TAX INDEMNITY AGREEMENT
 
This Tax Indemnity Agreement (“Agreement”) is dated for reference purposes only
December 28, 2006, and is by and between OraLabs, Inc., a Colorado corporation
(“OraLabs”), China Precision Steel, Inc., formerly known as OraLabs Holding
Corp., a Colorado corporation (“Holding”) and Partner Success Holdings Limited,
a British Virgin Islands international business company (“PSHL”).
 
WHEREAS, Holding and PSHL entered into a Stock Exchange Agreement (the “Exchange
Agreement”) dated as of March 31, 2006, as amended by First Amendment to Stock
Exchange Agreement (“First Amendment”) and the Second Amendment to Stock
Exchange Agreement, dated October 12, 2006, under which, among other things,
PSHL became on even date herewith (the “Closing Date”) a wholly-owned subsidiary
of Holding in consideration for the issuance to the principals of PSHL and their
designees of controlling ownership of Holding; and
 
WHEREAS, under the Exchange Agreement, such acquisition of the ownership of PSHL
was followed immediately on the Closing Date by the redemption by Holding of all
of the stock of Holding owned individually by Gary H. Schlatter (“Schlatter”) in
exchange for the conveyance to Schlatter of all of the stock of OraLabs owned by
Holding (the “Redemption Transaction”); and
 
WHEREAS, the parties agree that the Redemption Transaction is a taxable
transaction under the Internal Revenue Code of 1986, as amended, (the “Code”),
calculated upon the excess, if any, of the value of OraLabs (“OraLabs Value”) on
the Closing Date over Holding’s basis in the OraLabs’ common stock owned by
Holding immediately prior to the distribution of those shares of common stock to
Schlatter (the “Basis”), and that income taxes assessed by a State may also be
payable with respect to the Redemption Transaction; and
 
WHEREAS, on the Closing Date, OraLabs estimated that the Basis is $7,006,586 and
the OraLabs Value is $8,542,000, (as determined from a fairness opinion from
Capitalink, L.C.); and
 
WHEREAS, on the Closing Date, the Spinoff Tax Liability (defined below) was
estimated to be $522,041, and to pay the same, OraLabs purchased 100,000 shares
of common stock from Holding for the total purchase price of $450,690, and paid
to Holding an additional sum of $71,351 (the “Cash Payment”) (collectively, the
“Estimated Tax”) plus a Gross-Up Amount (as defined in Section 5B below) on the
Cash Payment of $36,756.25, to provide the public company with the funds to pay
the Estimated Tax and taxes thereon; and
 
WHEREAS, Holding and PSHL have required an indemnity from OraLabs to the extent
that the amount of Spinoff Tax Liability owing with respect to the Redemption
Transaction is Finally Determined to be more than the Estimated Tax, and OraLabs
is willing to provide an indemnity in accordance with the provisions of this
Agreement.
 

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NOW, THEREFORE, in consideration of the foregoing recitals and for other good
and valuable consideration, the receipt and sufficiency of which is acknowledged
by the parties, the parties agree as follows:
 
1. For the purposes of this Agreement, the capitalized terms set forth below
have the meanings set forth in this Section:
 
1.1 “Final Determination” or “Finally Determined” means with respect to any
liability for Taxes for any period, (a) a final, unappealable decision by a
court of competent jurisdiction, (b) the expiration of applicable statutes of
limitations on assessment of Taxes or filing of claims for refund, (c) the
execution of a closing agreement under section 7121 of the Code or the
acceptance by the IRS of an offer in compromise pursuant to section 7122 of the
Code (or similar agreements with tax authorities entered into under applicable
state or local tax law), but excluding any agreement or compromise that reserves
(whether by its terms or by operation of law) the right of the taxpayer to file
a claim for refund and/or the right of the Taxing Authority to assert a further
deficiency, or (d) any other final, irrevocable and unappealable determination
of Taxes for such period.
 
1.2 “IRS” means the United States Internal Revenue Service or any successor
thereto.
 
1.3 “Income Tax” or “Income Taxes” means Taxes based upon or measured by net
income.
 
1.4 “Income Tax Return” means a Tax Return relating to the payment or receipt of
any refund of any Income Tax.
 
1.5 “Neutral Auditors” means a firm of nationally or regionally recognized
independent accountants who shall not have had a material relationship with
OraLabs, Holding or PSHL.
 
1.6 “Preclosing Taxable Period” means a Taxable Year that ends on or before the
Closing Date.
 
1.7 “Spinoff Tax Liability” means the excess of the OraLabs Value (as finally
determined) over the Basis (as finally determined) multiplied by 34% plus the
state income tax rate, if applicable.
 
1.8 “Tax” or “Taxes” means any taxes imposed by any federal, state or local
government or agency thereof within the United States.
 
1.9 “Tax Practices” means the most recently applied policies, procedures and
practices employed by Holding in the preparation and filing of, and positions
taken on, any Tax Returns of Holding for any Preclosing Taxable Period.
 
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1.10 “Tax Return” means all returns and other filings relating to, or required
to be filed by any taxpayer in connection with, the payment or receipt of any
refund of any Income Tax.
 
1.11 “Taxable Year” means a taxable year (which may be shorter than a full
calendar or fiscal year) or similar period with respect to which any Tax may be
imposed.
 
1.12 “Taxing Authority” means the IRS or any other governmental authority
responsible for the administration of any Tax.
 
2. Holding has the responsibility to file the Income Tax Return(s) that will
report the Redemption Transaction for the Taxable Year during which the Closing
Date occurs. Holding will prepare the Tax Return(s) with respect thereto in a
manner consistent with past Tax Practices except as otherwise required by
changes in applicable law or material underlying facts. Holding will report the
Redemption Transaction in the Income Tax Return(s) for said Taxable Year and
agrees that the basis in its OraLabs stock and the value of OraLabs will be
reported as the Basis and OraLabs Value stated above. However, the Basis
calculation (but not the OraLabs Value) may be adjusted as required by changes
in applicable law or material underlying facts, or by a determination by Holding
after Holding’s compliance with Section 4 below of a different amount of Basis.
The parties agree that OraLabs has no indemnity obligation with respect to the
amount of Income Tax owed with respect to the Redemption Transaction except to
the extent that the amount of Spinoff Tax Liability exceeds the Estimated Tax.
Prior to Holding’s filing any Income Tax Return that reports the Redemption
Transaction, Holding will comply with the provisions of Section 4 of this
Agreement, and if the amount of Basis reported in said Income Tax Return is
lower than the Basis used to compute the Estimated Tax, OraLabs will pay to
Holding, within 30 days after filing the Income Tax Return, the additional
amount of Estimated Tax calculated upon the lower Basis, plus the applicable
Gross-Up Amount defined in Section 5B. If the amount of Basis reported in said
Income Tax Return is higher than used to calculate the Estimated Tax at Closing,
then to the extent of any Cash Payment (and Gross-Up Amount thereon) made at
Closing, Holding will refund to OraLabs an amount equal to the sum of the
overpayment portion of the Cash Payment made at Closing, plus the applicable
Gross-Up Amount on the refunded amount.
 
3. In the event that Holding does not comply with its obligations under this
Agreement, then notwithstanding any provision of this Agreement to the contrary,
OraLabs will be relieved of all of its indemnity obligations under this
Agreement.
 
4. OraLabs will cooperate and assist Holding in the preparation and filing of
all Tax Returns required to be filed for Holding after the date hereof that
relate to a Preclosing Taxable Period. At least 45 days prior to the filing of
any Tax Return (including amendments thereto) for Holding for a Preclosing
Taxable Period, Holding will provide OraLabs with a copy of those portions of
the proposed Tax Return that relate to the Redemption Transaction and/or any Tax
claimed to be payable in connection therewith, and OraLabs will have the right
to review all related work papers prior to the filing of any such Tax Return.
Holding will consult with OraLabs regarding its comments with respect to such
portions of the Tax Returns, will in good faith consult with OraLabs in an
effort to resolve any differences with respect to the preparation and accuracy
of such portions of the Tax Returns and their consistency with past Tax
Practices, and will consider OraLabs’ recommendations for alternative positions
with respect to items reflected on such portions of the Tax Returns.
 
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5. A. Subject to the provisions of this Agreement, OraLabs agrees to indemnify
and hold harmless Holding and PSHL, and their respective officers, agents and
directors, from and against any obligation of Holding to pay an amount of
federal and state (if applicable) Income Tax attributable to the Redemption
Transaction in an amount equal to the excess of the Spinoff Tax Liability over
the Estimated Tax. However, the parties agree that the amount of Spinoff Tax
Liability will be determined without regard to the actual Income Tax that may be
payable by Holding for any Taxable Year. Provided that Holding and PSHL comply
with their obligations under this Agreement, OraLabs will pay to Holding the
amount indemnified hereunder that is due with the filing of the Tax Return that
reports the Redemption Transaction, or that results from a Final Determination
that an indemnified amount is due with respect to the Redemption Transaction. If
an amount representing state Income Tax is payable by OraLabs to Holding under
this paragraph, the amount of federal Income Tax payable by Holding will give
effect to any reduction of federal taxes due to the payment of state taxes.
 
B. The parties agree that any payment made to Holding under Section 5A above
will be a taxable transaction to Holding. OraLabs agrees that when it pays the
amount (“Tax Amount”) of indemnified Spinoff Tax Liability required to be paid
under Section 5A, it will simultaneously pay to Holding an amount (a “Gross-Up
Amount”) that will enable Holding to net the amount of the Tax Amount after
paying United States federal and any state income tax due (giving effect to any
reduction of federal taxes due to the payment of state taxes) with respect to
OraLabs’ payment to Holding of the Tax Amount. The Gross-Up Amount shall be
calculated by using a 34% federal income tax rate plus the state income tax
rate, if applicable and shall be determined without regard to the actual Income
Tax that may be payable with respect to such Tax Amount. The parties agree that
the payment made by OraLabs to Holding under the preceding sentence will be
deemed to be in full satisfaction of any Income Tax that may be payable by
Holding that arises from OraLabs’ payment of the Tax Amount, and shall be a full
and final settlement between the parties.
 
6. Holding and OraLabs will endeavor in good faith to resolve any dispute under
this Agreement, including without limitation any dispute about a reporting
position in connection with the Redemption Transaction. If any such dispute is
not so resolved, then either party may deliver to the other a written notice
detailing such party’s objections. If the parties are unable to resolve the
dispute within 15 days after such notice is given, then either party shall have
the right to refer the dispute for resolution to Neutral Auditors selected by
the parties within 10 days after the expiration of such 15-day period. If the
parties do not agree upon the Neutral Auditors within that time, then either
party has the right to request that the American Arbitration Association appoint
the Neutral Auditors, and any costs in connection therewith will be shared
equally by the parties. Each party agrees to execute, if requested by the
Neutral Auditors, a reasonable engagement letter. All fees and expenses relating
to the work, if any, to be performed by the Neutral Auditors shall be borne
equally by the parties. The Neutral Auditors shall act as an arbitrator to
determine, based solely on presentations by OraLabs and Holding, and not by
independent review, only those issues that remain in dispute between the
parties. The Neutral Auditors’ determination shall be made within 30 days of
such firm’s selection, shall be set forth in a written statement delivered to
the parties, and shall be final, binding and conclusive.
 
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7. A. In the event that Holding is notified of any audit, examination or other
controversy (any such proceeding will be referred to as a “Proceeding”) before a
Taxing Authority with respect to the amount of Income Tax due from the
Redemption Transaction, Holding will within 15 business days thereafter give
written notice to OraLabs of the Proceeding. The notification required by this
Section must include, insofar as relevant to the Redemption Transaction, copies
of any correspondence between the Taxing Authority and Holding and, as
applicable, written summaries of any oral communications, as well as a detailed
statement of the reasons why Holding believes that the Proceeding may result in
an indemnification obligation under this Agreement. To the extent known by
Holding, the notice will also include a calculation of the estimated amount of
Spinoff Tax Liability in excess of the Estimated Tax that may be payable.
 
B. Holding and OraLabs will comply with the provisions of Section 4 with respect
to any Proceeding described in the previous paragraph. Holding will deliver to
OraLabs copies of any correspondence between the Taxing Authority and Holding
and, as applicable, written summaries of any subsequent oral communications,
that occur throughout the course of the Proceeding, , insofar as relevant to the
Redemption Transaction. OraLabs will have ultimate control over whether to
settle a Proceeding, the amount of any settlement, and whether to challenge the
Proceeding until a Final Determination, but only to the extent that the
Proceeding relates to the Redemption Transaction. Holding will execute a power
of attorney to facilitate OraLabs’ direct communications with the Taxing
Authority. In no event will Holding or PSHL take any action with any Taxing
Authority that Holding or PSHL could reasonably foresee would have a material
and adverse effect upon any indemnification obligation of OraLabs under this
Agreement.
 
C. OraLabs will reimburse Holding for its reasonable costs and fees incurred in
connection with the conduct and resolution of a Proceeding, but if the
Proceeding involves any Tax matter other than the Redemption Transaction, the
obligation of OraLabs under this sentence will only apply to the reasonable
costs and fees incurred by Holding that relate to the Redemption Transaction.
Promptly upon resolution of the Proceeding, the parties will in good faith seek
to agree upon how the costs and fees incurred by Holding will be allocated on
the one hand to OraLabs and on the other hand to Holding. If the parties do not
agree upon the allocation, then either party may deliver to the other a written
notice detailing such party’s objections. Thereafter, the resolution procedure
in Section 6 above will be undertaken to resolve the disagreement. The Neutral
Auditors will act as an arbitrator to determine, based solely on presentations
by OraLabs and Holding, and not by independent review, the allocation of the
costs and fees, and the Neutral Auditors shall (i) assess to OraLabs the costs
and fees that are found to be solely attributable to the Reimbursement
Transaction, (ii) assess to Holding the costs and fees that are found to be
solely attributable to matters other than the Redemption Transaction, and (iii)
allocate the costs and fees incurred in the Proceeding in general, not
specifically allocable to a specific Tax matter that is addressed in the
Proceeding, as determined to be appropriate.
 
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8. Holding shall retain all Tax Returns relating to the Redemption Transaction
and any Proceeding involving the Redemption Transaction, and all books, records,
schedules, work papers and other documents relating thereto, until the
expiration of the later of (i) all applicable statutes of limitations (including
any waivers or extensions thereof), and (ii) any retention period required by
law or pursuant to any record retention agreement. OraLabs has the right to
review and copy any of such books and records of the Proceeding relating to the
Redemption Transaction from time to time upon reasonable advance notice to
Holding. Holding shall notify OraLabs in writing of any waivers, extensions or
expirations of applicable statutes of limitations, and shall provide at least 30
days prior written notice of any intended destruction of the documents referred
to in the preceding sentence. Holding shall not dispose of any of the foregoing
materials without first obtaining the written approval of OraLabs, which may not
be unreasonably withheld.
 
9. Except as required by law or with a prior written consent of the other
parties, all Tax Returns, documents, schedules, work papers and similar items
and all information contained therein, which Tax Returns and other materials are
within the scope of this Agreement, shall be kept confidential by the parties
and their representatives, shall not be disclosed to any other person or entity
and shall be used only for the purposes provided in this Agreement.
 
10. This Agreement contains the entire agreement among the parties with respect
to the indemnification by OraLabs of Taxes arising from the Redemption
Transaction. In the event of a conflict between any provision of this Agreement
and any provision of the Exchange Agreement, First Amendment, or Indemnification
Agreement attached to the First Amendment, the provision of this Agreement
controls. Notices under this Agreement shall be given only in the same manner
described in the Indemnification Agreement attached to the First Amendment, to
the addresses specified therein or to such other address as any party may
designate by proper written notice to the other.
 
11. The Parties agree that this Agreement shall be construed in accordance with
the laws of the State of Colorado and that exclusive jurisdiction and venue for
any controversy, claim or suit arising out of or connected with this Agreement
shall be in the courts located in Denver, Colorado. This Agreement may be
executed in counterparts, each such counterpart being deemed to be an original
instrument, and all of such counterparts shall together constitute one and the
same instrument. Facsimile signatures will be accepted as originals.
 
12. This Agreement may be amended only by written agreement executed and
delivered by all of the parties. This Agreement is solely for the benefit of the
parties to this Agreement and shall not be deemed to confer upon third parties
any remedy, claim, liability, reimbursement, claim of action or other right.
Except as otherwise stated in this Agreement, each party agrees to pay its own
costs and expenses (including without limitation attorneys fees) resulting from
the fulfillment of its respective obligations hereunder. Any ambiguities in this
Agreement shall be resolved without regard to which party drafted this
Agreement.
 
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13. The parties acknowledge that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. The parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court having
jurisdiction. Any such remedy shall be in addition to any other remedy available
at law or in equity.
 
 
 
[Remainder of page intentionally left blank. Signatures on following page.]
 
 
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CHINA PRECISION STEEL, INC., formerly known as ORALABS HOLDINGS CORP., a
Colorado corporation
 
 
By:  /s/ Wo Hing Li

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Wo Hing Li, President and CEO
 
Date: December 28, 2006
 
PARTNER SUCCESS HOLDINGS LIMITED, a British Virgin Islands international
business company
 
 
By:  /s/ Wo Hing Li

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Wo Hing Li, President and CEO
 
Date: December 28, 2006
           
ORALABS, INC., a Colorado corporation
 
 
By:  /s/ Gary H. Schlatter

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Gary H. Schlatter, President
 
Date: December 28, 2006
   

 
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