Unassociated Document


    Exhibit
      10.1

      EXECUTION
        COPY

       

       

    

    STOCK
      PURCHASE AGREEMENT
      dated as
      of March 13, 2008 (this "Agreement")
      among
WO
      HING LI (the
      "Seller"),
      and
HUDSON
      BAY FUND, LP,
      a
      Delaware limited partnership and HUDSON
      BAY OVERSEAS FUND,
      LTD., a
      company
      with limited liability organized under the laws of the Cayman Islands
      (collectively, the "Purchasers").

     

    WHEREAS,
      the
      Seller owns shares of Ordinary Stock, $0.001 par value per share (the
      "Ordinary
      Stock"),
      of
      China Precision Steel, Inc., a Delaware corporation (the "Company")
      and is
      the Chairman of the Board, Chief Executive Officer and President of the
      Company.

     

    WHEREAS,
      the
      Purchasers seek to purchase from the Seller, and the Seller seeks to sell to
      the
      Purchasers, up to Three Million, Five Hundred Twenty Four Thousand, Eight
      Hundred Ten (3,524,810) shares of Ordinary Stock currently owned by the Seller
      (the "Purchased
      Shares")
      in
      accordance with the terms of this Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and mutual benefits representations, warranties,
      conditions, covenants and agreements contained herein, the parties hereto hereby
      agree as set forth below.

     

    ARTICLE
      I

    PURCHASE AND
      SALE OF THE PURCHASED SHARES

     

    1.1  Purchase
      and Sale of Purchased Shares. 

     

    (a)
      Upon
      the terms and subject to the conditions set forth herein, on the third Trading
      Day (or such other date as is mutually agreed to by the Seller and the
      Purchasers) (the "Closing
      Date")
      following the satisfaction or waiver of all of the conditions set forth in
      Article IV of this Agreement and the earliest of (i) (the "First
      Trigger Event")
      the
      first time that the average of the Closing Bid Prices of the Ordinary Stock
      is
      at or above $6.234 (as adjusted for any stock dividend, stock split, stock
      combination, reclassification or similar transaction) for any five (5)
      consecutive Trading Days during the period beginning five (5) Trading Days
      prior
      to the date hereof and ending forty-five (45) Trading Days after the date hereof
      (which period may be extended for up to two (2) additional forty-five (45)
      Trading Day periods by the Seller by delivering a written notice to the
      Purchasers and thereafter by mutual agreement among the parties) (such period,
      as may be extended, the "Pricing
      Period"),
      (ii)
      (the "Second
      Trigger Event")
      if the
      average of the Closing Bid Prices of the Ordinary Stock has not been at or
      above
      $6.234 (as adjusted for any stock dividend, stock split, stock combination,
      reclassification or similar transaction) for five (5) consecutive Trading Days
      during the Pricing Period, upon delivery by the Purchasers of a written notice
      to the Seller of its election to purchase some or all of the Purchased Shares
      at
      a purchase price per share equal to $3.601 (as adjusted for any stock dividend,
      stock split, stock combination, reclassification or similar transaction), and
      (iii) (the "Third
      Trigger Event")
      for so
      long as the average of the Closing Bid Prices of the Ordinary Stock has not
      been
      at or above $6.234 (as adjusted for any stock dividend, stock split, stock
      combination, reclassification or similar transaction) for five (5) consecutive
      Trading Days during the Pricing Period, upon agreement between the Seller and
      the Purchasers as to the number of Purchased Shares to be sold by the Seller
      and
      purchased by each Purchaser and the per share purchase price for such shares.
      Upon the occurrence of (A) the First Trigger Event, the Seller shall sell to
      the
      Purchasers, and the Purchasers shall purchase from the Seller, the number of
      Purchased Shares set forth opposite each Purchaser's name on Schedule I, (B)
      the
      Second Trigger Event, the Seller shall sell to the Purchasers, and the
      Purchasers shall purchase from the Seller, the number of Purchased Shares
      specified in the written notice of the Purchasers or (C) the Third Trigger
      Event, the Seller shall sell to the Purchasers, and the Purchasers shall
      purchase from the Seller, the number of Purchased Shares mutually agreed by
      the
      Seller and the Purchasers (each, the "Closing").
      Notwithstanding the foregoing, in no event shall the Closing Date be earlier
      than three (3) Trading Days after the date hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)
      As
      used herein, "Closing
      Bid Price"
      means,
      for any security as of any date, the last closing bid price for such security
      on
      The NASDAQ Capital Market (the "Principal Market"), as reported by the Bloomberg
      Financial Markets ("Bloomberg"),
      or,
      if the Principal Market begins to operate on an extended hours basis and does
      not designate the closing bid price, then the last bid price of such security
      prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the
      Principal Market is not the principal securities exchange or trading market
      for
      such security, the last closing bid price of such security on the principal
      securities exchange or trading market where such security is listed or traded
      as
      reported by Bloomberg, or if the foregoing do not apply, the last closing bid
      price of such security in the over-the-counter market on the electronic bulletin
      board for such security as reported by Bloomberg, or, if no closing bid price
      is
      reported for such security by Bloomberg, the average of the bid prices of any
      market makers for such security as reported in the "pink sheets" by Pink Sheets
      LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price
      cannot be calculated for a security on a particular date on any of the foregoing
      bases, the Closing Bid Price of such security on such date shall be the fair
      market value as mutually determined by the Seller and the Purchasers. All such
      determinations to be appropriately adjusted for any share dividend, share split,
      share combination or other similar transaction during the applicable calculation
      period.

     

    (c)
      As
      used herein, "Trading
      Day"
      means
      any day on which the Ordinary Stock is traded on the Principal Market, or,
      if
      the Principal Market is not the principal trading market for the Ordinary Stock,
      then on the principal securities exchange or securities market on which the
      Ordinary Stock is then traded; provided that "Trading Day" shall not include
      any
      day on which the Ordinary Stock is scheduled to trade on such exchange or market
      for less than 4.5 hours or any day that the Ordinary Stock is suspended from
      trading during the final hour of trading on such exchange or market (or if
      such
      exchange or market does not designate in advance the closing time of trading
      on
      such exchange or market, then during the hour ending at 4:00:00 p.m., New York
      Time).

     

    1.2  Purchase
      Price. 

     

    Upon
      the
      terms and subject to the conditions of this Agreement, at the Closing, each
      Purchaser shall pay to the Seller an aggregate amount equal to (a) in the case
      of the First Trigger Event, (1) the number of Purchased Shares set forth
      opposite such Purchaser's name on Schedule I multiplied
      by (2)
      77% of the average of the Closing Bid Prices during the five (5) consecutive
      Trading Days ending on the Closing Date, (b) in the case of the Second Trigger
      Event, the number of Purchased Shares specified by each Purchaser in the written
      notice is referred to therein multiplied
      by
      $3.601 (as adjusted for any stock dividend, stock split, stock combination,
      reclassification or similar transaction) and (c) in the case of the Third
      Trigger Event, the number of Purchased Shares mutually agreed upon, multiplied
      by the per share purchase price mutually agreed upon, by the Purchasers and
      the
      Seller (in each case, the "Purchase
      Price").

     

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

     

    1.3  The
      Closing. 

     

    The
      Closing contemplated hereby shall take place at 10:00 a.m., EST time on the
      Closing Date. All actions taken at the Closing shall be deemed to have occurred
      simultaneously.

     

    ARTICLE
      II

    REPRESENTATIONS
      AND WARRANTIES OF THE SELLER

     

    The
      Seller represents and warrants to the Purchasers as of the date hereof as set
      forth below.

     

    2.1  Legal
      Capacity 

     

    The
      Seller has the legal capacity and right to execute, deliver, enter into,
      consummate and perform this Agreement.

     

    2.2  Title
      to Purchased Shares. 

     

    The
      Seller is the sole record and beneficial owner of the Purchased Shares to be
      sold by it pursuant to this Agreement and owns such shares free from all taxes,
      liens, claims, encumbrances and charges. There are no outstanding rights,
      options, subscriptions or other agreements or commitments obligating the Seller
      to sell or transfer the Purchased Shares and the Purchased Shares are not
      subject to any lock-up or other restriction on their transfer or on the ability
      of the Purchasers to sell or transfer the Purchased Shares (except that the
      Purchased Shares are restricted securities and may not be sold by the Purchasers
      except pursuant to a registration statement or an exemption from
      registration).

     

    2.3  Authority 

     

    The
      Seller has the requisite power and authority to execute and deliver this
      Agreement and to carry out and perform all of its obligations under the terms
      of
      this Agreement, including, without limitation, the full power and authority
      to
      sell and transfer such Purchased Shares. This Agreement has been duly executed
      and delivered by the Seller, and this Agreement constitutes the valid and
      legally binding obligation of the Seller enforceable against the Seller in
      accordance with its terms, except as such enforceability may be limited by
      general principles of equity or to applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors' rights and
      remedies.

     

    2.4  Accredited
      Investor Status; Affiliate Status.

     

    The
      Seller is an "accredited investor" as that term is defined in Rule 501(a) of
      Regulation D under the Securities Act of 1933, as amended (the "Securities
      Act").
      The
      Seller is an "affiliate" of the Company, as such term is defined in Rule 144
      of
      the Securities Act.

     

    
      
        
        

      

      
        -
          3
          -

        
          

        

      

      
        
        

      

    

     

    2.5  Noncontravention. 

     

    The
      execution, delivery and performance by the Seller of this Agreement and the
      consummation by the Seller of the transactions contemplated hereby will not
      (a)
      conflict with, or constitute a default (or an event which with notice or lapse
      of time or both would become a default) under, or give to others any rights
      of
      termination, amendment, acceleration or cancellation of, any agreement,
      indenture or instrument to which the Seller is a party, or (b) result in a
      violation of any law, rule, regulation, order, judgment or decree (including
      federal and state securities laws) applicable to the Seller, except for such
      conflicts, defaults, rights or violations which would not, individually or
      in
      the aggregate, reasonably be expected to have a material adverse effect on
      the
      ability of the Seller to perform its obligations hereunder.

     

    2.6  Consents. 

     

    Except
      for the approvals required to be obtained by Closing in accordance with Article
      IV, no consent, approval, permit, order, notification or authorization of,
      or
      any exemption from registration, declaration or filing with, any person
      (governmental or private) is required in connection with the execution, delivery
      and performance by the Seller of this Agreement or the consummation by the
      Seller of the transactions contemplated hereby.

     

    2.7  Seller
      Status.

     

    The
      Seller (a) is a sophisticated person with respect to the sale of the Purchased
      Shares; (b) has adequate information concerning the business and financial
      condition of the Company to make an informed decision regarding the sale of
      the
      Purchased Shares; and (c) has independently and without reliance upon the
      Purchasers, and based on such information as the Seller has deemed appropriate,
      made its own analysis and decision to enter into this Agreement, except that
      the
      Seller has relied upon the Purchasers' express representations, warranties
      and
      covenants in this Agreement. The Seller acknowledges that the Purchasers have
      not given the Seller any investment advice, credit information or opinion on
      whether the sale of the Purchased Shares is prudent.

     

    2.8  Absence
      of Litigation. 

     

    There
      is
      no action, suit, claim, proceeding, inquiry or investigation before or by any
      court, public board, government agency or self regulatory organization or body
      pending or, to the knowledge of the Seller, threatened against or affecting
      the
      Seller that could reasonably be expected to have a material adverse affect
      on
      the ability of the Seller to perform its obligations hereunder.

     

    2.9  No
      Brokers.

     

    Other
      than Primary Capital, LLC (the "Agent"),
      whose
      fees, in the amount of 2.5% of the Purchase Price, shall be paid by the Seller,
      directly from the Escrow Account when the assets in the Escrow Account are
      otherwise to be released to the Seller. The Seller has taken no action that
      would give rise to any claim by any person for brokerage commissions, finder's
      fees or similar payments relating to this Agreement or the transactions
      contemplated hereby.

     

    
      
        
        

      

      
        -
          4
          -

        
          

        

      

      
        
        

      

    

     

    2.10  Outstanding
      Amounts.

     

    The
      Seller has paid any and all amounts and charges due and owing to the Company
      with respect to the Purchased Shares and there are no unpaid amounts or charges
      claimed to be due to the Company from the Seller with respect to the Purchased
      Shares.

     

    2.11 Material
      Nonpublic Information.

     

    The
      Seller confirms that neither it, the Company nor any other person or entity
      acting on either of their behalf has provided any of the Purchasers or their
      respective agents or counsel with any information that constitutes or could
      reasonably be expected to constitute material, non-public information. The
      Seller further confirms that its is not selling the Purchase Shares hereunder
      on
      the basis of material non-public information. The Seller understands and
      confirms that each of the Purchasers will rely on the foregoing representations
      in effecting transactions in securities of the Company. 

     

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES OF THE PURCHASER

     

    Each
      Purchaser severally and not jointly, represents and warrants to the Seller
      as of
      the date hereof as set forth below.

     

    3.1  Organization
      and Existence. 

     

    Such
      Purchaser is an entity duly organized and validly existing under the laws of
      the
      jurisdiction of its formation.

     

    3.2  No
      Public Sale or Distribution. 

     

    Such
      Purchaser is acquiring the Purchased Shares in the ordinary course of business
      for its own account and not with a view towards, or for resale in connection
      with, the public sale or distribution thereof, except pursuant to sales
      registered or exempted under the Securities Act, and such Purchaser does not
      have a present arrangement to effect any distribution of the Purchased Shares
      to
      or through any person or entity; provided,
      however,
      that by
      making the representations herein, such Purchaser does not agree to hold any
      of
      the Purchased Shares for any minimum or other specific term and reserves the
      right to dispose of the Purchased Shares at any time in accordance with or
      pursuant to a registration statement or an exemption under the Securities
      Act.

     

    3.3  Accredited
      Investor Status.

     

    Such
      Purchaser is an "accredited investor" as that term is defined in Rule 501(a)
      of
      Regulation D under the Securities Act. 

     

    
      
        
        

      

      
        -
          5
          -

        
          

        

      

      
        
        

      

    

     

    3.4  Authority.

     

    Such
      Purchaser has all requisite power and authority to execute, deliver and perform
      its obligations under this Agreement. This Agreement has been duly and validly
      authorized, executed and delivered on behalf of such Purchaser and shall
      constitute the legal, valid and binding obligation of such Purchaser enforceable
      against it in accordance with its terms, except as such enforceability may
      be
      limited by general principles of equity or to applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors' rights and
      remedies.

     

    3.5  Noncontravention.
      

     

    The
      execution, delivery and performance by such Purchaser of this Agreement and
      the
      consummation by such Purchaser of the transactions contemplated hereby will
      not
      (a) result in a violation of the organizational documents of such Purchaser,
      (b)
      conflict with, or constitute a default (or an event which with notice or lapse
      of time or both would become a default) under, or give to others any rights
      of
      termination, amendment, acceleration or cancellation of, any agreement,
      indenture or instrument to which such Purchaser is a party, or (c) result in
      a
      violation of any law, rule, regulation, order, judgment or decree (including
      federal and state securities laws) applicable to such Purchaser, except in
      the
      case of clauses (b) and (c) above, for such conflicts, defaults, rights or
      violations which would not, individually or in the aggregate, reasonably be
      expected to have a material adverse effect on the ability of such Purchaser
      to
      perform its obligations hereunder.

     

    3.6  Purchaser
      Status.

     

    Such
      Purchaser (a) is a sophisticated person with respect to the sale of the
      Purchased Shares; (b) has adequate information concerning the business and
      financial condition of the Company to make an informed decision regarding the
      purchase of the Purchased Shares; and (c) has independently and without reliance
      upon the Seller, and based on such information as such Purchaser has deemed
      appropriate, made its own analysis and decision to enter into this Agreement,
      except that such Purchaser has relied upon the Seller's express representations,
      warranties and covenants in this Agreement. Such Purchaser acknowledges that
      the
      Seller has not given such Purchaser any investment advice, credit information
      or
      opinion on whether the purchase of the Purchased Shares is prudent.

     

    3.7  Absence
      of Litigation. 

     

    There
      is
      no action, suit, claim, proceeding, inquiry or investigation before or by any
      court, public board, government agency or self-regulatory organization or body
      pending or, to the knowledge of such Purchaser, threatened against or affecting
      such Purchaser that could reasonably be expected to have a material adverse
      affect on the ability of such Purchaser to perform its obligations
      hereunder.

     

    3.8  No
      Brokers.

     

    Such
      Purchaser has taken no action that would give rise to any claim by any person
      for brokerage commissions, finder's fees or similar payments relating to this
      Agreement or the transactions contemplated hereby.

     

    
      
        
        

      

      
        -
          6
          -

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV

    CONDITIONS
      TO CLOSING

     

    4.1  Conditions
      to the Seller's Obligation to Sell.

     

    The
      obligation of the Seller hereunder to sell the Purchased Shares to the
      Purchasers on the Closing Date is subject to the satisfaction, on or before
      the
      Closing Date, of each of the following conditions, provided,
      that
      these conditions are for the Seller's sole benefit and may be waived by the
      Seller at any time in its sole discretion by providing the Purchasers with
      prior
      written notice thereof:

     

    (a) Such
      Purchaser shall have delivered (i) 90% of the Purchase Price to the Seller
      (less
      any amounts withheld by a Purchaser pursuant to Section 5.2) by wire transfer
      of
      immediately available funds pursuant to the wire instructions provided by the
      Seller and (ii) 10% of the Purchase Price to the Escrow Account (as defined
      below) by wire transfer of immediately available Funds pursuant to wire
      instructions provided by the Escrow Agent (as defined below).

     

    (b) The
      representations and warranties of the Purchasers shall be true and correct
      in
      all material respects as of the date when made and as of the Closing Date as
      though made at that time (except for representations and warranties that speak
      as of a specific date), and the Purchasers shall have performed, satisfied
      and
      complied in all material respects with the covenants, agreements and conditions
      required by this Agreement to be performed, satisfied or complied with by the
      Purchasers at or prior to the Closing Date.

     

    (c) The
      First
      Trigger Event, the Second Trigger Event or the Third Trigger Event shall have
      occurred.

     

    4.2  Conditions
      to each Purchaser's Obligation to Purchase.

     

    The
      obligation of each Purchaser hereunder to purchase the Purchased Shares on
      the
      Closing Date is subject to the satisfaction, on or before the Closing Date,
      of
      each of the following conditions, provided,
      that
      these conditions are for each Purchaser's sole benefit and may be waived by
      such
      Purchaser at any time in its sole discretion by providing the Seller with prior
      written notice thereof:

     

    (a) The
      Seller shall have caused the Purchased Shares to be delivered to the Purchasers
      in the denominations and registered in the names requested by the
      Purchasers.

     

    (b) The
      representations and warranties of the Seller shall be true and correct in all
      material respects as of the date when made and as of the Closing Date as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date), and the Seller shall have performed, satisfied and complied
      in
      all material respects with the covenants, agreements and conditions required
      by
      this Agreement to be performed, satisfied or complied with by the Seller at
      or
      prior to the Closing Date.

     

    (c) The
      Seller shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the sale of the Purchased
      Shares.

     

    
      
        
        

      

      
        -
          7
          -

        
          

        

      

      
        
        

      

    

     

    (d) The
      First
      Trigger Event, the Second Trigger Event or the Third Trigger Event shall have
      occurred and, with respect to the First Trigger Event, the average of the
      Closing Bid Prices of the Ordinary Stock shall have been at or above $6.234
      (as
      adjusted for any stock dividend, stock split, stock combination,
      reclassification or similar transaction) for the five (5) consecutive Trading
      Days ending on the Closing Date.

     

    ARTICLE
      V

    COVENANTS

     

    5.1  Disclosure
      of Transactions and Other Material Information. 

     

    The
      Seller shall cause the Company, on or before 9:00 a.m., New York City time,
      on
      the first Trading Day after the date of this Agreement, (A) to issue a press
      release (the "Press
      Release")
      reasonably acceptable to the Purchasers disclosing all material terms of the
      transactions contemplated hereby and (B) to file
      a
      Current Report on Form 8-K describing the terms of the transactions contemplated
      by this Agreement, the Escrow Agreement and the Registration Rights Agreement
      in
      the form required by the Securities Exchange Act of 1934, as amended (the
      "Exchange
      Act"),
      and
      attaching as exhibits to such filing (including all attachments, the
      "8-K
      Filing").
      From
      and after the issuance of the Press Release, no Purchaser shall be in possession
      of any material, nonpublic information received from the Seller or any person
      or
      entity acting on its behalf (including the Company, any of its subsidiaries
      or
      any of its respective officers, directors, employees or agents) that is not
      disclosed in the Press Release. The Seller shall not, and shall cause the
      Company and each of the Company's subsidiaries and each of their respective
      officers, directors, employees and agents, not to, provide the Purchasers with
      any material, nonpublic information regarding the Company or any of its
      subsidiaries from and after the filing of the Press Release without the express
      written consent of such Purchasers. If a Purchaser has, or believes it has,
      received any such material, nonpublic information regarding the Company or
      any
      of its subsidiaries from the Seller, the Company, any of its subsidiaries or
      any
      of the respective officers, directors, or agents, other than as requested in
      writing by such Purchaser, it may provide Seller and the Company with written
      notice thereof. The Seller shall cause the Company, within five (5) Trading
      Days
      of receipt of such notice, cause the Company to make public disclosure of such
      material, nonpublic information. Subject to the foregoing, neither the Seller,
      the Company, its subsidiaries nor any Purchaser shall issue any press releases
      or any other public statements with respect to the transactions contemplated
      hereby; provided,
      however,
      that
      the Company shall be entitled, without the prior approval of any Purchaser,
      to
      make any press release or other public disclosure with respect to such
      transactions (i) in substantial conformity with the 8-K Filing and
      contemporaneously therewith and (ii) as is required by applicable law and
      regulations, including the applicable rules and regulations of the Principal
      Market (provided that in the case of clause (i) the Seller shall cause the
      Company to consult with each Purchaser in connection with any such press release
      or other public disclosure prior to its release). Without the prior written
      consent of any applicable Purchaser, neither the Company nor any of its
      subsidiaries or affiliates shall disclose the name of such Purchaser in any
      filing, announcement, release or otherwise, unless such disclosure is required
      by law or regulation.

     

    
      
        
        

      

      
        -
          8
          -

        
          

        

      

      
        
        

      

    

     

    5.2  Fees.
      

     

    The
      Seller shall reimburse Hudson
      Bay Fund LP
      (a
      Purchaser) or its designee(s) for all reasonable costs and expenses, incurred
      in
      connection with the transactions contemplated hereby (including all reasonable
      legal fees and disbursements in connection therewith, documentation and
      implementation of the transactions contemplated hereby and due diligence in
      connection therewith) in an amount not to exceed $25,000, which amount may
      be
      withheld by such Purchaser from its Purchase Price at the Closing. The Seller
      shall be responsible for the payment of any placement agent's fees, financial
      advisory fees, or broker's commissions (other than for Persons engaged by any
      Purchaser) relating to or arising out of the transactions contemplated hereby,
      including, without limitation, any fees or commissions payable to the Agent.
      The
      Seller shall pay, and hold each Purchaser harmless against, any liability,
      loss
      or expense (including, without limitation, reasonable attorney's fees and
      out-of-pocket expenses) arising in connection with any claim relating to any
      such payment.

     

    5.3  Escrow.

     

    Simultaneously,
      with the execution of this Agreement, the Seller, the Purchasers and Tri-State
      Title & Escrow, LLC, as escrow agent (the "Escrow
      Agent"),
      shall
      execute and deliver an escrow agreement, in the form attached hereto as
Exhibit
      A
      (the
      "Escrow
      Agreement"),
      pursuant to which the Seller shall, promptly, but in no event later than two
      (2)
      Trading Days after the date hereof, deliver the Purchased Shares (i) duly
      manually endorsed for transfer on the back of such certificate or on a stock
      power to be attached to such, in each case duly executed in the name that
      appears on the face of such certificate and (ii) including a Medallion Guarantee
      stamp placed below the signature on any accompanying stock power (unless such
      Medallion Guarantee is waived by the Company and Company's transfer agent).
      The
      Escrow Agreement will also contain provisions for 10% of the Purchase Price
      to
      be paid by the Purchasers to be delivered to the Escrow Agent at Closing to
      be
      held in an account (the "Escrow
      Account")
      pursuant to the terms of the Escrow Agreement.

     

    5.4  Best
      Efforts.
      

     

    Each
      party shall use its best efforts timely to satisfy each of the covenants and
      conditions to be satisfied by it as provided in Sections 4 and 5 of this
      Agreement.

    


    5.5 Registration
      Rights Agreement.

     

    Simultaneously,
      with the execution of this Agreement, the Seller and the Purchasers shall enter
      into the Registration Rights Agreement annexed hereto as Exhibit B (the "Registration
      Rights Agreement").

     

    5.6 Removal
      of Legends.

     

    The
      Seller shall cause the Company upon receipt of a representation letter from
      the
      Purchaser that it is not an "affiliate" of the Company for purposes of Rule
      144
      of the Securities Act, to remove all restrictive securities law legends on
      the
      Purchased Shares upon request of any Purchaser from and after the six month
      anniversary of the Closing Date, and shall cause the Company to take all steps
      necessary to facilitate the resale of the Purchased Shares by the Purchasers
      pursuant to Rule 144 under the Securities Act, including issuing all necessary
      legal opinions.

     

    
      
        
        

      

      
        -
          9
          -

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VI

    MISCELLANEOUS
      PROVISIONS

     

    6.1  Securities
      Filings.

     

    The
      Seller shall make any filings with the Securities and Exchange Commission
      required to be filed by the Seller pursuant to the Securities Exchange Act
      of
      1934, as amended (the "Exchange
      Act")
      with
      respect sale of the Purchased Shares contemplated hereby within the time periods
      required for such filings under the Exchange Act.

     

    6.2  Governing
      Law; Jurisdiction; Jury Trial. 

     

    All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdictions) that would
      cause the application of the laws of any jurisdictions other than the State
      of
      New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in The City of New York, Borough of
      Manhattan for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein, and
      hereby irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such suit, action or proceeding is brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. The Seller hereby appoints Guzov Ofsink,
      LLC, 600 Madison Avenue, 14th Floor, New York, New York 10022, as its agent
      for
      service of process in New York. Nothing contained herein shall be deemed to
      limit in any way any right to serve process in any manner permitted by law.
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
      HEREBY.

     

    6.3  Headings.
      

     

    The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    6.4  Severability.

     

    If
      any
      provision of this Agreement is prohibited by law or otherwise determined to
      be
      invalid or unenforceable by a court of competent jurisdiction, the provision
      that would otherwise be prohibited, invalid or unenforceable shall be deemed
      amended to apply to the broadest extent that it would be valid and enforceable,
      and the invalidity or unenforceability of such provision shall not affect the
      validity of the remaining provisions of this Agreement so long as this Agreement
      as so modified continues to express, without material change, the original
      intentions of the parties as to the subject matter hereof and the prohibited
      nature, invalidity or unenforceability of the provision(s) in question does
      not
      substantially impair the respective expectations or reciprocal obligations
      of
      the parties or the practical realization of the benefits that would otherwise
      be
      conferred upon the parties. The parties will endeavor in good faith negotiations
      to replace the prohibited, invalid or unenforceable provision(s) with a valid
      provision(s), the effect of which comes as close as possible to that of the
      prohibited, invalid or unenforceable provision(s).

     

    
      
        
        

      

      
        -
          10
          -

        
          

        

      

      
        
        

      

    

     

    6.5  Entire
      Agreement; Amendments.

     

    This
      Agreement supersedes all other prior oral or written agreements among the
      Purchasers and the Seller, their affiliates and persons acting on their behalf
      with respect to the matters discussed herein, and this Agreement and the
      instruments referenced herein contain the entire understanding of the parties
      with respect to the matters covered herein and therein and, except as
      specifically set forth herein or therein, neither the Seller nor the Purchasers
      makes any representation, warranty, covenant or undertaking with respect to
      such
      matters. No provision of this Agreement may be amended other than by an
      instrument in writing signed by the Seller and the Purchasers. No provision
      hereof may be waived other than by an instrument in writing signed by the party
      against whom enforcement is sought.

     

    6.6  Notices.

     

    Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (a) upon receipt, when delivered personally; (b) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (c) one business day after deposit with an overnight courier service, in
      each
      case properly addressed to the party to receive the same. The addresses and
      facsimile numbers for such communications shall be:

     

    If
      to the
      Seller:

     

    Wo
      Hing
      Li

    c/o
      China
      Precision Steel, Inc.

    8th
      Floor, Teda Building

    87
      Wing
      Lok Street

    Sheung
      Wan

    Hong
      Kong, The People's Republic of China

    Telephone:
      +852-2543-8223

    Facsimile:
      +021-59940382

    


    with
      a
      copy to (for information purposes only):

    


    Guzov
      Ofsink, LLC

    600
      Madison Avenue, 14th Floor

    New
      York,
      New York 10022

    Attention:
      Darren L. Ofsink, Esq.

    Telephone:
      (212) 371-8008

    Facsimile:
      (212) 688-7273

     

    
      
        
        

      

      
        -
          11
          -

        
          

        

      

      
        
        

      

    

    


    If
      to the
      Purchasers:

     

    Hudson
      Bay Fund LP

    120
      Broadway, 40th Floor

    New
      York,
      New York 10271

    Attention:
      Yoav Roth

    Telephone:
      (212) 571-1244

    Facsimile:
      (212) 571-1279

    


    Hudson
      Bay Overseas Fund LTD

    120
      Broadway, 40th
      Floor

    New
      York,
      NY 10271

    Attention:
      Yoav Roth

    Telephone:
      (212) 571-1244

    Facsimile:
      (212) 571-1279

    


    with
      a
      copy to (for information purposes only):

     

    Schulte
      Roth & Zabel LLP

    919
      Third
      Avenue

    New
      York,
      New York 10022

    Attention:
      Eleazer Klein, Esq.

    Telephone:
      (212) 756-2000

    Facsimile:
      (212) 593-5955

     

    Written
      confirmation of receipt (A) given by the recipient of such notice, consent,
      waiver or other communication, (B) mechanically or electronically generated
      by
      the sender's facsimile machine containing the time, date, recipient facsimile
      number and an image of the first page of such transmission or (C) provided
      by an
      overnight courier service shall be rebuttable evidence of personal service,
      receipt by facsimile or receipt from an overnight courier service in accordance
      with clause (a) or (c) above, respectively.

     

    6.7  Successors
      and Assigns.

     

    This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns. Neither the Seller nor the Purchasers
      shall assign this Agreement or any of their respective rights or obligations
      hereunder without the prior written consent of the other party.

     

    6.8  No
      Third Party Beneficiaries.

     

    This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person. 

     

    
      
        
        

      

      
        -
          12
          -

        
          

        

      

      
        
        

      

    

     

    6.9  Survival.

     

    Unless
      this Agreement is terminated by mutual consent of the Seller and the Purchasers,
      the representations and warranties of the Seller and the Purchasers contained
      in
      Articles II and III shall survive the Closing Date and the delivery of the
      Purchased Shares.

     

    6.10  Further
      Assurances.

     

    Each
      party shall use its commercially reasonable efforts to do and perform, or cause
      to be done and performed, all such further acts and things, and shall execute
      and deliver all such other agreements, certificates, instruments and documents,
      as any other party may reasonably request in order to carry out the intent
      and
      accomplish the purposes of this Agreement and the consummation of the
      transactions contemplated hereby.

     

    6.11  No
      Strict Construction.

     

    The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    [The
      remainder of the page is intentionally left blank]

     

     

    
      
        
        

      

      
        -
          13
          -

        
          

        

      

      
        
        

      

    

     

    



    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Stock Purchase Agreement as of the date first
      written above.

     

     

    
      	 	SELLER:
	 	 	 
	 	 
	 	 
              
	 	WO HING
              LI
	 	 	 
	 	 	 
	 	 	 
	 	PURCHASERS:
	 	 
	 	HUDSON BAY FUND,
              LP
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:

              Title:

            
	 	
               

            


    

    
      	 	 	 
	 	HUDSON
              BAY
              OVERSEAS FUND, LTD.
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:

              Title:
                

            
	 	 


    

     

    
      
        
        

      

      
        -
          14
          -

        
          

        

      

      
        
        

      

    

     

    Schedule
      I

    


    Purchased
      Shares

    


    


    
      	
              Hudson
                Bay Fund, LP

            	
              1,515,668

            
	
              Hudson
                Bay Overseas Fund, Ltd.

            	
              2,009,142

            


    

     

     

    
      
        
        

      

      
        -
          15
          -

        
          

        

      

      
        
        

      

    

     

    Exhibit
      A

     

     

     

    
      
        
        

      

      
        -
          16
          -