LIMITED STANDSTILL AGREEMENT

This AGREEMENT (the “Agreement”) is made as of the ___ day of February, 2007, by
the signatories hereto (each a “Holder”), in connection with their respective
ownership of shares of China Precision Steel, Inc., a Colorado corporation (the
“Company”). Terms not otherwise defined herein are defined in the Stock Purchase
Agreement among the Company and the Investors named therein; dated as of
February ___, 2007 (the “Stock Purchase Agreement”).
 
NOW THEREFORE, for good and valuable consideration, the sufficiency and receipt
of which consideration are hereby acknowledged, Holder agrees as follows:
 
1. General.
 
(a) Holder is a director or executive officer of the Company and the beneficial
owner of the amount of shares of the Common Stock, $0.001 par value, of the
Company (“Common Stock”) and rights to purchase Common Stock as designated on
the signature page hereto (collectively, the “Shares”).
 
(b) Holder acknowledges that the Company has entered into or will enter into an
agreement with each Investor (a “Stock Purchase Agreement”) for the sale to the
Investors of an aggregate of up to $20,000,000 principal amount of Common Stock
(the “Offering”). Holder understands that, as a condition to Closing, the
Investors have required, and the Company has agreed to obtain, an agreement from
the Holder to refrain from selling any securities of the Company in accordance
with the terms and conditions set forth herein.
 
2. Share Restriction.
 
(a) Holder hereby agrees that during the period commencing on the effective date
of the Registration Statement filed pursuant to Section 8 of the Stock Purchase
Agreement and ending on the date that is twelve (12) months thereafter (the
“Restriction Period”), the Holder will not offer, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
sell short, grant any option, right or warrant to purchase, lend or otherwise
transfer or dispose of any Shares or enter into any swap or other arrangement
that transfers any economic consequences of ownership of Shares other than as
may be required in the ordinary course of the Company’s business; provided,
however, that 20% of the Holder’s Shares shall be released from and no longer
subject to the foregoing restrictions after ninety (90) calendar days following
the effective date of such Registration Statement, and further, provided, that
such 20% may, at Holder’s option, be registered for resale under the Securities
Act of 1933, as amended, on the Registration Statement to be filed pursuant to
Section 8 of the Stock Purchase Agreement. The foregoing sentence shall not
apply with respect to an offer made to all shareholders of the Company in
connection with any merger, consolidation or similar transaction involving the
Company. Holder further agrees that the Company is authorized to and the Company
agrees to place “stop orders” on its books to prevent any transfer of Shares
held by Holder in violation of this Agreement.
 
(b) Any subsequent issuance to and/or acquisition of Common Stock or the right
to acquire Common Stock by Holder will be subject to the provisions of this
Agreement; provided, however, that the Restriction Period shall not be extended
hereby with respect thereto.
 
 

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(c) Notwithstanding the foregoing restrictions on transfer, the Holder may, at
any time and from time to time during the Restriction Period, transfer the
Common Stock (i) as bona fide gifts or transfers by will or intestacy, (ii) to
any trust for the direct or indirect benefit of the undersigned or the immediate
family of the Holder, provided that any such transfer shall not involve a
disposition for value, (iii) to a partnership which is the general partner of a
partnership of which the Holder is a general partner, provided, that, in the
case of any gift or transfer described in clauses (i), (ii) or (iii), each donee
or transferee agrees in writing to be bound by the terms and conditions
contained herein in the same manner as such terms and conditions apply to the
undersigned. For purposes hereof, “immediate family” means any relationship by
blood, marriage or adoption, not more remote than first cousin.
 
3. Miscellaneous.
 
(a) At any time, and from time to time, after the signing of this Agreement
Holder will execute such additional instruments and take such action as may be
reasonably requested by the Investors to carry out the intent and purposes of
this Agreement. The Company agrees not to take any action or allow any act to be
taken which would be inconsistent with this Agreement.
 
(b) This Agreement shall be governed, construed and enforced in accordance with
the laws of the State of New York without regard to conflicts of laws principles
that would result in the application of the substantive laws of another
jurisdiction, except to the extent that the securities laws of the state in
which Holder resides and federal securities laws may apply. Any proceeding
brought to enforce this Agreement may be brought exclusively in courts sitting
in New York County, New York.
 
(c) This Agreement contains the entire agreement of the Holder with respect to
the subject matter hereof. This Agreement shall be binding upon Holder, its
legal representatives, successors, heirs and assigns.
 
(d) This Agreement may be signed in counterpart and delivered by facsimile or
electronic transmission and such facsimile or electronic transmission signed and
delivered shall be enforceable.
 

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IN WITNESS WHEREOF, and intending to be legally bound hereby, Holder has
executed this Agreement as of the day and year first above written.
 

        HOLDER:          

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(Signature of Holder)
     
     

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(Print name of Holder)
         

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Number of shares of Common Stock
Beneficially Owned
         

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Number of options, warrants or other rights
to acquire Common Stock
   

 

 
COMPANY:
        CHINA PRECISION STEEL, INC.  
   
   
    By:      

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Name: Leada Tak Tai Li   Title: Chief Financial Officer

 

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