FORM OF PLACEMENT AGENCY AGREEMENT
 
October 31, 2007
 
Roth Capital Partners, LLC
24 Corporate Plaza
Newport Beach, CA 92660
 
Ladies and Gentlemen:
 
Introductory. Subject to the terms and conditions herein, China Precision Steel,
Inc., a Colorado corporation (the “Company”), hereby agrees to sell an aggregate
of up to 7,100,000 shares (the “Shares”) of common stock, US$0.001 par value per
share (the "Common Stock”), and an aggregate of up to 1,420,000 warrants (the
“Warrants” and, together with the Shares, the “Securities”) to purchase shares
of Common Stock, of the Company, directly to various investors (each an
“Investor” and, collectively, the “Investors”) through Roth Capital Partners,
LLC, as placement agent (the “Placement Agent”.)
 
The Company hereby confirms its agreement with the Placement Agent as follows:
 
Section 1. Agreement to Act as Placement Agent.
 
(a) On the basis of the representations, warranties and agreements of the
Company herein contained, and subject to all the terms and conditions of this
Agreement, the Placement Agent shall be the exclusive Placement Agent in
connection with the offering and sale by the Company of the Securities from the
Company's shelf registration statement on Form S-3 (File No. 333-143454), with
the terms of such offering (the “Offering”) to be subject to market conditions
and negotiations between the Company, the Placement Agent and the prospective
Investors. The Placement Agent shall act on a best efforts basis and does not
guarantee that it will be able to sell the Securities in the prospective
Offering. As compensation for services rendered, on the Closing Date (as defined
below), the Company shall pay to the Placement Agent an aggregate amount equal
to 7.0% of the gross proceeds received by the Company from the sale of such
Securities. The purchase price to the Investors for each Share is US$6.75 and
the exercise price to the Investors of each share of common stock issuable upon
exercise of the Warrants is US$8.45. The Placement Agent may retain other
brokers or dealers to act as sub-agents on its behalf in connection with the
Offering.
 
(b) Concurrently with the Closing (as defined below) for the Offering, the
Company will issue to the Placement Agent warrants to purchase Common Stock in
an amount and with such terms as set forth in Schedule I hereto.
 
(c) The term of the Placement Agent's exclusive engagement will be the earlier
of (i) the Closing Date and (ii) six (6) months from the date hereof (the
“Exclusive Term”); however, a party hereto may terminate the engagement with
respect to itself at any time upon 10 days written notice to the other parties.
Upon termination or expiration of this Agreement, the Placement Agent will be
entitled to collect all fees earned, and to be reimbursed for all reimbursable
expenses (as set forth in Section 6 below) incurred, through the date of
termination or expiration, as applicable. Notwithstanding the foregoing, if
during the 180 day period beginning on the date this Agreement is terminated or
otherwise expires, the Company issues and sells any securities of the Company,
the Company agrees to pay to the Placement Agent upon the closing of such
transaction or transactions a cash fee equal to the amount that would otherwise
have been payable to the Placement Agent had such transaction or transactions
occurred during the Exclusive Term. Nothing in this Agreement shall be construed
to limit the ability of the Placement Agent or its affiliates to pursue,
investigate, analyze, invest in, or engage in investment banking, financial
advisory or any other business relationship with entities or persons other than
the Company.

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Section 2. Representations, Warranties and Covenants
 
A.  Representations, Warranties and Covenants of the Company. The Company hereby
represents, warrants and covenants to the Placement Agent as of the date hereof,
and as of each Closing Date, as follows:
 
(a) Securities Law Filings. The Company meets the requirements for use of Form
S-3 under the Securities Act of 1933, as amended (the “Act”), and has prepared
and filed with the Securities and Exchange Commission (the “Commission”) a
registration statement on such Form S-3 (File No. 333-143454), which became
effective on July 16, 2007 at 5:00 P.M., for the registration under the Act of
the Securities. Such registration statement meets the requirements set forth in
Rule 415(a)(1)(x) under the Act and complies in all other material respects with
said Rule and the Act. The Company will file with the Commission pursuant to
Rule 424(b) under the Act a supplement to the form of prospectus included in
such registration statement relating to the offering of the Securities and the
plan of distribution thereof and the Company has advised the Placement Agent of
all further information (financial and other) with respect to the Company to be
set forth therein. Such registration statement, including the exhibits thereto,
as amended at the date of this Agreement, is hereinafter called the
“Registration Statement”; the prospectus, in the form in which it appears in the
Registration Statement, is hereinafter called the “Base Prospectus”; and each
supplemented form of prospectus, in the form in which it will be filed with the
Commission pursuant to Rule 424(b), is hereinafter called a “Prospectus
Supplement.” Any reference herein to the Registration Statement, the Base
Prospectus or a Prospectus Supplement shall be deemed to refer to and include
the documents, if any, which may be incorporated by reference in the
Registration Statement, the Base Prospectus and any Prospectus Supplement (the
“Incorporated Documents”) pursuant to Form S-3 and which were filed under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or before
the date of this Agreement, or the issue date of the Base Prospectus or any
Prospectus Supplement, as the case may be; and any reference herein to the terms
“amend,” “amendment” or “supplement” with respect to the Registration Statement,
the Base Prospectus or a Prospectus Supplement shall be deemed to refer to and
include the filing of any document under the Exchange Act after the date of this
Agreement, or the issue date of the Base Prospectus or any Prospectus
Supplement, as the case may be, deemed to be incorporated therein by reference.
All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” in the Registration
Statement or any Prospectus Supplement (and all other references of like import)
shall be deemed to mean and include all such financial statements and schedules
and other information which is or is deemed to be incorporated by reference in
the Registration Statement or such Prospectus Supplement, as the case may be.
 
(b) Effectiveness; No Stop Order. The Registration Statement has been declared
effective by the Commission under the Act and the Company has complied to the
Commission’s satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the
Registration Statement or the use of the Base Prospectus or any Prospectus
Supplement has been issued, and no proceeding for any such purpose is pending or
has been initiated or, to the Company’s knowledge, is threatened by the
Commission.
 
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(c) Compliance with Applicable Regulations. The Registration Statement (and any
further documents to be filed with the Commission) contains all exhibits and
schedules as required by the Act. Each of the Registration Statement and any
post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the Act
and the applicable rules and regulations of the Commission thereunder and did
not and, as amended or supplemented, if applicable, will 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 not misleading. Each
of the Base Prospectus and any Prospectus Supplement, as of its respective date
and at all subsequent times, complied and will comply in all material respects
with the Act and the applicable rules and regulations of the Commission
thereunder. Each of the Base Prospectus and any Prospectus Supplement, as
amended or supplemented, as of its date and at all subsequent times, did not and
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Incorporated
Documents, if any, when they became effective or were filed with the Commission,
as the case may be, conformed in all material respects to the requirements of
the Act and the Exchange Act, as applicable, and the applicable rules and
regulations of the Commission thereunder, and none of such documents contained
any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Base Prospectus or any
Prospectus Supplement, if any, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material respects
to the requirements of the Act and the Exchange Act, as applicable, and the
applicable rules and regulations of the Commission thereunder, and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. No post-effective
amendment to the Registration Statement reflecting any facts or events arising
after the effective date thereof which represent, individually or in the
aggregate, a fundamental change in the information set forth therein is required
to be filed with the Commission. This representation by the Company shall not
apply to statements in or omissions from the Registration Statement based upon
and in conformity with written information furnished to the Company by the
Placement Agent specifically for use therein, it being understood and agreed
that the only such information furnished by the Placement Agent consists of the
information described as such in Section 7(c) hereof.
 
(d) Disclosure Package. The term “Disclosure Package” shall mean (i) the Base
Prospectus, (ii) any preliminary Prospectus Supplement relating to the Offering
that is filed with the Commission and delivered to investors prior to the Sale
Time (as defined below), and (iii) any issuer free writing prospectus as defined
in Rule 433 of the Act (each, an “Issuer Free Writing Prospectus”), if any, that
the parties hereto shall hereafter expressly agree in writing to treat as part
of the Disclosure Package. As of 4:00 p.m. (Eastern Time) on the date of this
Agreement with respect to the Offering hereunder (the “Sale Time”) the
Disclosure Package did not contain any untrue statement of material fact or omit
to state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from the
Disclosure Package based upon and in conformity with written information
furnished to the Company by the Placement Agent specifically for use therein, it
being understood and agreed that the only such information furnished by or on
behalf of the Placement Agent consists of the information described as such in
Section 7(c) hereof.
 
(e) Reports and Documents, etc. There are no documents required to be filed with
the Commission in connection with the transactions contemplated hereby that
(i) have not been filed as required pursuant to the Act or (ii) will not be
filed within the requisite time period. There are no contracts or other
documents required to be described in the Base Prospectus or any Prospectus
Supplement, or to be filed as exhibits or schedules to the Registration
Statement, which have not been or will not be described or filed as required.
 
(f) Offering Materials Furnished to the Placement Agent. The Company has
delivered, or will as promptly as practicable deliver, to the Placement Agent
complete conformed copies of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and the Base Prospectus and each
Prospectus Supplement, as amended or supplemented, in such quantities and at
such places as the Placement Agent reasonably requests.
 
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(g) Distribution of Offering Materials. The Company is not an “Ineligible
Issuer,” as defined in Rule 405 of the Act. Subject to Section 4A(e) below, the
Company represents and warrants that it has not prepared or had prepared on its
behalf or used or referred to any Issuer Free Writing Prospectus in connection
with the Offering. Subject to Section 4A(e) below, the Company has not
distributed and the Company will not distribute, prior to the completion of the
distribution of the Securities, any offering material in connection with the
Offering other than the Base Prospectus, a Prospectus Supplement or the
Registration Statement and copies of the documents, if any, incorporated by
reference therein.
 
(h) The Placement Agency Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company
enforceable against the Company in accordance with its terms, except as rights
to indemnification and contribution hereunder may be limited by applicable law
and except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
 
(i) No Applicable Registration or Other Similar Rights. There are no persons
with registration, preemptive or other similar rights to have any securities
(whether equity, debt or any combination thereof) registered or qualified for
sale under the Registration Statement or a Prospectus Supplement or included in
the Offering contemplated by this Agreement, except for such rights as have been
duly waived or satisfied.
 
(j) No Material Adverse Change. Subsequent to the respective dates as of which
information is given in the Base Prospectus and in any Prospectus Supplement:
(i) there has been no material adverse change or effect, or any development that
could reasonably be expected to result in a material adverse change or effect,
in the condition, financial or other, or in the earnings, business, operations
or prospects, whether or not arising from transactions in the ordinary course of
business, of the Company and the Subsidiaries (as defined herein) taken as a
whole (any such change or effect, where the context so requires, is called a
“Material Adverse Change” or a “Material Adverse Effect”); (ii) the Company and
the Subsidiaries have not incurred any material liability or obligation,
indirect, direct or contingent, not in the ordinary course of business nor
entered into any material transaction or agreement not in the ordinary course of
business; and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of capital stock or
repurchase or redemption by the Company of any class of capital stock.
 
(k) Independent Accountants. To the best of the Company’s knowledge, Murrell,
Hall, McIntosh & Co., PLLP, who have expressed their opinion with respect to the
financial statements (which term as used in this Agreement includes the related
notes and schedules thereto) and supporting schedules filed with the Commission
as a part of the Registration Statement and included in or incorporated by
reference in the Disclosure Package or any Prospectus Supplement, is an
independent registered public accounting firm as required by the Act and the
Exchange Act.
 
(l) Preparation of the Financial Statements. The financial statements and
selected financial data filed with the Commission as a part of the Registration
Statement or included or incorporated by reference in the Disclosure Package or
any Prospectus Supplement present fairly the financial position of the Company
and its consolidated subsidiaries as of and at the dates indicated and the
results of its operations and cash flows for the periods specified therein. The
supporting exhibits and schedules included in the Registration Statement, if
any, present fairly the information required to be stated therein subject to the
normal year-end adjustments which are not expected to be material in amount.
Such financial statements and supporting schedules, if any, have been prepared
in conformity with generally accepted accounting principles as applied in the
United States (“U.S. GAAP”), as applicable, applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto, and comply in all material respects with the accounting
requirements of the Act, the Exchange Act and the applicable rules and
regulations of the Commission thereunder. No other financial statements or
supporting schedules or exhibits are required by the Act or the rules and
regulations of the Commission thereunder to be included in the Registration
Statement, the Base Prospectus or any Prospectus Supplement.
 
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(m) Critical Accounting Policies; Material Trends and Off Balance Sheet
Transactions. The section entitled “Management’s Discussion and Analysis of
Financial Condition and Results of Operation—Critical Accounting Policies” in
the Registration Statement or included or incorporated by reference in the
Disclosure Package or any Prospectus Supplement accurately and fully describes
(A) accounting policies which the Company believes are the most important in the
portrayal of the financial condition and results of operations of the Company
and its consolidated subsidiaries and which require management’s most difficult,
subjective or complex judgments (“critical accounting policies”); (B) judgments
and uncertainties affecting the application of critical accounting policies; and
(C) explanation of the likelihood that materially different amounts would be
reported under different conditions or using different assumptions. The
Company’s board of directors, senior management and audit committee have
reviewed and agreed with the selection, application and disclosure of critical
accounting policies. The section entitled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in the Registration Statement
or included or incorporated by reference in the Disclosure Package or any
Prospectus Supplement accurately and fully describes (X) all material trends,
demands, commitments, events, uncertainties and risks that the Company believes
would materially affect liquidity and are reasonably likely to occur; and (Y)
all off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources of the Company and its Subsidiaries taken as a
whole. Except as otherwise disclosed in the Registration Statement, Disclosure
Package or any Prospectus Supplement, there are no outstanding guarantees or
other contingent obligations of the Company or any subsidiary that could
reasonably be expected to have a Material Adverse Effect.
 
(n) Incorporation and Good Standing. Each of the Company and its subsidiaries
set forth in Exhibit A attached hereto (the “Subsidiaries”) has been duly
organized and is validly existing and, as applicable, is a corporation in good
standing under the laws of its jurisdiction of incorporation with full corporate
power and authority to own its properties and other assets and conduct its
business as described in the Disclosure Package and any Prospectus Supplement,
and is duly qualified or licensed to do business as a foreign corporation and,
as applicable, is in good standing under the laws of each jurisdiction which
requires such qualification or license, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect.
 
(o) Capitalization and Other Capital Stock Matters. The authorized, issued and
outstanding capital stock of the Company, and the outstanding options and
warrants, are as described in the Disclosure Package and any Prospectus
Supplement (other than for issuances after the dates thereof, if any, pursuant
to employee benefit plans, or upon exercise of outstanding options or warrants,
described in the Disclosure Package and any Prospectus Supplement), as the case
may be. The Common Stock and warrants, including the Securities, conforms in all
material respects to the description thereof contained in the Disclosure Package
and any Prospectus Supplement. As of the effective date of the Registration
Statement, there were 38,796,288 shares of Common Stock outstanding. Since the
effective date of the Registration Statement, the Company has not issued any
securities other than Common Stock of the Company pursuant to (i) Section 5(a)
of the Stock Purchase Agreement, dated as of February 16, 2007 (the "Make Good
Shares"), and (ii) the exercise of previously outstanding options and warrants,
in each case as disclosed in the Disclosure Package and any Prospectus
Supplement. All the issued and outstanding shares of the capital stock of the
Company and the Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance, in all material
respects, with all applicable laws. Except as set forth in the Disclosure
Package and any Prospectus Supplement, all of the outstanding shares of capital
stock of the Subsidiaries are owned, directly or indirectly, by the Company, and
such shares are held free and clear of any security on interest mortgage,
pledge, lien, encumbrance or claim. None of the outstanding shares of capital
stock of the Company or any Subsidiary were issued in violation of any
preemptive rights, rights of first refusal or other similar rights to subscribe
for or purchase securities. There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company or any Subsidiary other than
those described in the Disclosure Package and any Prospectus Supplement. The
description of the Company’s stock option, stock bonus and other stock plans or
arrangements, and the options, warrants or other rights granted thereunder, set
forth in the Disclosure Package and any Prospectus Supplement accurately and
fairly presents the information required by the Act to be shown with respect to
such plans, arrangements, options and rights. Except as set forth in the
Disclosure Package or in any Prospectus Supplement, the Company does not have
any subsidiaries or own directly or indirectly any of the capital stock or other
equity or long-term debt securities or have any equity interest in any other
person.
 
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(p) Stock Exchange Listing. The Common Stock (including the Shares and the
shares of common stock issuable upon exercise of the Warrants) is registered
under the Exchange Act and is listed on the NASDAQ Capital Market (“NASDAQ”).
The Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting or suspending from trading the Common Stock on NASDAQ, nor has the
Company received any information suggesting that the Commission or NASDAQ is
contemplating terminating or suspending such registration or listing.
 
(q) No Consents, Approvals or Authorizations Required. No consent, approval,
authorization, filing with or order of any court or governmental agency or
regulatory body or vote of the Company’s stockholders is required in connection
with the performance by the Company of its obligations under this Agreement or
the Offering contemplated hereby and by the Disclosure Package and any
Prospectus Supplement, except such as have been obtained or made by the Company
under the Act or the rules and regulations promulgated thereunder and are in
full force and effect, and such as may be required under applicable state
securities or blue sky laws.
 
(r) Non-Contravention of Existing Instruments and Agreements. Neither the issue
and sale of the Securities nor the performance by the Company of its obligations
under this Agreement nor the fulfillment of the terms hereof will conflict with,
result in a breach or violation of, or the loss of any benefit under, or give
rise to a right of acceleration or any other right, or the imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to: (i) the charter or by-laws of the Company or any
Subsidiary; (ii) the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company or any Subsidiary is a party or is
bound or to which any of its property is subject and which conflict, breach,
violation, loss of benefit, acceleration, imposition of lien, charge or
encumbrance is reasonably likely to have a Material Adverse Effect; or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to the
Company or any Subsidiary, as the case may be, of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such Subsidiary, as the case may be, or any of
its property.

 
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(s) No Defaults or Violations. None of the Company or any Subsidiary is in
violation or default of: (i) any provision of its charter or by-laws; (ii) the
terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or by which it is bound or to which any of its
property is subject; or (iii) any foreign, federal, state or local statute, law
or rule applicable to the Company or any Subsidiary, as the case may be, or any
regulation, judgment, order or decree of any court, governmental body, or agency
having jurisdiction over the Company or such Subsidiary, as the case may be, or
any of its property, as applicable, except in case of clause (ii) any such
violation or default which would not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Change not specifically disclosed in
the Disclosure Package or any Prospectus Supplement.
 
(t) No Actions, Suits or Proceedings. No action, suit or proceeding by or before
any foreign, federal, state or local court or governmental agency, authority or
body or any arbitrator involving the Company or any Subsidiary, as the case may
be, or any of its property is pending or, to the best knowledge of the Company,
threatened that if adversely determined: (i) could reasonably be expected to
have a Material Adverse Effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby; or (ii) could
reasonably be expected to result in a Material Adverse Change.
 
(u) All Necessary Permits, Etc. Each of the Company and its Subsidiaries
possesses such valid and current certificates, authorizations and permits issued
by the appropriate foreign, federal, state or local regulatory agencies or
bodies necessary to conduct its business as currently conducted, except to the
extent that the failure to obtain such certificates, authorizations or permits
would not have a Material Adverse Effect, and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could reasonably be expected to result in a
Material Adverse Change.
 
(v) Title to Properties. Each of the Company and its Subsidiaries has good and
marketable title to all real and personal property and assets reflected as owned
by it in the financial statements referred to in Section 2(l) above (or
elsewhere in the Disclosure Package and any Prospectus Supplement) and which are
material to the business of the Company or such Subsidiary, in each case free
and clear of any security interests, mortgages, liens, encumbrances, claims and
other defects, except such as do not materially and adversely affect the value
of such property and do not materially interfere with the use made or proposed
to be made of such property and except as otherwise described in the
Registration Statement and the Disclosure Package. The real property,
improvements, equipment and personal property held under lease by each of the
Company and its Subsidiaries are held under valid and enforceable leases, with
such exceptions as are not material, and do not materially interfere with the
use made or proposed to be made of such real property, improvements, equipment
or personal property. The Company and its Subsidiaries own or have valid rights
to use the intellectual property assets necessary to conduct the business
described in the Disclosure Package and any Prospectus Supplement, and no
material right is expected to expire, terminate or be disposed of in the
foreseeable future, except as disclosed therein. Neither the Company nor any
Subsidiary has received any notice of, and neither the Company nor any
Subsidiary has knowledge of, any infringement of or conflict with the asserted
intellectual property rights of others, except where the loss of any such right
would not be reasonably likely to have a Material Adverse Effect. The Company is
not a party to or bound by any options, licenses or agreements with respect to
the intellectual property rights of any other person or entity that are required
to be described in the Disclosure Package and any Prospectus Supplement and are
not described in all material respects.  None of the technology employed by the
Company has been obtained or is being used by the Company in violation of any
contractual obligation binding on the Company or, to the Company’s knowledge,
any of its officers, directors or employees or otherwise in violation of the
rights of any persons
 
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(w) Tax Law Compliance. Each of the Company its Subsidiaries has filed all
necessary foreign, federal, state and local income and franchise Tax returns,
except to the extent that the failure to file such Tax returns would not have a
Material Adverse Effect, and have paid all Taxes required to be paid by any of
them and, if due and payable, any related or similar assessment, fine or penalty
levied against any of them. The Company has made adequate charges, accruals and
reserves in the applicable financial statements referred to in Section 2(l)
above in respect of all federal, state and foreign income and franchise taxes
for all periods as to which the Tax liability of the Company or any Subsidiary
has not been finally determined. Neither the Company nor any Subsidiary is aware
of any Tax deficiency that has been or might reasonably be asserted or
threatened against it that could reasonably be expected to result in a Material
Adverse Change. For purposes of this Agreement, the terms “Tax” and “Taxes” mean
all federal, state, local and foreign taxes, and any other assessments of a
similar nature (whether imposed directly or through withholding), including,
without limitation, any interest, additions to tax, or penalties applicable
thereto. All such Tax returns are true, complete and correct in all material
respects.
 
(x) No Transfer Taxes or Other Fees Payable. There are no transfer Taxes or
other similar fees or charges under United States law or the laws of any state
or any political subdivision thereof, required to be paid by the Company in
connection with the execution and delivery of this Agreement or the sale by the
Company of the Securities. No stamp or other issuance or transfer Taxes or
duties and no capital gains, income, withholding or other Taxes are payable by
or on behalf of the Placement Agent to the United States or the Peoples Republic
of China (the "PRC") or any political subdivision or taxing authority thereof or
therein in connection with (A) the issuance of the Securities by the Company,
and (B) the consummation by the Company of any other transaction contemplated in
this Agreement or the performance by the Company of its obligations under this
Agreement.
 
(y) Disclosure Controls and Procedures.  The Company has established and
maintains disclosure controls and procedures (as such term is defined in Rule
13a-15(e) under the Exchange Act), which (i) are designed to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company’s principal executive officer and its
principal financial officer by others within those entities, particularly during
the periods in which the periodic reports required under the Exchange Act are
being prepared, (ii) will be evaluated for effectiveness as of the end of each
fiscal quarter and fiscal year of the Company and (iii) are effective in all
material respects to perform the functions for which they were established. The
Company is not aware of (A) any significant deficiency in the design or
operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize and report financial data or any material
weaknesses in internal controls, or (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company’s internal controls.
 
(z) Accounting Controls. Each of the Company and its Subsidiaries (i) makes and
keeps accurate books and records, and (ii) maintains a system of accounting
controls sufficient to provide reasonable assurances that: (A) transactions are
executed in accordance with management’s general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with U.S. GAAP, the Act and the Exchange Act and the
rules and regulations of the Commission thereunder, and to maintain
accountability for assets; (C) access to assets is permitted only in accordance
with management’s general or specific authorization; and (D) recorded assets are
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
 
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(aa) Conflicts of Interest. Except as disclosed in the Registration Statement
and the Disclosure Package, none of the directors or officers of the Company is
a shareholder, officer or director in any business similar to or in competition
with the business of the Company, nor are any of the directors or their
respective associates interested, directly or indirectly, in any assets which
have since the date two years immediately preceding the date of the Registration
Statement been acquired or disposed of by or leased to the Company.
 
(bb) Company not an “Investment Company.” The Company is not, and after giving
effect to the offer and sale of the Securities and the application of the
proceeds thereof as described in the Disclosure Package or any Prospectus
Supplement, will not be, required to register as an “investment company” or an
entity “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
 
(cc) Insurance. Each of the Company and its Subsidiaries is insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are prudent and
customary in the business in which it is engaged, including directors and
officers liability. Neither the Company nor any Subsidiary has any reason to
believe that it will not be able: (i) to renew its existing insurance coverage
as and when such policies expire; or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct its business
as now conducted. Neither the Company nor any Subsidiary has been denied any
insurance coverage which it has sought or for which it has applied, such as
would have a Material Adverse Effect.
 
(dd) Labor Matters. No material labor disturbance by the employees of the
Company or any Subsidiary exists or, to the knowledge of the Company or any
Subsidiary, is threatened or imminent, and neither the Company nor any
Subsidiary is aware of any existing, threatened or imminent labor disturbance by
the employees of any of its principal suppliers, manufacturers, contractors or
customers that could reasonably be expected to result in a Material Adverse
Effect.
 
(ee) No Price Stabilization or Manipulation. The Company has not taken and will
not take, directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the
Securities. 
 
(ff) Prior Stock Issuances. All offers and sales of capital stock of the Company
prior to the date hereof were at all relevant times duly registered or exempt
from the registration requirements of the Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or blue sky laws.
 
(gg) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any Subsidiary or any other
person required by the Act to be described in the Base Prospectus or any
Prospectus Supplement, which have not been described, or incorporated by
reference, therein as required.
 
(hh)  Inter-company Indebtedness. Except as otherwise disclosed in the
Registration Statement and the Disclosure Package, (A) no indebtedness (actual
or contingent) and no contract or arrangement is outstanding between the Company
and any of its subsidiaries and (B) no indebtedness (actual or contingent) and
no material contract or arrangement is outstanding between (i) the Company or
any of its subsidiaries (on the one hand), and (ii) any significant shareholder
of the Company, any director or officer of the Company or related party of the
Company or any of their associates (on the other hand).
 
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(ii) Exchange Act Reports Filed. The Company has timely filed all reports
required of it to be filed pursuant to the Act and the Exchange Act and has
filed all such reports in the manner prescribed thereby.
 
(jj) Exhibits. Each agreement filed as an exhibit to the Registration Statement
or described in the Disclosure Package and any Prospectus Supplement, including
all documents, if any, incorporated by reference therein, is in full force and
effect and is valid, binding and enforceable by the Company or a Subsidiary, as
the case may be, in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors’ rights generally. Neither the Company nor any Subsidiary,
as the case may be, nor, to the knowledge of the Company or any such Subsidiary,
any other party, is in default in the observance or performance of any term or
obligation to be performed by it under any such agreement, and no event has
occurred that with notice or lapse of time or both would constitute such a
default, in any such case where such default or event would have a Material
Adverse Effect.
 
(kk) Blue Sky. The Securities have been or will be qualified for sale under the
securities laws of such jurisdictions (United States and foreign) as the
Placement Agent determines, or are or will be exempt from the qualification and
broker-dealer requirements of such jurisdictions.
 
(ll) No Unlawful Contributions or Other Payments.  Neither the Company nor any
of its Subsidiaries nor any employee or agent of the Company or any Subsidiary,
has made any contribution or other payment to any official of, or candidate for,
any federal, state or foreign office in violation of any law or of a character
required to be disclosed in the Disclosure Package or any Prospectus Supplement.
 
(mm) Compliance with OFAC. None of the Company or any of its Subsidiaries does
any business with governments, entities or persons subject to sanctions
administered by the Office of Foreign Assets Control of the U.S. Department of
the Treasury or any enabling legislation or executive order relating thereto
(the “U.S. Sanctions Laws”), or any person or entity in those countries or with
those persons, or performs contracts in support of projects in or for the
benefit of those countries or those persons; neither the entry into this
Agreement nor the performance of any transactions contemplated herein would
cause the Company or any of its Subsidiaries, the Placement Agent or any of its
affiliates (as defined in Rule 501(b) of Regulation D under the U.S. Securities
Act, an “Affiliate”), or any of the Company’s or the Placement Agent's advisors
to violate any U.S. Sanctions Laws applicable to such person; the Company and
each of its Subsidiaries will not use the proceeds of the offering of the
Securities, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for the purpose of
financing an activity that would cause the Company or any of its Subsidiaries,
the Placement Agent or any of their Affiliates, or any of the Company’s or the
Placement Agent's advisors to violate any U.S. Sanctions Laws applicable to such
person.
 
(nn) Compliance with Money Laundering Rules. The business and operations of the
Company and each of its Subsidiaries are being, and have been since December 28,
2006, conducted in compliance in all material respects with, and are not in
default in any material respect under any applicable statutes, laws, rules,
regulations, judgments, orders or decrees of and commitments to any United
States, PRC or other foreign governmental authority relating to money
laundering, bank secrecy, anti-bribery and other corrupt practices. There is no
pending or threatened charge by any United States, PRC or other foreign
governmental authority that the Company or any of its Subsidiaries has
materially violated any such law, rule, regulation, judgment, order, decree or
commitment, nor is there any pending or threatened investigation by any
Governmental Authority with respect to possible material violations of any such
law, rule, regulation, judgment, order, decree or commitment, except for such
violations which would not, individually or in the aggregate, have a Material
Adverse Effect.

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(oo) Compliance with Environmental Laws.  Except as would not, individually or
in the aggregate, result in a Material Adverse Change (i) neither the Company
nor any of its Subsidiaries is in violation of any federal, state, local or
foreign law or regulation relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum and petroleum products
(collectively, “Materials of Environmental Concern”), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environment Concern (collectively,
“Environmental Laws”), which violation includes, but is not limited to,
noncompliance with any permits or other governmental authorizations required for
the operation of the business of the Company or its Subsidiaries under
applicable Environmental Laws, or noncompliance with the terms and conditions
thereof, nor has the Company or any of its Subsidiaries received any written
communication, whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company or any of its Subsidiaries is in
violation of any Environmental Law; (ii) there is no claim, action or cause of
action filed with a court or governmental authority, no investigation with
respect to which the Company has received written notice, and no written notice
by any person or entity alleging potential liability for investigatory costs,
cleanup costs, governmental responses costs, natural resources damages, property
damages, personal injuries, attorneys’ fees or penalties arising out of, based
on or resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated by
the Company or any of its Subsidiaries, now or in the past (collectively,
“Environmental Claims”), pending or, to the best of the Company’s knowledge,
threatened against the Company or any of its Subsidiaries or any person or
entity whose liability for any Environmental Claim the Company or any of
its Subsidiaries has retained or assumed either contractually or by operation of
law; and (iii) to the best of the Company’s knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could result
in a violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its Subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or
any of its Subsidiaries has retained or assumed either contractually or by
operation of law.
 
(pp) ERISA Compliance.  The Company and its Subsidiaries and any “employee
benefit plan” (as defined under the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations thereunder
(collectively, “ERISA”)) established or maintained by the Company,
its Subsidiaries or their “ERISA Affiliates” (as defined below) are in
compliance in all material respects with ERISA.  “ERISA Affiliate” means, with
respect to the Company or a Subsidiary, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the “Code”) of which the Company or such Subsidiary is a member.  No
“reportable event” (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any “employee benefit plan” established or
maintained by the Company, its Subsidiaries or any of their ERISA Affiliates. 
No “employee benefit plan” established or maintained by the Company,
its Subsidiaries or any of their ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of unfunded benefit liabilities”
(as defined under ERISA).  Neither the Company, its Subsidiaries nor any of
their ERISA Affiliates has incurred or reasonably expects to incur any liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the
Code.  Each “employee benefit plan” established or maintained by the Company,
its Subsidiaries or any of their ERISA Affiliates that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause the loss of
such qualification.
 

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(qq) Compliance with Sarbanes-Oxley Act of 2002.  The Company and, to the best
of its knowledge, its officers and directors are in compliance with all
applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”) that
are effective and are actively taking steps to ensure that they will be in
compliance with other applicable provisions of the Sarbanes-Oxley Act upon the
effectiveness of such provisions.
 
(rr) No Contracts Relating to the Sale of Securities. Except as disclosed in the
Registration Statement and the Disclosure Package, there are no contracts,
agreements or understandings between the Company and any person that would give
rise to a valid claim against the Company or any Placement Agent for a brokerage
commission, finder’s fee or other like payment in connection with the sale of
the Securities.
 
Any certificate signed by an officer of the Company and delivered to
the Placement Agent or to counsel for the Placement Agent shall be deemed to be
a representation and warranty by the Company to the Placement Agent as to the
matters set forth therein.
 
The Company acknowledges that the Placement Agent will rely upon the accuracy
and truthfulness of the foregoing representations and warranties and hereby
consents to such reliance. 
 
Section 3. Delivery and Payment.
 
Subject to the terms and conditions hereof, payment of the purchase price for,
and delivery of, the Securities shall be made at one or more closings (each a
“Closing” and the date on which each Closing occurs, a “Closing Date”) at the
offices of Roth Capital Partners, LLC, 24 Corporate Plaza, Newport Beach, CA
92660 (or at such other place as shall be agreed upon by the Placement Agent and
the Company), the first such Closing to take place at 10:00 A.M., New York City
time, on November 6, 2007 (unless another time shall be agreed to by the
Placement Agent and the Company). Subject to the terms and conditions hereof, at
each Closing payment of the purchase price for the Shares sold on such Closing
Date shall be made by Federal Funds wire transfer, against delivery of such
Securities (through the facilities of The Depository Trust Company), and such
Securities shall be registered in such name or names and shall be in such
denominations, as the Placement Agent may request at least one business day
before the time of purchase (as defined below). For the avoidance of doubt, each
of the Company and the Placement Agent agree for the benefit of the Investors
that no instructions shall be provided to the Escrow Agent, as defined in the
Escrow Agreement, dated October 29, 2007 (the “Escrow Agreement”), for the
release of funds from the Escrow Account (as defined in the Escrow Agreement)
until confirmation has been received from the Company’s registrar and transfer
agent that the Securities have been delivered in accordance with the Placement
Agent’s instructions. Payment of the purchase price for the Shares shall be made
at the time of purchase by the Investors to the Escrow Account set forth in the
subscription agreement executed by each Investor (the “Subscription Agreement”),
in the form attached hereto as Exhibit B. The time at which such payment and
delivery are to be made is hereinafter sometimes called “the time of purchase.”
Physical delivery of the Securities shall be made at the time of purchase in
such names and in such denominations as is set forth in the applicable
Subscription Agreement.
 
Deliveries of the documents described in Section 4 hereof with respect to the
purchase of the Securities shall be made at the offices of DLA Piper US LLP,
2415 East Camelback Road, Suite 700, Phoenix, Arizona 85016-4245 on each Closing
Date. All actions taken at a Closing shall be deemed to have occurred
simultaneously.
 
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Section 4. Covenants and Agreements of the Company.
 
A.  Covenants and Agreements of the Company. The Company further covenants and
agrees with the Placement Agent as follows:
 
(a) Registration Statement Matters. The Company will advise the Placement Agent
promptly after it receives notice thereof of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
any Prospectus Supplement or any amended Prospectus Supplement has been filed
and will furnish the Placement Agent with copies thereof. The Company will file
promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 14 or
15(d) of the Exchange Act subsequent to the date of any Prospectus Supplement
and for so long as the delivery of a prospectus is required in connection with
the Offering. The Company will advise the Placement Agent, promptly after it
receives notice thereof (i) of any request by the Commission to amend the
Registration Statement or to amend or supplement any Prospectus Supplement or
for additional information, and (ii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or any order directed at any Incorporated
Document, if any, or any amendment or supplement thereto or any order preventing
or suspending the use of the Base Prospectus or any Prospectus Supplement or any
amendment or supplement thereto or any post-effective amendment to the
Registration Statement, of the suspension of the qualification of the Securities
for offering or sale in any jurisdiction, of the institution or threatened
institution of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or a
Prospectus Supplement or for additional information. The Company shall use its
best efforts to prevent the issuance of any such stop order or prevention or
suspension of such use.  If the Commission shall enter any such stop order or
order or notice of prevention or suspension at any time, the Company will use
its best efforts to obtain the lifting of such order at the earliest possible
moment, or will file a new registration statement and use its best efforts to
have such new registration statement declared effective as soon as practicable. 
Additionally, the Company agrees that it shall comply with the provisions of
Rules 424(b), 430A, 430B and 430C, as applicable, under the Act, including with
respect to the timely filing of documents thereunder, and will use its
reasonable efforts to confirm that any filings made by the Company under such
Rule 424(b) are received in a timely manner by the Commission.
 
(b) Blue Sky Compliance. The Company will cooperate with the Placement Agent and
the Investors in endeavoring to qualify the Securities for sale under the
securities laws of such jurisdictions (United States and foreign) as the
Placement Agent and the Investors may reasonably request and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent, and provided further that the Company shall not be required to
produce any new disclosure document other than a Prospectus Supplement. The
Company will, from time to time, prepare and file such statements, reports and
other documents as are or may be required to continue such qualifications in
effect for so long a period as the Placement Agent may reasonably request for
distribution of the Securities. The Company will advise the Placement Agent
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Securities for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.
 

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(c) Amendments and Supplements to a Prospectus Supplement and Other Matters. The
Company will comply with the Act and the Exchange Act, and the rules and
regulations of the Commission thereunder, so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement, the Disclosure
Package and any Prospectus Supplement. If during the period in which a
prospectus is required by law to be delivered in connection with the
distribution of Securities contemplated by the Disclosure Package or any
Prospectus Supplement (the “Prospectus Delivery Period”), any event shall occur
as a result of which, in the judgment of the Company or in the opinion of the
Placement Agent or counsel for the Placement Agent, it becomes necessary to
amend or supplement the Disclosure Package or any Prospectus Supplement in order
to make the statements therein, in the light of the circumstances under which
they were made, as the case may be, not misleading, or if it is necessary at any
time to amend or supplement the Disclosure Package or any Prospectus Supplement
or to file under the Exchange Act any Incorporated Document to comply with any
law, the Company will promptly prepare and file with the Commission, and furnish
at its own expense to the Placement Agent and to dealers, an appropriate
amendment to the Registration Statement or supplement to the Registration
Statement, the Disclosure Package or any Prospectus Supplement that is necessary
in order to make the statements in the Disclosure Package and any Prospectus
Supplement as so amended or supplemented, in the light of the circumstances
under which they were made, as the case may be, not misleading, or so that the
Registration Statement, the Disclosure Package or any Prospectus Supplement, as
so amended or supplemented, will comply with law. Before amending the
Registration Statement or supplementing the Disclosure Package or any Prospectus
Supplement in connection with the Offering, the Company will furnish the
Placement Agent with a copy of such proposed amendment or supplement and will
not file any such amendment or supplement to which the Placement Agent
reasonably objects.
 
(d) Copies of any Amendments and Supplements to a Prospectus Supplement. The
Company will furnish the Placement Agent, without charge, during the period
beginning on the date hereof and ending on the later of the last Closing Date of
the Offering or the last date of the Prospectus Delivery Period, as many copies
of the Disclosure Package and any Prospectus Supplement and any amendments and
supplements thereto (including any Incorporated Documents, if any) as the
Placement Agent may reasonably request.
 
(e) Free Writing Prospectus. The Company covenants that it will not, unless it
obtains the prior written consent of the Placement Agent, make any offer
relating to the Securities that would constitute an Issuer Free Writing
Prospectus or that would otherwise constitute a “free writing prospectus” (as
defined in Rule 405 of the Act) required to be filed by the Company with the
Commission or retained by the Company under Rule 433 of the Act. In the event
that the Placement Agent expressly consents in writing to any such free writing
prospectus (a “Permitted Free Writing Prospectus”), the Company covenants that
it shall (i) treat each Permitted Free Writing Prospectus as an Issuer Free
Writing Prospectus, and (ii) comply with the requirements of Rule 164 and 433 of
the Act applicable to such Permitted Free Writing Prospectus, including in
respect of timely filing with the Commission, legending and record keeping.
 
(f) Transfer Agent. The Company will maintain, at its expense, a registrar and
transfer agent for the Common Stock.
 
(g) Earnings Statement. As soon as practicable and in accordance with applicable
requirements under the Act, but in any event not later than 18 months after the
last Closing Date, the Company will make generally available to its security
holders and to the Placement Agent an earnings statement, covering a period of
at least 12 consecutive months beginning after the last Closing Date, that
satisfies the provisions of Section 11(a) and Rule 158 under the Act.
 
(h) Periodic Reporting Obligations. During the Prospectus Delivery Period, the
Company will duly file, on a timely basis, with the Commission and NASDAQ all
reports and documents required to be filed under the Exchange Act within the
time periods and in the manner required by the Exchange Act.
 
(i) Additional Documents. The Company will enter into any subscription, purchase
or other customary agreements as the Placement Agent or the Investors deem
necessary or appropriate to consummate the Offering, all of which will be in
form and substance reasonably acceptable to the Placement Agent and the
Investors. The Company agrees that the Placement Agent may rely upon, and each
is a third party beneficiary of, the representations and warranties, and
applicable covenants, set forth in any such purchase, subscription or other
agreement with Investors in the Offering.
 
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(j) No Manipulation of Price.  The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
 
(k) Acknowledgment. The Company acknowledges that any advice given by the
Placement Agent to the Company is solely for the benefit and use of the Board of
Directors of the Company and may not be used, reproduced, disseminated, quoted
or referred to, without the Placement Agent's prior written consent.
 
Section 5. Conditions of the Obligations of the Placement Agent.
 
The obligations of the Placement Agent hereunder shall be subject to the
accuracy of the representations and warranties on the part of the Company set
forth in Section 2 hereof, in each case as of the date hereof and as of each
Closing Date as though then made, to the timely performance by each of the
Company of its covenants and other obligations hereunder on and as of such
dates, and to each of the following additional conditions:
 
(a) Accountants’ Comfort Letter. On the date hereof, the Placement Agent shall
have received, and the Company shall have caused to be delivered to the
Placement Agent, a letter from Murrell, Hall, McIntosh & Co., PLLP (the
independent registered public accounting firm of the Company), addressed to the
Placement Agent, dated as of the date hereof, in form and substance satisfactory
to the Placement Agent. The letter shall not disclose any change in the
condition (financial or other), earnings, operations, business or prospects of
the Company from that set forth in the Disclosure Package or the applicable
Prospectus Supplement, which, in the Placement Agent's sole judgment, is
material and adverse and that makes it, in the Placement Agent's sole judgment,
impracticable or inadvisable to proceed with the Offering of the Securities as
contemplated by such Prospectus Supplement.
 
(b) Compliance with Registration Requirements; No Stop Order; No Objection from
the NASD. Each Prospectus Supplement (in accordance with Rule 424(b)) and “free
writing prospectus” (as defined in Rule 405 of the Act), if any, shall have been
duly filed with the Commission, as appropriate; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; no order preventing or suspending the use of any
Prospectus Supplement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; no order having the
effect of ceasing or suspending the distribution of the Securities or any other
securities of the Company shall have been issued by any securities commission,
securities regulatory authority or stock exchange and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company, contemplated by any securities commission, securities regulatory
authority or stock exchange; all requests for additional information on the part
of the Commission shall have been complied with; and the NASD shall have raised
no objection to the fairness and reasonableness of the placement terms and
arrangements.
 
(c) Corporate Proceedings. All corporate proceedings and other legal matters in
connection with this Agreement, the Registration Statement and each Prospectus
Supplement, and the registration, sale and delivery of the Securities, shall
have been completed or resolved in a manner reasonably satisfactory to the
Placement Agent's counsel, and such counsel shall have been furnished with such
papers and information as it may reasonably have requested to enable such
counsel to pass upon the matters referred to in this Section 5.
 
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(d) No Material Adverse Change. Subsequent to the execution and delivery of this
Agreement and prior to each Closing Date, in the Placement Agent's sole judgment
after consultation with the Company, there shall not have occurred any Material
Adverse Change or Material Adverse Effect.
 
(e) Opinion of Counsel for the Company. The Placement Agent shall have received
on each Closing Date the favorable opinion of legal counsel to the Company,
dated as of such Closing Date, addressed to the Placement Agent in form and
substance satisfactory to the Placement Agent.
 
(f) Officers’ Certificate. The Placement Agent shall have received on each
Closing Date a certificate of the Company, dated as of such Closing Date, signed
by the Chief Executive Officer and Chief Financial Officer of the Company, to
the effect that, and the Placement Agent shall be satisfied that, the signers of
such certificate have reviewed the Registration Statement, the Disclosure
Package, any Prospectus Supplement, and this Agreement and to the further effect
that:
 
(i) The representations and warranties of the Company in this Agreement are true
and correct, as if made on and as of such Closing Date, and the Company has
complied with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to such Closing Date;
 
(ii) No stop order suspending the effectiveness of the Registration Statement or
the use of the Base Prospectus or any Prospectus Supplement has been issued and
no proceedings for that purpose have been instituted or are pending or, to the
Company’s knowledge, threatened under the Act; no order having the effect of
ceasing or suspending the distribution of the Securities or any other securities
of the Company has been issued by any securities commission, securities
regulatory authority or stock exchange in the United States and no proceedings
for that purpose have been instituted or are pending or, to the knowledge of the
Company, contemplated by any securities commission, securities regulatory
authority or stock exchange in the United States;
 
(iii) When the Registration Statement became effective, at the Sale Time, and at
all times subsequent thereto up to the delivery of such certificate, the
Registration Statement, the Disclosure Package and the Incorporated Documents,
if any, when such documents became effective or were filed with the Commission,
contained all material information required to be included therein by the Act
and the Exchange Act and the applicable rules and regulations of the Commission
thereunder, as the case may be, and in all material respects conformed to the
requirements of the Act and the Exchange Act and the applicable rules and
regulations of the Commission thereunder, as the case may be, and the
Registration Statement, the Disclosure Package and the Incorporated Documents,
if any, did not and do not include 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 the light of the circumstances under which they were
made, not misleading (provided, however, that the preceding representations and
warranties contained in this paragraph (iii) shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by the Placement Agent expressly for use therein) and,
since the effective date of the Registration Statement, there has occurred no
event required by the Act and the rules and regulations of the Commission
thereunder to be set forth in the Disclosure Package which has not been so set
forth; and
 
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(iv) Subsequent to the respective dates as of which information is given in the
Registration Statement, the Disclosure Package and any Prospectus Supplement,
there has not been: (a) any Material Adverse Change; (b) any transaction that is
material to the Company and the Subsidiaries taken as a whole, except
transactions entered into in the ordinary course of business; (c) any
obligation, direct or contingent, that is material to the Company and the
Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except
obligations incurred in the ordinary course of business; (d) any material change
in the capital stock (except changes thereto resulting from the exercise of
outstanding stock options or warrants) or outstanding indebtedness of the
Company or any Subsidiary; (e) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company; or (f) any loss or
damage (whether or not insured) to the property of the Company or any Subsidiary
which has been sustained or will have been sustained which has a Material
Adverse Effect.
 
(g) Bring-down Comfort Letter.  On each Closing Date, the Placement Agent shall
have received from Murrell, Hall, McIntosh & Co., PLLP, or such other
independent registered public accounting firm of the Company, a letter dated as
of such Closing Date, in form and substance satisfactory to the Placement Agent,
to the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (a) of this Section 5, except that the specified date
referred to therein for the carrying out of procedures shall be no more than
three business days prior to such Closing Date.
 
(h) Stock Exchange Listing. The Common Stock shall be registered under the
Exchange Act and shall be listed on NASDAQ, and the Company shall not have taken
any action designed to terminate, or likely to have the effect of
terminating, the registration of the Common Stock under the Exchange Act or
delisting or suspending from trading the Common Stock from NASDAQ, nor shall the
Company have received any information suggesting that the Commission or the NASD
is contemplating terminating such registration or listing.
 
(i) Compliance with Prospectus Delivery Requirements. The Company shall have
complied with the provisions of Section 4A(c) and Section 4A(d) with respect to
the furnishing of the documents referred to therein.
 
(j) Additional Documents. On or before each Closing Date, the Placement Agent
and counsel for the Placement Agent shall have received such information and
documents as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Securities as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.
 
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Placement
Agent by notice to the Company at any time on or prior to a Closing Date, which
termination shall be without liability on the part of any party to any other
party, except that Section 6 (Payment of Expenses), Section 7 (Indemnification
and Contribution) and Section 8 (Representations and Indemnities to Survive
Delivery) shall at all times be effective and shall survive such termination.
 
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Section 6. Payment of Expenses.
 
The Company agrees to pay all costs, fees and expenses incurred by the Company
in connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including, without
limitation: (i) all expenses incident to the issuance, delivery and
qualification of the Securities (including all printing and engraving costs);
(ii) all fees and expenses of the registrar and transfer agent of the Common
Stock; (iii) all necessary issue, transfer and other stamp taxes in connection
with the issuance and sale of the Securities; (iv) all fees and expenses of the
Company’s counsel, independent public or certified public accountants and other
advisors; (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), the Base Prospectus and each Prospectus Supplement,
and all amendments and supplements thereto, and this Agreement; (vi) all filing
fees, reasonable attorneys’ fees and expenses incurred by the Company or the
Placement Agent in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Securities for offer and sale under the state securities or blue sky laws or the
securities laws of any other country, and, if requested by the Placement Agent,
preparing and printing a “Blue Sky Survey,” an “International Blue Sky Survey”
or other memorandum, and any supplements thereto, advising the Placement Agent
of such qualifications, registrations and exemptions; (vii) if applicable, the
filing fees incident to, and the reasonable fees and expenses of counsel for the
Placement Agent in connection with, the review and approval by the NASD of the
Placement Agent's participation in the offering and distribution of the
Securities; provided, however, that the Company shall not be responsible for
reimbursement of any such fees and expenses set forth in clauses (vi) and (vii)
in excess of $25,000; (viii) the fees and expenses associated with including the
Securities on NASDAQ; (ix) all costs and expenses incident to the travel and
accommodation of the Company’s and the Placement Agent's employees on the
“roadshow,” if any; and (x) all other fees, costs and expenses referred to in
Part II of the Registration Statement.
 
Section 7. Indemnification and Contribution.
 
(a) Indemnification of the Placement Agent. The Company agrees to indemnify and
hold harmless the Placement Agent, its officers and employees, and each person,
if any, who controls the Placement Agent within the meaning of the Act and the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which the Placement Agent or such controlling person may become subject,
under the Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based: (A) upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A, Rule 430B and Rule 430C under the Act, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading; (B)
upon any untrue statement or alleged untrue statement of a material fact
contained in the Base Prospectus, any Issuer Free Writing Prospectus, any
Prospectus Supplement or any Incorporated Document (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (C) in whole or in
part upon any inaccuracy in the representations and warranties of the Company
contained herein; (D) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law; or (E) upon any act or failure
to act or any alleged act or failure to act by the Placement Agent in connection
with, or relating in any manner to, the Securities or the Offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon any matter covered by
clause (A), (B), (C) or (D) above, provided that the Company shall not be liable
under this clause (E) to the extent that a court of competent jurisdiction shall
have determined by a final judgment that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by the Placement Agent through its gross negligence, bad
faith or willful misconduct; and to reimburse the Placement Agent and each such
controlling person for any and all expenses (including the reasonable fees and
disbursements of counsel chosen by the Placement Agent) as such expenses are
incurred by the Placement Agent or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Placement Agent expressly for use in the Registration
Statement, the Base Prospectus, any Issuer Free Writing Prospectus or any
Prospectus Supplement (or any amendment or supplement thereto).
 
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(b) Indemnification of the Company, its Directors and Officers. The Placement
Agent agrees to indemnify and hold harmless the Company, each of its directors,
each of its officers who signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of the Act or the Exchange Act,
against any loss, claim, damage, liability or expense, as incurred, to which the
Company, or any such director, officer, or controlling person may become
subject, under the Act, the Exchange Act, or other federal, state statutory law
or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Placement Agent), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
any untrue or alleged untrue statement of a material fact contained in any
Prospectus Supplement (or any amendment or supplement thereto), or arises out of
or is based upon the omission or alleged omission to state therein 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, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
Prospectus Supplement (or any amendment or supplement thereto), in reliance upon
and in conformity with written information furnished to the Company by the
Placement Agent expressly for use therein; and to reimburse the Company, or any
such director, officer, or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or controlling
person, in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The indemnity
agreement set forth in this Section 7(b) shall be in addition to any liabilities
that the Placement Agent may otherwise have.
 
(c) Information Provided by the Placement Agent. The Company and each person, if
any, who controls the Company within the meaning of the Act or the Exchange Act,
hereby acknowledges that the only information that the Placement Agent has
furnished to the Company expressly for use in any Prospectus Supplement (or any
amendment or supplement thereto) are the statements regarding the Placement
Agent set forth under the caption “Plan of Distribution” in such Prospectus
Supplement.
 
(d) Notifications and Other Indemnification Procedures. Promptly after receipt
by an indemnified party under this Section 7 of notice of the commencement of
any action, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 7, notify the indemnifying
party in writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability, which it may have to
any indemnified party for contribution to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with all other
indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that a conflict may
arise between the positions of the indemnifying party and the indemnified party
in conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party’s election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless: (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party), representing the indemnified parties who are parties to such action);
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action; or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party.
 
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(e) Settlements. The indemnifying party under this Section 7 shall not be liable
for any settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld, but if settled with such consent or
if there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party against any loss, claim, damage, liability or
expense by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by Section 7(d) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 45 days
after the receipt by such indemnifying party of the aforesaid request, and (ii)
such indemnifying party shall have not reimbursed such indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes: (A) an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding; and (B) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
 
(f) Contribution. If the indemnification provided for in this Section 7 is for
any reason held to be unavailable to or otherwise insufficient to hold harmless
an indemnified party in respect of any losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the aggregate amount paid or
payable by such indemnified party, as incurred, as a result of any losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) referred to therein (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying parties, on the one hand, and
the indemnified parties, on the other hand, from the Offering of the Securities
pursuant to this Agreement, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
indemnifying parties, on the one hand, and the indemnified parties, on the other
hand, in connection with the statements or omissions or the inaccuracies in the
representations and warranties herein that resulted in such losses, claims,
damages, liabilities or expenses (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the indemnifying parties, on the one hand, and the indemnified
parties, on the other hand, in connection with the Offering of Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from such Offering of Securities pursuant
to this Agreement (before deducting expenses) received by the indemnifying
parties, and the total Placement Agent fees received by the indemnified parties,
in each case as set forth on the cover page of the applicable Prospectus
Supplement bear to the aggregate offering price of the Securities set forth on
such cover. The relative fault of the indemnifying parties, on the one hand, and
the indemnified parties, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact or any such
inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the indemnifying parties, on the one hand, or the
indemnified parties, on the other hand, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
 
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The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 7(d) above, any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.  The provisions set forth in
Section 7(d) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 7(f); provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under Section 7(d) for purposes of
indemnification.
 
The Company and the Placement Agent agree that it would not be just and
equitable if contributions pursuant to this Section 7(f) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7(f).
Notwithstanding the provisions of this Section 7(f): (i) the Placement Agent
shall not be required to contribute any amount in excess of the amount of the
Placement Agent fees actually received by the Placement Agent pursuant to this
Agreement; and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
 
(g) Timing of Any Payments of Indemnification. Any losses, claims, damages,
liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
liabilities or expenses are incurred, but in all cases, within forty-five (45)
days of invoice to the indemnifying party.
 
(h) Acknowledgements of Parties. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 7 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement, the Disclosure Package and
each Prospectus Supplement as required by the Act and the Exchange Act.
 
Section 8. Representations and Indemnities to Survive Delivery.
 
The respective indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the Company, of its
officers, and of the Placement Agent set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Placement Agent, the Company, or any of its or their
partners, officers or directors or any controlling person, as the case may be,
and will survive delivery of and payment for the Securities sold hereunder and
any termination of this Agreement. A successor to a Placement Agent, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Agreement.
 
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Section 9. Notices.
 
All communications hereunder shall be in writing and shall be mailed, hand
delivered or telecopied and confirmed to the parties hereto as follows:
 
If to the Placement Agent:

Roth Capital Partners, LLC
24 Corporate Plaza
Newport Beach, California 92660
Facsimile: (949) 720-7223
Attention: Managing Director

With a copy to:

DLA Piper US LLP
2415 East Camelback Road
Suite 700
Phoenix, Arizona 85016-4245
Facsimile: 1 (816) 480 606-5101
Attention: David P. Lewis, Esq.
 
If to the Company:

China Precision Steel, Inc.
8th Floor, Teda Building
87 Wing Lok Street
Sheung Wan, Hong Kong
People’s Republic of China
Facsimile: (852) 2543-8223
Attention: Company Secretary

With a copy to:

Kirkpatrick & Lockhart Preston Gates Ellis LLP
One Lincoln Street
Boston, MA 02111
Facsimile: (617) 951-9096
Attention: Barbara A. Jones, Esq.

Any party hereto may change the address for receipt of communications by giving
written notice to the others.
 
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Section 10. Successors.
 
This Agreement will inure to the benefit of and be binding upon the parties
hereto, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 7 hereof, and to their respective
successors, and personal representative, and no other person will have any right
or obligation hereunder.
 
Section 11. Partial Unenforceability.
 
The invalidity or unenforceability of any section, paragraph or provision of
this Agreement shall not affect the validity or enforceability of any other
section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
 
Section 12. Governing Law Provisions.
 
(a) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the state of California applicable to
agreements made and to be performed in such state.
 
(b) Consent to Jurisdiction. Any legal suit, action or proceeding arising out of
or based upon this Agreement or the transactions contemplated hereby (“Related
Proceedings”) may be instituted in the federal courts of the United States of
America located in the Borough of Manhattan, New York, New York, or the courts
of the State of New York in each case located in the Borough of Manhattan, New
York, New York (collectively, the “Specified Courts”), and each party
irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a
“Related Judgment”), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. Service of any process, summons,
notice or document by mail to such party’s address set forth above shall be
effective service of process for any suit, action or other proceeding brought in
any such court. The parties irrevocably and unconditionally waive any objection
to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in any
such court has been brought in an inconvenient forum.
 
Section 13. General Provisions.
 
(a) This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
 
(b) The Company acknowledges that in connection with the offering of the
Securities: (i) the Placement Agent has acted at arms length, are not agents of,
and owe no fiduciary duties to the Company or any other person, (ii) Placement
Agent owes the Company only those duties and obligations set forth in this
Agreement and (iii) the Placement Agent may have interests that differ from
those of the Company. The Company waives to the full extent permitted by
applicable law any claims it may have against the Placement Agent arising from
an alleged breach of fiduciary duty in connection with the offering of the
Securities
 
[The remainder of this page has been intentionally left blank.]

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If the foregoing is in accordance with your understanding of our agreement,
please sign below whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.

        Very truly yours,      
CHINA PRECISION STEEL, INC., 
a Colorado corporation
 
   
   
    By:                                  Name:   Title 

 
 
The foregoing Placement Agency Agreement is hereby confirmed and accepted as of
the date first above written.
 
 
 
ROTH CAPITAL PARTNERS LLC

By:                          
Name:
Title:
 
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Schedule I
 
Warrants to be granted to the Placement Agent at each Closing

Concurrently with each Closing, the Company will issue to the Placement Agent
warrants to purchase a number of shares of Common Stock equal to 3.0% of the
number of Shares issued in connection with such Closing (the "Warrants"). The
Warrants will be exercisable into the same class of Common Stock as issued as
part of the Offering, have a strike price equal to 120% of the closing price of
the Company's Common Stock on the Closing Date and have a term of three years.
The Warrants are not exercisable prior to the date that is six months from the
Closing Date. The Warrants will provide for cashless or "net" exercise at all
times. In the event Investors are issued warrants as part of the Offering, the
terms and conditions of the Warrants shall be the same as such Investors'
warrants, except to the extent that the aforementioned term and form of payment
provisions of the Investors' warrants and the Warrants differ, in which case
this Agreement shall control as to those terms of the Warrants.

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Exhibit A

List of Company Subsidiaries
 
 
Shanghai Chengtong Precision Strip Co., Ltd. (China)

 
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Exhibit B

Form of Subscription Agreement

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