FORM
      OF COMMON STOCK PURCHASE WARRANT

    


    CHINA
      PRECISION STEEL, INC.

     

    

      
        	
                CUSIP
                  No.                              
                  16941J
                  114            
                   

              	 	 
	
                Warrant
                  No.                             

              	 	 
	 	 	 
	
                Warrant
                  Shares:                       

              	 	
                Initial
                  Exercise Date: May 6, 2008

              
	 	 	
                Issue
                  Date: November 6, 2007

              


      

    

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, _____________ (the “Holder”)
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after May 6, 2008 (the
“Initial
      Exercise Date”)
      and on
      or prior to the close of business on the five year anniversary of the Initial
      Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from China Precision Steel, Inc.,
      a corporation (the “Company”),
      up to
      ______ shares (the “Warrant
      Shares”)
      of
      Common Stock. The purchase price of one share of Common Stock under this Warrant
      shall be equal to the Exercise Price, as defined in Section 2(b).

     

    This
      Warrant is issued pursuant to that certain Warrant Agreement dated as of
      November 6, 2007 (the “Warrant Agreement”), between the Company and
      Corporate Stock Transfer, Inc. as Warrant Agent (together with any successors
      and assigns, the “Warrant Agent”).

     

    Section
      1. Definitions.
      Capitalized terms used and not otherwise defined herein shall have the meanings
      set forth in that certain Subscription Agreement (the “Subscription
      Agreement”),
      dated
      November 1, 2007, among the Company and the purchaser signatory
      thereto.

     

    Section
      2. Exercise.

     

    a) Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made, in
      whole or in part, at any time or times on or after the Initial Exercise Date
      and
      on or before the Termination Date by delivery to the Warrant Agent of a duly
      executed facsimile copy of the Notice of Exercise Form annexed hereto (or such
      other office or agency of the Company as it may designate by notice in writing
      to the registered Holder at the address of the Holder appearing on the books
      of
      the Company); and, within three (3) Trading Days of the date said Notice of
      Exercise is delivered to the Warrant Agent, the Warrant Agent, for the account
      of the Company, shall have received payment of the aggregate Exercise Price
      of
      the shares thereby purchased by wire transfer or cashier’s check drawn on a
      United States bank. Notwithstanding anything herein to the contrary, the Holder
      shall not be required to physically surrender this Warrant to the Warrant Agent
      until the Holder has purchased all of the Warrant Shares available hereunder
      and
      the Warrant has been exercised in full, in which case, the Holder shall
      surrender this Warrant to the Warrant Agent for cancellation within three (3)
      Trading Days of the date the final Notice of Exercise is delivered to the
      Warrant Agent. Partial exercises of this Warrant resulting in purchases of
      a
      portion of the total number of Warrant Shares available hereunder shall have
      the
      effect of lowering the outstanding number of Warrant Shares purchasable
      hereunder in an amount equal to the applicable number of Warrant Shares
      purchased. The Holder and the Warrant Agent shall maintain records showing
      the
      number of Warrant Shares purchased and the date of such purchases. The Company
      shall deliver any objection to any Notice of Exercise Form within two (2)
      Business Days of receipt of such notice. In the event of any dispute or
      discrepancy, the records of the Warrant Agent shall be controlling and
      determinative in the absence of manifest error. The
      Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
      that, by reason of the provisions of this paragraph, following the purchase
      of a
      portion of the Warrant Shares hereunder, the number of Warrant Shares available
      for purchase hereunder at any given time may be less than the amount stated
      on
      the face hereof.

     

    
      
        
          
          

        

        
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    b) Exercise
      Price.
      The
      exercise price per share of the Common Stock under this Warrant shall be
$8.45,
      such price representing the closing price of the Common Stock on The NASDAQ
      Capital Market on October 31, 2007, subject to adjustment hereunder (the
“Exercise
      Price”).

     

    c) Cashless
      Exercise.
      In lieu
      of tendering the Exercise Amount, the Warrants may be exercised by surrendering
      this Certificate together with irrevocable instructions to the Warrant Agent
      to
      issue in exchange for this Certificate the number of shares of Common Stock
      equal to the product of (i) the number of shares as to which the Warrants are
      being exercised multiplied by (ii) a fraction, the numerator of which is the
      Fair Market Value of a share of Common Stock on the last business day
      immediately preceding the exercise date less the Purchase Price therefore and
      the denominator of which is such Fair Market Value (a “Cashless
      Exercise”).
      Fair
      Market Value”
or
      “FMV”
of
      a
      share of Common Stock as of a particular date shall mean: (i) if traded on
      a
      securities exchange or if actively traded over-the-counter, the Fair Market
      Value shall be deemed to be the last reported sale price of the Common Stock
      on
      such exchange or over-the-counter on the last business day before the date
      in
      question; (ii) if actively traded over-the-counter, but no sale is made
      on such day, the mean of the closing bid and asked prices such day on such
      over-the-counter quotation; and (iii) if there is no active public market,
      the
      Fair Market Value shall be the value as determined in good faith by the
      Company’s Board of Directors upon a review of relevant factors, including due
      consideration of the Holders’ determination of the value of the
      Company.

     

    Notwithstanding
      anything herein to the contrary, on the Termination Date, this Warrant shall
      be
      automatically exercised via cashless exercise pursuant to this Section
      2(c).

     

    
      
        
          
          

        

        
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        d) Holder’s
        Restrictions.
        The
        Warrant Agent and the Company shall not effect any exercise of this Warrant,
        and
        a Holder shall not have the right to exercise any portion of this Warrant,
        pursuant to Section 2 or otherwise, to the extent that after giving effect
        to
        such issuance after exercise as set forth on the applicable Notice of Exercise,
        the Holder (together with the Holder’s Affiliates, and any other person or
        entity acting as a group together with the Holder or any of the Holder’s
        Affiliates), would beneficially own in excess of the Beneficial Ownership
        Limitation (as defined below). For purposes of the foregoing sentence, the
        number of shares of Common Stock beneficially owned by the Holder and its
        Affiliates shall include the number of shares of Common Stock issuable upon
        exercise of this Warrant with respect to which such determination is being
        made,
        but shall exclude the number of shares of Common Stock which would be issuable
        upon (A) exercise of the remaining, nonexercised portion of this Warrant
        beneficially owned by the Holder or any of its Affiliates and (B) exercise
        or
        conversion of the unexercised or nonconverted portion of any other securities
        of
        the Company (including, without limitation, any other Common Stock Equivalents)
        subject to a limitation on conversion or exercise analogous to the limitation
        contained herein beneficially owned by the Holder or any of its
        affiliates. Except
        as set forth in the preceding sentence, for purposes of this Section 2(d),
        beneficial ownership shall be calculated in accordance with Section 13(d)
        of the
        Exchange Act and the rules and regulations promulgated thereunder, it being
        acknowledged by the Holder that the Company is not representing to the Holder
        that such calculation is in compliance with Section 13(d) of the Exchange
        Act
        and the Holder is solely responsible for any schedules required to be filed
        in
        accordance therewith. To the extent that the limitation contained in this
        Section 2(d) applies, the determination of whether this Warrant is exercisable
        (in relation to other securities owned by the Holder together with any
        Affiliates) and of which portion of this Warrant is exercisable shall be
        in the
        sole discretion of the Holder, and the submission of a Notice of Exercise
        shall
        be deemed to be the Holder’s determination of whether this Warrant is
        exercisable (in relation to other securities owned by the Holder together
        with
        any Affiliates) and of which portion of this Warrant is exercisable, in each
        case subject to the Beneficial Ownership Limitation, and the Company shall
        have
        no obligation to verify or confirm the accuracy of such determination. In
        addition, a determination as to any group status as contemplated above shall
        be
        determined in accordance with Section 13(d) of the Exchange Act and the rules
        and regulations promulgated thereunder. For purposes of this Section 2(d),
        in
        determining the number of outstanding shares of Common Stock, a Holder may
        rely
        on the number of outstanding shares of Common Stock as reflected in (x) the
        Company’s most recent periodic or annual report, as the case may be, (y) a more
        recent public announcement by the Company or (z) any other notice by the
        Company
        or the Company’s Transfer Agent setting forth the number of shares of Common
        Stock outstanding.  Upon the written or oral request of a Holder, the
        Company shall within two Trading Days confirm orally and in writing to the
        Holder the number of shares of Common Stock then outstanding.  In any case,
        the number of outstanding shares of Common Stock shall be determined after
        giving effect to the conversion or exercise of securities of the Company,
        including this Warrant, by the Holder or its Affiliates since the date as
        of
        which such number of outstanding shares of Common Stock was reported. The
        “Beneficial
        Ownership Limitation”
shall
        be 4.99% of the number of shares of the Common Stock outstanding immediately
        after giving effect to the issuance of shares of Common Stock issuable upon
        exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice
        to the Company and the Warrant Agent, may increase or decrease the Beneficial
        Ownership Limitation provisions of this Section 2(d), provided that the
        Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
        shares of the Common Stock outstanding immediately after giving effect to
        the
        issuance of shares of Common Stock upon exercise of this Warrant held by
        the
        Holder and the provisions of this Section 2(d) shall continue to apply. Any
        such
        increase or decrease will not be effective until the 61st
        day
        after such notice is delivered to the Company and the Warrant Agent. The
        provisions of this paragraph shall be construed and implemented in a manner
        otherwise than in strict conformity with the terms of this Section 2(d) to
        correct this paragraph (or any portion hereof) which may be defective or
        inconsistent with the intended Beneficial Ownership Limitation herein contained
        or to make changes or supplements necessary or desirable to properly give
        effect
        to such limitation. The limitations contained in this paragraph shall apply
        to a
        successor holder of this Warrant.

    

     

    
      
        
          
          

        

        
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    e) Mechanics
      of Exercise.
      

     

    i. Delivery
      of Certificates Upon Exercise.
      Certificates for shares purchased hereunder shall be transmitted by the Warrant
      Agent to the Holder by crediting the account of the Holder’s prime broker with
      the Depository Trust Company through its Deposit Withdrawal Agent Commission
      (“DWAC”)
      system
      if the Company is a participant in such system and there is an effective
      Registration Statement permitting the resale of the Warrant Shares by the
      Holder, and otherwise by physical delivery to the address specified by the
      Holder in the Notice of Exercise within three (3) Trading Days from the delivery
      to the Warrant Agent of the Notice of Exercise Form, surrender of this Warrant
      (if required) and payment of the aggregate Exercise Price as set forth above
      (“Warrant
      Share Delivery Date”).
      This
      Warrant shall be deemed to have been exercised on the date the Exercise Price
      is
      received by the Warrant Agent, for the account of the Company. The Warrant
      Shares shall be deemed to have been issued, and Holder or any other person
      so
      designated to be named therein shall be deemed to have become a holder of record
      of such shares for all purposes, as of the date the Warrant has been exercised
      by payment to the Warrant Agent, for the account of the Company of the Exercise
      Price (or by cashless exercise, if permitted) and all taxes required to be
      paid
      by the Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of
      such shares, have been paid. 

     

    ii. Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Warrant Agent shall, at the
      request of a Holder and upon surrender of this Warrant certificate, at the
      time
      of delivery of the certificate or certificates representing Warrant Shares,
      deliver to Holder a new Warrant evidencing the rights of Holder to purchase
      the
      unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
      in all other respects be identical with this Warrant.

     

    iii. Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to this
      Section 2(e)(i) by the Warrant Share Delivery Date, then the Holder will have
      the right to rescind such exercise.

     

    
      
        
          
          

        

        
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    iv. Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.
      In
      addition to any other rights available to the Holder, if the Company fails
      to
      cause the Warrant Agent to transmit to the Holder a certificate or certificates
      representing the Warrant Shares pursuant to an exercise on or before the Warrant
      Share Delivery Date, and if after such date the Holder is required by its broker
      to purchase (in an open market transaction or otherwise) or the Holder’s
      brokerage firm otherwise purchases, shares of Common Stock to deliver in
      satisfaction of a sale by the Holder of the Warrant Shares which the Holder
      anticipated receiving upon such exercise (a “Buy-In”),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Shares that the Company was required
      to
      deliver to the Holder in connection with the exercise at issue times (B) the
      price at which the sell order giving rise to such purchase obligation was
      executed, and (2) at the option of the Holder, either reinstate the portion
      of
      the Warrant and equivalent number of Warrant Shares for which such exercise
      was
      not honored or deliver to the Holder the number of shares of Common Stock that
      would have been issued had the Company timely complied with its exercise and
      delivery obligations hereunder. For example, if the Holder purchases Common
      Stock having a total purchase price of $11,000 to cover a Buy-In with respect
      to
      an attempted exercise of shares of Common Stock with an aggregate sale price
      giving rise to such purchase obligation of $10,000, under clause (1) of the
      immediately preceding sentence the Company shall be required to pay the Holder
      $1,000. The Holder shall provide the Company written notice indicating the
      amounts payable to the Holder in respect of the Buy-In and, upon request of
      the
      Company, evidence of the amount of such loss. Nothing herein shall limit a
      Holder’s right to pursue any other remedies available to it hereunder, at law or
      in equity including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company’s failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the Warrant
      as
      required pursuant to the terms hereof.

     

    v. No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall at
      its
      election, either pay a cash adjustment in respect of such final fraction in
      an
      amount equal to such fraction multiplied by the Exercise Price or round up
      to
      the next whole share.

     

    
      
        
          
          

        

        
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    vi. Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    vii. Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner designed
      to prevent the timely exercise of this Warrant, pursuant to the terms hereof.
      The Company may close its books as it deems necessary and appropriate from
      time
      to time in accordance with its business and its disclosure and reporting
      requirements.

     

    Section
      3. Certain
      Adjustments.

     

    (a) Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company upon exercise of this Warrant),
      (B)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (C) combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by reclassification
      of shares of the Common Stock any shares of capital stock of the Company, then
      in each case the Exercise Price shall be multiplied by a fraction of which
      the
      numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding immediately before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding
      immediately after such event and the number of shares issuable upon exercise
      of
      this Warrant shall be proportionately adjusted such that the aggregate Exercise
      Price of this Warrant shall remain unchanged. Any adjustment made pursuant
      to
      this Section 3(a) shall become effective immediately after the record date
      for
      the determination of stockholders entitled to receive such dividend or
      distribution and shall become effective immediately after the effective date
      in
      the case of a subdivision, combination or re-classification.

     

    (b) Subsequent
      Rights Offerings.
      If the
      Company, at any time while the Warrant is outstanding, shall issue rights,
      options or warrants to all holders of Common Stock (and not to Holders)
      entitling them to subscribe for or purchase shares of Common Stock at a price
      per share less than the FMV at the record date mentioned below, then the
      Exercise Price shall be multiplied by a fraction, of which the denominator
      shall
      be the number of shares of the Common Stock outstanding on the date of issuance
      of such rights or warrants plus the number of additional shares of Common Stock
      offered for subscription or purchase, and of which the numerator shall be the
      number of shares of the Common Stock outstanding on the date of issuance of
      such
      rights or warrants plus the number of shares which the aggregate offering price
      of the total number of shares so offered (assuming receipt by the Company in
      full of all consideration payable upon exercise of such rights, options or
      warrants) would purchase at such FMV. Such adjustment shall be made whenever
      such rights or warrants are issued, and shall become effective immediately
      after
      the record date for the determination of stockholders entitled to receive such
      rights, options or warrants. 

     

    
      
        
          
          

        

        
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    (c) Pro
      Rata Distributions.
      If the
      Company, at any time while this Warrant is outstanding, shall distribute to
      all
      holders of Common Stock (and not to Holders of the Warrants) evidences of its
      indebtedness or assets (including cash and cash dividends) or rights or warrants
      to subscribe for or purchase any security other than the Common Stock), then
      in
      each such case the Exercise Price shall be adjusted by multiplying the Exercise
      Price in effect immediately prior to the record date fixed for determination
      of
      stockholders entitled to receive such distribution by a fraction of which the
      denominator shall be the FMV determined as of the record date mentioned above,
      and of which the numerator shall be such FMV on such record date less the then
      per share fair market value at such record date of the portion of such assets
      or
      evidence of indebtedness so distributed applicable to one outstanding share
      of
      the Common Stock as determined by the Board of Directors in good faith. In
      either case the adjustments shall be described in a statement provided to the
      Holder of the portion of assets or evidences of indebtedness so distributed
      or
      such subscription rights applicable to one share of Common Stock. Such
      adjustment shall be made whenever any such distribution is made and shall become
      effective immediately after the record date mentioned above.

     

    (d) Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (each “Fundamental
      Transaction”),
      then,
      upon any subsequent exercise of this Warrant, the Holder shall have the right
      to
      receive, for each Warrant Share that would have been issuable upon such exercise
      immediately prior to the occurrence of such Fundamental Transaction, the number
      of shares of Common Stock of the successor or acquiring corporation or of the
      Company, if it is the surviving corporation, and any additional consideration
      (the “Alternate
      Consideration”)
      receivable as a result of such merger, consolidation or disposition of assets
      by
      a holder of the number of shares of Common Stock for which this Warrant is
      exercisable immediately prior to such event. For purposes of any such exercise,
      the determination of the Exercise Price shall be appropriately adjusted to
      apply
      to such Alternate Consideration based on the amount of Alternate Consideration
      issuable in respect of one share of Common Stock in such Fundamental
      Transaction, and the Company shall apportion the Exercise Price among the
      Alternate Consideration in a reasonable manner reflecting the relative value
      of
      any different components of the Alternate Consideration. If holders of Common
      Stock are given any choice as to the securities, cash or property to be received
      in a Fundamental Transaction, then the Holder shall be given the same choice
      as
      to the Alternate Consideration it receives upon any exercise of this Warrant
      following such Fundamental Transaction. To the extent necessary to effectuate
      the foregoing provisions, any successor to the Company or surviving entity
      in
      such Fundamental Transaction shall issue to the Holder a new warrant consistent
      with the foregoing provisions and evidencing the Holder’s right to exercise such
      warrant into Alternate Consideration. The terms of any agreement pursuant to
      which a Fundamental Transaction is effected shall include terms requiring any
      such successor or surviving entity to comply with the provisions of this Section
      3(e) and insuring that this Warrant (or any such replacement security) will
      be
      similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction. Notwithstanding anything to the contrary, in the event of a
      Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3
      transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934,
      as amended, or (3) a Fundamental Transaction involving a person or entity not
      traded on a national securities exchange, the Nasdaq Global Select Market,
      the
      Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor
      entity shall pay at the Holder’s option, exercisable at any time concurrently
      with or within 30 days after the consummation of the Fundamental Transaction,
      an
      amount of cash equal to the value of this Warrant as determined in accordance
      with the Black Scholes Option Pricing Model obtained from the “OV” function on
      Bloomberg L.P. using (i) a price per share of Common Stock equal to the FMV
      of
      the Common Stock for the Trading Day immediately preceding the date of
      consummation of the applicable Fundamental Transaction, (ii) a risk-free
      interest rate corresponding to the U.S. Treasury rate for a period equal to
      the
      remaining term of this Warrant as of the date of consummation of the applicable
      Fundamental Transaction and (iii) an expected volatility equal to the 100 day
      volatility obtained from the “HVT” function on Bloomberg L.P. determined as of
      the Trading Day immediately following the public announcement of the applicable
      Fundamental Transaction. 

     

    
      
        
          
          

        

        
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    (e) Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

     

    (d) Notice
      to Holder; 

     

    (i) Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to any provision of this
      Section 3, the Company shall promptly mail to the Holder a notice setting forth
      the Exercise Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment.

     

    (ii) Notice
      to Allow Exercise by Holder.
      The
      Company shall give the Holder prompt notice if (A) the Company shall declare
      a
      dividend (or any other distribution in whatever form) on the Common Stock;
      (B)
      the Company shall declare a special nonrecurring cash dividend on or a
      redemption of the Common Stock; (C) the Company shall authorize the granting
      to
      all holders of the Common Stock rights or warrants to subscribe for or purchase
      any shares of capital stock of any class or of any rights; (D) the approval
      of
      any stockholders of the Company shall be required in connection with any
      reclassification of the Common Stock, any consolidation or merger to which
      the
      Company is a party, any sale or transfer of all or substantially all of the
      assets of the Company, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; and
      (E) the Company shall authorize the voluntary or involuntary dissolution,
      liquidation or winding up of the affairs of the Company. For purposes of this
      subsection, any filing with the Securities and Exchange Commission disclosing
      such event shall
      satisfy the Company’s notice requirement pursuant to this subsection.
      The
      Holder is entitled to exercise this Warrant during the period commencing on
      the
      date of such notice to the effective date of the event triggering such notice;
      provided such period is after the Initial Exercise Date.

     

    
      
        
          
          

        

        
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    Section
      4. Transfer
      of Warrant.

     

    a) Transferability.
      This
      Warrant and all rights hereunder (including, without limitation, any
      registration rights) are transferable, in whole or in part, upon surrender
      of
      this Warrant at the principal office of the Warrant Agent or the Company’s other
      designated agent, together with a written assignment of this Warrant
      substantially in the form attached hereto duly executed by the Holder or its
      agent or attorney and funds sufficient to pay any transfer taxes payable upon
      the making of such transfer. Upon such surrender and, if required, such payment,
      the Warrant Agent shall execute and deliver a new Warrant or Warrants in the
      name of the assignee or assignees and in the denomination or denominations
      specified in such instrument of assignment, and shall issue to the assignor
      a
      new Warrant evidencing the portion of this Warrant not so assigned, and this
      Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be
      exercised by a new holder for the purchase of Warrant Shares without having
      a
      new Warrant issued. 

     

    b) New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Warrant Agent, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which may be involved in such division or
      combination, the Warrant Agent shall execute and deliver a new Warrant or
      Warrants in exchange for the Warrant or Warrants to be divided or combined
      in
      accordance with such notice. All Warrants issued on transfers or exchanges
      shall
      be dated the original Issue Date and shall be identical with this Warrant except
      as to the number of Warrant Shares issuable pursuant thereto. 

     

    c) Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

    


    Section
      5. Miscellaneous.

     

    a) No
      Rights as Shareholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof as set forth in Section
      2(e)(i). 

     

    b) Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Warrant Agent covenants that upon receipt by the Warrant Agent of evidence
      reasonably satisfactory to it of the loss, theft, destruction or mutilation
      of
      this Warrant or any stock certificate relating to the Warrant Shares, and in
      case of loss, theft or destruction, of indemnity or security reasonably
      satisfactory to it (which, in the case of the Warrant, shall not include the
      posting of any bond), and upon surrender and cancellation of such Warrant or
      stock certificate, if mutilated, the Warrant Agent will make and deliver a
      new
      Warrant or stock certificate of like tenor and dated as of such cancellation,
      in
      lieu of such Warrant or stock certificate.

     

    c) Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a Business Day, then such action
      may be taken or such right may be exercised on the next succeeding Business
      Day.

     

    d) Authorized
      Shares.
      

     

    The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to execute and issue
      the
      necessary certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable action
      as
      may be necessary to assure that such Warrant Shares may be issued as provided
      herein without violation of any applicable law or regulation, or of any
      requirements of the Trading Market upon which the Common Stock may be listed.
      The Company covenants that all Warrant Shares which may be issued upon the
      exercise of the purchase rights represented by this Warrant will, upon exercise
      of the purchase rights represented by this Warrant, be duly authorized, validly
      issued, fully paid and nonassessable and free from all taxes, liens and charges
      created by the Company in respect of the issue thereof (other than taxes in
      respect of any transfer occurring contemporaneously with such issue).


     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

     

    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

     

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    The
      Company shall provide prompt notice to the Holder in
      the event that the Registration Statement on Form S-3 relating to the shares
      of
      Common Stock underlying the Warrants (or
      any
      other registration statement registering such shares, if applicable)
become deregistered with the Securities and Exchange Commission. If
      the
      Holder exercises its rights under this Warrant via
      cash
      exercise with
      respect to any Warrant Shares during to time such Registration Statement is
      no
      longer effective, and
      prior
      to such exercise the Holder was not notified in writing that such registration
      statement was no longer available, then
      the Holder will have the right to rescind such cash
      exercise and either hold the Warrant for future exercise or resubmit the
      exercise via cashless exercise assuming for such purposes the FMV on the date
      of
      the initial exercise.

     

    e) Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be determined in accordance with the provisions of the
      Subscription Agreement.

     

    f) Nonwaiver.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all rights
      hereunder terminate on the Termination Date. 

     

    g) Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Subscription Agreement. Notices to the Warrant Agent shall
      be
      sent to the following address or to such other address, as the Warrant Agent
      shall indicate in a notice to the Company and the holder:

     

    
      	
              Corporate
                Stock Transfer, Inc.

            
	
              3200
                Cherry Creek Drive South

            
	
              Denver,
                Colorado 80209

            


    

    


    h) Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant to purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

     

    i) Remedies.
      Holder
      and the Company, in addition to being entitled to exercise all rights granted
      by
      law, including recovery of damages, will be entitled to specific performance
      of
      its rights under this Warrant. The parties hereto agree that monetary damages
      would not be adequate compensation for any loss incurred by reason of a breach
      by either party of the provisions of this Warrant and hereby agree to waive
      and
      not to assert the defense in any action for specific performance that a remedy
      at law would be adequate.

     

    j) Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by the Holder or
      holder of Warrant Shares.

     

    k) Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    l) Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

     

    m) Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

     

    n) Warrant
      Agreement.
      This
      Warrant is governed by and subject to the terms and conditions contained in
      the
      Warrant Agreement. In the event of a conflict between the provisions of the
      Warrant Agreement and this Warrant, the provisions of the Warrant Agreement
      shall govern. A copy of the Warrant Agreement may be obtained at no cost upon
      request from the Company at its principal office or from the Warrant Agent.
      

     

    


    ********************

    


    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

     

    IN
      WITNESS WHEREOF, the Company and the Warrant Agent have caused this Warrant
      to
      be executed by their respective officer thereunto duly authorized as of the
      date
      first above indicated.

     

    
      	 	 	 
	 	CHINA
              PRECISION STEEL, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:

            
	 	
              Title:

            


    

     

    
      	 	 	 
	 	
              CORPORATE
                STOCK TRANSFER, INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Print
              Name: 
	 	Title;


    

    


    
      
        
          
          

          
          

        

        
          13

          
            

          

        

        
          
          

          
          

        

      

    

     

    NOTICE
      OF EXERCISE

    


    TO: [_______________________

    


    (1) The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2) Payment
      shall take the form of (check applicable box):

     

    o
      in lawful money of the
      United States; or

     

    o
      [if permitted] the cancellation of such
      number of Warrant Shares as is necessary, in accordance with the formula set
      forth in subsection 2(c), to exercise this Warrant with respect to the maximum
      number of Warrant Shares purchasable pursuant to the cashless exercise procedure
      set forth in subsection 2(c).

     

    (3) Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

     

    


    The
      Warrant Shares shall be delivered to the following DWAC Account Number or by
      physical delivery of a certificate to:

    


    _______________________________

     

    _______________________________

     

    _______________________________

    


     

    


    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      ________________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      ________________________________________________________________________________________

    


     

    
      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

    

     

    ASSIGNMENT
      FORM

    


    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

     

    FOR
      VALUE
      RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
      rights evidenced thereby are hereby assigned to

     

    


    _______________________________________________
      whose address is

    


    _______________________________________________________________.

    


    


    


    _______________________________________________________________

    


    Dated:
      ______________, _______

    


     

    
      	Holder’s Signature:	                    
	
            	 
	Holder’s Address:	                    
	
            	 
	
            	                     


    

         

     

    


    Signature
      Guaranteed: ___________________________________________

    


    


    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

    


    
      
        
        

      

      
        15