeure. NEITHER PARTY SHALL BE LIABLE
      TO
      THE OTHER FOR CONSEQUENTIAL DAMAGES.

    

    (l) This
      Agreement (including to the extent relevant the provisions of other Transaction
      Agreements) constitutes the entire agreement among the parties hereto with
      respect to the subject matter hereof and supersedes all prior agreements and
      understandings among the parties hereto with respect to the subject matter
      hereof. There are no restrictions, promises, warranties or undertakings, other
      than those set forth or referred to herein.

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      the
      parties have caused this Agreement to be duly executed by their respective
      officers thereunto duly authorized as of the day and year first above
      written.

     

    
      	 	 	 
	 	INITIAL
              INVESTOR:
	 	 
	 	[Print
              Name of Initial Investor] 
	 
 	 
 	 
 
	 	By:  	 
	 	Name: 	 
	 	Title: 	 

    

     

    
      	 	 	 
	 	COMPANY:
	 	SKYSTAR BIO-PHARMACEUTICAL
              COMPANY 
	 
 	 
 	 
 
	 	By:  	 
	 	Name: 	 
	 	Title:__________,
      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:

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