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Exhibit 10.7

INDEPENDENT DIRECTOR AGREEMENT

THIS INDEPENDENT DIRECTOR AGREEMENT (this “Agreement”) is made effective as of
January 11, 2012 by and between Longhai Steel Inc. (the “Company”), and Marshall
Toplansky (“Director”).

WHEREAS, the Company seeks to attract and retain as directors, capable and
qualified persons to serve on the Company’s board of directors (the “Board”);
and

WHEREAS, the Company has requested and received from Director certain
information regarding Director’s qualifications and fitness to serve on the
Board and has considered and relied upon the accuracy of such information in
offering Director the opportunity to serve on the Board; and

WHEREAS, the Company believes that Director possesses the necessary
qualifications and abilities to serve as a director of the Company and to
perform the functions and meet the Company’s needs related to its Board.

NOW, THEREFORE, the parties agree as follows:

1.                     Service to the Board.

(a)                 Service as a Director. Director will serve for a period of
three years (the “term as a director of the Company in accordance with the
bylaws of the Company and perform all duties as a director of the Company,
including without limitation (1) attending meetings of the Board, (2) serving on
such committees of the Board (each a “Committee”) to which Director has been
appointed, (3) attending meetings of each Committee of which Director is a
member and (4) performing Director’s duties on behalf of the Company in good
faith and in a manner that is not opposed to the best interests of the Company.

(b)                  Service on Committees. Director will serve on the following
committees and in the capacities stated:

  Member Chairperson Audit Committee √   Compensation/Nominating Committee √ √
Corporate Governance Committee √  

To the extent Director serves as Audit Committee Chairperson, Director agrees
that Director is also serving as the financial expert for purposes of filings
before the Securities and Exchange Commission.

2.                     Term. The term of this Agreement shall commence as of the
date of Director’s appointment by the Board of Directors of the Company and
shall continue until the Director’s removal or resignation.

3.                     Compensation and Expenses.

(a)                   Director Compensation. In recognition of the services
provided by and to be provided by Director, the Company agrees to pay Director
$2,500 per board meeting and issue to Director, an aggregate of 30,000 shares of
the Company’s common stock pursuant to an option agreement dated January 11,
2012 (such payment and issuance, the “Compensation”), one-half (1/2) of the
shares to be vested on the date of appointment, and the remaining one-half (1/2)
of the shares to be vested on December 31, 2012. The Board reserves the right to
change the Compensation from time to time, to take into consideration the
responsibilities associated with different committees in setting Compensation
levels and to grant additional restricted shares periodically, which may vary
from the terms described in this section. If Director ceases to serve as a
director on the Company’s Board at any time and for any reason prior to a grant
date associated with any restricted shares, all restricted shares described in
the restricted share agreement that have not been granted as of such time of
cessation of services will not be granted. All such cancelled or forfeited
restricted shares shall be returned to the Company’s incentive pool.

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(b)                  Expenses. The Company will reimburse Director for all
reasonable, out-of-pocket expenses, including business class airfare for board
meetings, approved by the Company in advance, incurred in connection with the
performance of Director’s duties under this Agreement (“Expenses”), upon
submission of receipts and a written request for payment. Such statement shall
be accompanied by sufficient documentary matter to support the expenditures. The
Company may withhold from any payment any amount of withholding required by law.

(c)                   Future Compensation and Benefits. The Board, with the
compensation committee, reserves the right to determine the compensation for
services provided under this Agreement. The Board may from time to time
authorize additional compensation and benefits for Director, including stock
options and restricted stock.

(d)                  Insurance and Indemnification. This Agreement is effective
only when the directors’ and officers’ insurance policy previously shown to the
Director is in place and an Indemnification Agreement satisfactory to the
Director is signed by the Company. When and if the Company anticipates the
successful qualification of its common stock for trading on the NASDAQ Stock
Exchange or any similar exchange for securities trading, the Company shall amend
its existing directors’ and officers’ insurance policy to increase limits
available to independent directors by approximately $5,000,000 or a lesser or
greater amount which is determined and approved by the Board to be appropriate,
with such insurance effective on date of such listing or as soon thereafter as
possible, provided that such increase is in the best interests of the Company
and its shareholders.

The Company has provided the Director with a summary of the limits and terms of
its current Directors’ and Officers’ Liability Insurance (the “D&O Insurance”)
and the provisions of its corporate by-laws and governing documents dealing with
indemnification of directors (the “Indemnification Provisions”). To the fullest
extent permitted by applicable law, the Company agrees that it will not
voluntarily change the terms of such D&O Insurance or the Indemnification
Provisions to the detriment of the Director at anytime while he is entitled to
benefit of such D&O Insurance or Indemnification Provisions.

4.                    Confidentiality. The Company and Director each acknowledge
that, in order for the intents and purposes of this Agreement to be
accomplished, Director shall necessarily be obtaining access to certain
confidential information concerning the Company and its affairs, including, but
not limited to business methods, information systems, financial data and
strategic plans which are unique assets of the Company (“Confidential
Information”). Director covenants not to, either directly or indirectly, in any
manner, utilize or disclose to any person, firm, corporation, association or
other entity any Confidential Information.

5.                      Non-Compete. During the term of this Agreement and for a
period of twelve (12) months following Director’s removal or resignation from
the Board of Directors of the Company or any of its subsidiaries or affiliates
(the “Restricted Period”), Director shall not, directly or indirectly, (i) in
any manner whatsoever engage in any capacity with any business competitive with
the Company’s current lines of business or any business then engaged in by the
Company, any of its subsidiaries or any of its affiliates (the “Company's
Business”) for Director’s own benefit or for the benefit of any person or entity
other than the Company or any subsidiary or affiliate; or (ii) have any interest
as owner, sole proprietor, shareholder, partner, lender, director, officer,
manager, employee, consultant, agent or otherwise in any business competitive
with the Company's Business; provided, however, that Director may hold, directly
or indirectly, solely as an investment, not more than two percent (2%) of the
outstanding securities of any person or entity which are listed on any national
securities exchange or regularly traded in the over-the-counter market
notwithstanding the fact that such person or entity is engaged in a business
competitive with the Company's Business. In addition, during the Restricted
Period, Director shall not develop any property for use in the Company’s
Business on behalf of any person or entity other than the Company, its
subsidiaries and affiliates.

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6.                     Termination. With or without cause, the Company and
Director may each terminate this Agreement at any time upon ten (10) days
written notice, and the Company shall be obligated to pay to Director the
compensation and expenses due up to the date of the termination. Nothing
contained herein or omitted herefrom shall prevent the shareholder(s) of the
Company from removing Director with immediate effect at any time for any reason.

7.                     Amendments and Waiver. No supplement, modification or
amendment of this Agreement will be binding unless executed in writing by both
parties. No waiver of any provision of this Agreement on a particular occasion
will be deemed or will constitute a waiver of that provision on a subsequent
occasion or a waiver of any other provision of this Agreement.

8.                     Binding Effect. This Agreement will be binding upon and
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.

9.                     Severability. The provisions of this Agreement are
severable, and any provision of this Agreement that is held by a court of
competent jurisdiction to be invalid, void, or otherwise unenforceable in any
respect will not affect the validity or enforceability of any other provision of
this Agreement.

10.                   Governing Law. This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in that state without giving
effect to the principles of conflicts of laws.

11.                   Notice. Any and all notices referred to herein shall be
sufficient if furnished in writing at the addresses specified on the signature
page hereto or, if to the Company, to the Company’s address as specified in
filings made by the Company with the U.S. Securities and Exchange Commission.

12.                   Assignment. The rights and benefits of the Company under
this Agreement shall be transferable, and all the covenants and agreements
hereunder shall inure to the benefit of, and be enforceable by or against, its
successors and assigns. The duties and obligations of Director under this
Agreement are personal and therefore Director may not assign any right or duty
under this Agreement without the prior written consent of the Company.

13.                   Entire Agreement. Except as provided elsewhere herein,
this Agreement sets forth the entire agreement of the parties with respect to
its subject matter and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party to this
Agreement with respect to such subject matter.

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14.                   Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one instrument.
Facsimile execution and delivery of this Agreement is legal, valid and binding
for all purposes.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Independent Director
Agreement to be duly executed and signed as of the day and year first above
written.

  LONGHAI STEEL INC.       By: /s/ Chaojun Wang                            
Name: Chaojun Wang   Title: Chief Executive Officer       DIRECTOR       /s/
Marshall Toplansky                            Name: Marshall Toplansky      
Address:                                                                        
                                                                     
                                                                   

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