CHINA GERUI ADVANCED MATERIALS GROUP LIMITED

    2010
SHARE INCENTIVE PLAN

    


    
      
        	
                1.

              	
                Purpose

              


      

    

     

    The China
Gerui Advanced Materials Group Limited 2010 Share Incentive Plan is intended to
promote the best interests of China Gerui Advanced Materials Group Limited and
its shareholders by (i) assisting the Corporation and its Affiliates in the
recruitment and retention of persons with ability and initiative, (ii) providing
an incentive to such persons to contribute to the growth and success of the
Corporation’s businesses by affording such persons equity participation in the
Corporation and (iii) associating the interests of such persons with those of
the Corporation and its affiliates and shareholders.

     

    
      
        	
                2.

              	
                Definitions

              


      

    

     

    As used
in this Plan the following definitions shall apply:

     

    A.          “Affiliate” means (i)
any Subsidiary, (ii) any Parent, (iii) any corporation, trade or business
(including, without limitation, a partnership or limited liability company)
which is directly or indirectly controlled fifty percent (50%) or more (whether
by ownership of stock, assets or an equivalent ownership interest or voting
interest) by the Corporation or one of its Affiliates, and (iv) any other entity
in which the Corporation or any of its Affiliates has a material equity interest
and which is designated as an “Affiliate” by resolution of the
Committee.

     

    B.          “Award” means any
Option or Share Award granted hereunder.

     

    C.          “Board” means the
Board of Directors of the Corporation.

     

    D.          “Cause” means (i) in
the case where the Participant does not have an employment, consulting or
similar agreement in effect with the Corporation or its Affiliate at the time of
grant of the Award or where there is such an agreement but it does not define
“cause” (or words of like import), conduct related to the Participant’s service
to the Corporation or an Affiliate for which either criminal or civil penalties
against the Participant may be sought, misconduct, insubordination, material
violation of the Corporation or its Affiliate’s policies, disclosing or misusing
any confidential information or material concerning the Corporation or any
Affiliate or material breach of any employment, consulting agreement or similar
agreement, or (ii) in the case where the Participant has an employment
agreement, consulting agreement or similar agreement in effect with the
Corporation or its Affiliate at the time of grant of the Award that defines a
termination for “cause” (or words of like import), “cause” as defined in such
agreement; provided, however, that with regard to any agreement that defines
“cause” on occurrence of or in connection with change of control, such
definition of  “cause” shall not apply until a change of control
actually occurs and then only with regard to a termination
thereafter.

     

    E.          “Code” means the
Internal Revenue Code of 1986, and any amendments thereto.

     

    F.          “Committee” means the
Board or any Committee of the Board to which the Board has delegated any
responsibility for the implementation, interpretation or administration of the
Plan.

     

    G.          “Consultant” means (i)
any person performing consulting or advisory services for the Corporation or any
Affiliate, or (ii) a director of an Affiliate.

     

    H.          “Continuous Service”
means that the Participant’s service with the Corporation or an Affiliate,
whether as an employee, Director or Consultant, is not interrupted or
terminated.  A Participant’s Continuous Service shall not be deemed to
have been interrupted or terminated merely because of a change in the capacity
in which the Participant renders service to the Corporation or an Affiliate as
an employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant’s Continuous Service.  The
Participant’s Continuous Service shall be deemed to have terminated either upon
an actual termination or upon the entity for which the Participant is performing
services ceasing to be an Affiliate of the Corporation.  The Committee
shall determine whether Continuous Service shall be considered interrupted in
the case of any leave of absence approved by the Corporation, including sick
leave, military leave or any other personal leave.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    I.          
“Corporation”
means China Gerui Advanced Materials Group Limited, a corporation incorporated
under the laws of the British Virgin Islands.

     

    J.          
“Corporation
Law” means the general corporation law of the jurisdiction of
incorporation of the Corporation.

     

    K.          “Director” means a
member of the Board.

     

    L.          “Disability” shall,
except as otherwise provided in an Award Agreement, mean the Participant is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months.

     

    M.         “Eligible Person”
means an employee of the Corporation or an Affiliate (including a corporation
that becomes an Affiliate after the adoption of this Plan), a Director or a
Consultant to the Corporation or an Affiliate (including a corporation that
becomes an Affiliate after the adoption of this Plan) .

     

    N.          “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    O.          “Fair Market Value”
means, on any given date, the current fair market value of the Ordinary Shares
as determined as follows:

     

    (i)          If
the Ordinary Shares are traded on The NASDAQ Stock Market or is listed on a
national securities exchange, the closing price for the day of determination as
quoted on such market or exchange which is the primary market or exchange for
trading of the Ordinary Shares or if no trading occurs on such date, the last
day on which trading occurred, or such other appropriate date as determined by
the Committee in its discretion, as reported in The Wall Street Journal or such
other source as the Committee deems reliable;

     

    (ii)         If
the Ordinary Shares are regularly quoted by a recognized securities dealer but
selling prices are not reported, their Fair Market Value shall be the mean
between the high and the low asked prices for the Ordinary Shares for the day of
determination; or

     

    (iii)        In
the absence of an established market for the Ordinary Shares, Fair Market Value
shall be determined by the Committee in good faith.

     

    P.          “Nonqualified Share
Option” means an Option (or portion thereof) which is not intended or
does not for any reason qualify as an incentive stock option within the meaning
of Section 422 of the Code.

     

    Q.          “Option” means any
option to purchase Ordinary Shares granted under this Plan.

     

    R.          “Ordinary Shares”
means the ordinary shares, no par value, of the Corporation.

     

    S.          “Parent” means any
corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation if each of the corporations (other than the
Corporation) owns stock possessing at least fifty percent (50%) of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.


    
      
         


      

      
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    T.          “Participant” means an
Eligible Person who is selected by the Committee to receive an Award and is
party to an agreement setting forth the terms of the Award, as
appropriate.

     

    U.          “Plan” means this
China Gerui Advanced Materials Limited 2010 Share Incentive Plan.

     

    V.          “Restricted Share
Award” means an award of Ordinary Shares under Section 7.A.

     

    W.         “Securities Act” means
the Securities Act of 1933, as amended.

     

    X.          “Share Award” means a
Restricted Share Award.

     

    Y.          “Share Award
Agreement” means an agreement (written or electronic) between the
Corporation and a Participant setting forth the specific terms and conditions of
a Share Award granted to the Participant under Section 7.  Each Share
Award Agreement shall be subject to the terms and conditions of the Plan and
shall include such terms and conditions as the Committee shall
authorize.

     

    Z.          “Share Option
Agreement” means an agreement (written or electronic) between the
Corporation and a Participant setting forth the specific terms and conditions of
an Option granted to the Participant under Section 6.  Each Share
Option Agreement shall be subject to the terms and conditions of the Plan and
shall include such terms and conditions as the Committee shall
authorize.

     

    AA.      “Subsidiary” means any
corporation (other than the Corporation) in an unbroken chain of corporations
beginning with the Corporation if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing at least fifty percent
(50%) of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

     

    
      
        	
                3.

              	
                Administration

              


      

    

     

    A.          Delegation of
Administration.  The Board shall be the sole Committee of the
Plan unless the Board delegates all or any portion of its authority to
administer the Plan to a Committee.  To the extent not prohibited by
the charter or bylaws of the Corporation, the Board may delegate all or a
portion of its authority to administer the Plan to a Committee of the Board
appointed by the Board and constituted in compliance with the applicable
Corporation Law.  The Committee shall consist solely of three (3) or
more Directors who are, to the extent required by the rules of the market on
which the Corporation’s shares are traded or the exchange on which the
Corporation’ shares are listed, “independent” within the meaning of such
rules.

     

    B.          Powers of the
Committee.  Subject to the provisions of the Plan, and in the
case of a Committee appointed by the Board, the specific duties delegated to
such Committee, the Committee shall have the authority:

     

    (i)           To
construe and interpret all provisions of this Plan and all Share Option
Agreements and Share Award Agreements under this Plan.

     

    (ii)          To
determine the Fair Market Value of Ordinary Shares.

     

    (iii)         To
select the Eligible Persons to whom Awards are granted from time to time
hereunder.


    
      
         


      

      
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    (iv)          To
determine the number of Ordinary Shares covered by an Award; and determine such
other terms and conditions, not inconsistent with the terms of the Plan, of each
such Award.  Such terms and conditions include, but are not limited
to, the exercise price of an Option, purchase price of Ordinary Shares subject
to a Share Award, the time or times when Options or Share Awards may be
exercised or Ordinary Shares issued thereunder, the right of the Corporation to
repurchase Ordinary Shares issued pursuant to the exercise of an Option or a
Share Award and other restrictions or limitations (in addition to those
contained in the Plan) on the forfeitability or transferability of Options,
Share Awards or Ordinary Shares issued upon exercise of an Option or pursuant to
an Award.  Such terms may include conditions which shall be determined
by the Committee and need not be uniform with respect to
Participants.

     

    (v)         To
accelerate the time at which any Option or Share Award may be exercised, or the
time at which a Share Award or Ordinary Shares issued under the Plan may become
transferable or nonforfeitable.

     

    (vi)         To
determine whether and under what circumstances an Option may be settled in cash,
Ordinary Shares or other property under Section 6.H instead of Ordinary
Shares.

     

    (vii)        To
amend, cancel, extend, renew, accept the surrender of, modify or accelerate the
vesting of or lapse of restrictions on all or any portion of an outstanding
Award, including the repricing of the exercise price for an outstanding
Option.  Except as specifically permitted by the Plan, the Share
Option Agreement or Share Award Agreement or as required to comply with
applicable law, regulation or rule, no amendment, cancellation or modification
shall, without a Participant’s consent, adversely affect any rights of the
Participant.

     

    (viii)       To
prescribe the form of Share Option Agreements and Share Award Agreements; to
adopt policies and procedures for the exercise of Options or Share Awards,
including the satisfaction of withholding obligations; to adopt, amend, and
rescind policies and procedures pertaining to the administration of the Plan;
and to make all other determinations necessary or advisable for the
administration of this Plan.

     

    The
express grant in the Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee; provided that a
Committee of the Board may not exercise any right or power reserved to the
Board.  Any decision made, or action taken, by the Committee or in
connection with the administration of this Plan shall be final, conclusive and
binding on all persons having an interest in the Plan.

     

    
      
        	
                4.

              	
                Eligibility

              


      

    

     

    A.          Eligibility for
Awards.  Awards may be granted to any Eligible Person selected
by the Committee.

     

    B.          Eligibility of
Consultants. A Consultant shall be an Eligible Person only if the offer
or sale of the Corporation’s securities would be eligible for registration on
Form S-8 Registration Statement because of the identity and nature of the
service provided by such person, unless the Corporation determines that an offer
or sale of the Corporation’s securities to such person will satisfy another
exemption from the registration under the Securities Act and complies with the
securities laws of all other jurisdictions applicable to such offer or
sale.

     

    C.          Substitution
Awards.  The Committee may make Awards and may grant Options
under the Plan by assumption, in substitution or replacement of performance
shares, phantom shares, share awards, stock options, stock appreciation rights
or similar awards granted by another entity (including an Affiliate) in
connection with a merger, consolidation, acquisition of property or stock or
similar transaction affecting the Corporation or its
Affiliate.  Notwithstanding any provision of the Plan (other than the
maximum number of Ordinary Shares that may be issued under the Plan), the terms
of such assumed, substituted, or replaced Awards shall be as the Committee, in
its discretion, determines is appropriate.


    
      
         


      

      
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                5.

              	
                Ordinary
      Shares Subject to Plan

              


      

    

     

    A.          Share Reserve and
Limitations on Grants.  Subject to adjustment as provided in
Section 8, the maximum aggregate number of Ordinary Shares that may be (i)
issued under this Plan pursuant to the exercise of Options, and (ii) issued
pursuant to Share Awards is 3,500,000.

     

    B.          Reversion of
Shares.  If an Option or Share Award is terminated, expires or
becomes unexercisable, in whole or in part, for any reason, the unissued or
unpurchased Ordinary Shares which were subject thereto shall become available
for future grant under the Plan.  Ordinary Shares that have been
actually issued under the Plan shall not be returned to the share reserve for
future grants under the Plan; except that Ordinary Shares issued pursuant to a
Share Award which are forfeited to the Corporation or repurchased by the
Corporation at the original purchase price of such shares, shall be returned to
the share reserve for future grant under the Plan.

     

    C.          Source of
Shares.  Ordinary Shares issued under the Plan may be shares of
authorized and unissued Ordinary Shares or previously issued Ordinary Shares
that have been reacquired by the Corporation and cancelled or maintained as
treasury shares.

     

    
      
        	
                6.

              	
                Options

              


      

    

     

    A.          Award.  In
accordance with the provisions of Section 4, the Committee will designate each
Eligible Person to whom an Option is to be granted and will specify the number
of Ordinary Shares covered by such Option.  The Share Option Agreement
shall specify the vesting schedule applicable to such Option and any other terms
of such Option.  Options granted under the Plan are intended to be
Nonqualified Share Options.

     

    B.          Option
Price.  The exercise price per share for Ordinary Shares
subject to an Option shall be not less than (a) par value or (b) the Fair Market
Value of the Ordinary Shares on the date of grant unless the Committee
determines that a grant with an exercise price less than Fair Market Value is
either (i) awarded to a Participant who is not subject to Section 409A or 457A
of the Code or (ii) if the Participant is subject to Section 409A or 457A of the
Code, the terms of such Option will comply with Section 409A of the Code and
will not result in taxation by reason of Section 457A(a) of the
Code.

     

    C.          Maximum Option
Period.  The maximum period during which an Option may be
exercised shall be determined by the Committee on the date of grant, except that
no Option shall be exercisable after the expiration of ten years from the date
such Option was granted.

     

    D.          Nontransferability.  Except
to the extent transferability of an Option is provided for in the Share Option
Agreement or is approved by the Committee, during the lifetime of the
Participant to whom the Option is granted, such Option may be exercised only by
the Participant.  The holder of an Option transferred pursuant to this
section shall be bound by the same terms and conditions that governed the Option
during the period that it was held by the Participant.  No right or
interest of a Participant in any Option shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.

     

    E.          Vesting and Termination of
Continuous Service.  Except as otherwise provided in a Share
Option Agreement, the following rules shall apply:

     

    (i)           Options
will vest as provided in the Share Option Agreement.  An Option will
be exercisable only to the extent that it is vested on the date of
exercise.  Vesting of an Option will cease on the date of the
Participant's termination of Continuous Service and the Option will be
exercisable only to the extent the Option is vested on the date of termination
of Continuous Service.


    
      
         


      

      
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    (ii)          If
the Participant's termination of Continuous Service is for reason of death or
Disability, the right to exercise the Option (to the extent vested) will expire,
unless otherwise specified in the Share Option Agreement, on the earlier of (i)
one (1) year after the date of the Participant's termination of Continuous
Service, or (ii) the expiration date under the terms of the
Agreement.  Until the expiration date, the Participant's heirs,
legatees or legal representative may exercise the Option, except to the extent
the Option was previously transferred pursuant to Section 6.D.

     

    (iii)         If
the Participant's termination of Continuous Service is an involuntary
termination without Cause or a voluntary termination (other than a voluntary
termination described in Section 6.E.(iv)), the right to exercise the Option (to
the extent that it is vested) will expire, unless otherwise specified in the
Share Option Agreement, on the earlier of (i) three (3) months after the date of
the Participant's termination of Continuous Service, or (ii) the expiration date
under the terms of the Agreement. If the Participant’s termination of Continuous
Service is an involuntary termination without Cause or a voluntary termination
(other than a voluntary termination described in Section 6.E(iv)) and the
Participant dies after his or her termination of Continuous Service but before
the right to exercise the Option has expired, the right to exercise the Option
(to the extent vested) shall expire, unless otherwise specified in the Share
Option Agreement, on the earlier of (i) one (1) year after the date of the
Participant's termination of Continuous Service or (ii) the date the Option
expires under the terms of the Share Option Agreement, and, until expiration,
the Participant's heirs, legatees or legal representative may exercise the
Option, except to the extent the Option was previously transferred pursuant to
Section 6.D.

     

    (iv)         If
the Participant’s termination of Continuous Service is for Cause or is a
voluntary termination at any time after an event which would be grounds for
termination of the Participant’s Continuous Service for Cause, the right to
exercise the Option shall expire, unless otherwise specified in the Share Option
Agreement, as of the date of the Participant’s termination of Continuous
Service.

     

    F.          Exercise.  An
Option shall be exercised by completion, execution and delivery of notice
(written or electronic) to the Corporation which states (i) the Option holder’s
intent to exercise the Option, (ii) the number of Ordinary Shares with respect
to which the Option is being exercised, (iii) such other representations and
agreements as may be required by the Corporation and (iv) the method for
satisfying any applicable tax withholding as provided in Section
9.  Such notice of exercise shall be provided on such form or by such
method as the Committee may designate, and payment of the exercise price shall
be made in accordance with Section 6.G.  Subject to the provisions of
this Plan and the applicable Share Option Agreement, an Option may be exercised
to the extent vested in whole at any time or in part from time to time at such
times and in compliance with such requirements as the Committee shall
determine.  A partial exercise of an Option shall not affect the right
to exercise the Option from time to time in accordance with this Plan and the
applicable Share Option Agreement with respect to the remaining shares subject
to the Option.  An Option may not be exercised with respect to
fractional Ordinary Shares.

     

    G.          Payment.  Unless
otherwise provided by the Share Option Agreement, payment of the exercise price
for an Option shall be made in cash or a cash equivalent acceptable to the
Committee or such other method as may be provided for in the Share Option
Agreement.  With the consent of the Committee, payment of all or part
of the exercise price of an Option may also be made (i) by surrender to the
Corporation (or delivery to the Corporation of a properly executed form of
attestation of ownership) of Ordinary Shares that have been held for at least
six (6) months prior to the date of exercise, or (ii) if the Ordinary Shares are
traded on an established securities market, the Committee may approve a
“cashless exercise” by payment of the exercise price by a broker-dealer or by
the Option holder with cash advanced by the broker-dealer if the exercise notice
is accompanied by the Option holder's written irrevocable instructions to
deliver the Ordinary Shares acquired upon exercise of the Option to the
broker-dealer or by delivery of the Ordinary Shares to the broker-dealer with an
irrevocable commitment by the broker-dealer to forward the exercise price to the
Corporation.  If Ordinary Shares are used to pay all or part of the
exercise price, the sum of the cash or cash equivalent and the Fair Market Value
(determined as of the date of exercise) of the shares surrendered must not be
less than the Option price of the shares for which the Option is being
exercised.

     

    H.          Buyout
Provisions.  The Committee may at any time offer to buy out an
Option previously granted for a payment in cash, Ordinary Shares or other
property.  Such buyout offer shall be on such terms and conditions as
the Committee shall determine.


    
      
         


      

      
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    I.          Shareholder
Rights.  No Participant shall have any rights as a shareholder
with respect to shares subject to  an Option until the date of
exercise of such Option and the certificate for Ordinary Shares to be received
on exercise of such Option has been issued by the Corporation.

     

    
      
        	
                7.

              	
                Share
      Awards

              


      

    

     

    A.          Restricted Share
Awards.  Each Share Award Agreement for a Restricted Share
Award shall be in such form and shall contain such terms and conditions as the
Committee shall deem appropriate.  The terms and conditions of the
Share Award Agreements for Restricted Share Awards may change from time to time,
and the terms and conditions of separate Restricted Share Awards need not be
identical, but each Restricted Share Award shall include (through incorporation
of the provisions hereof by references in the agreement or otherwise) the
substance of each of the following provisions.

     

    (i)           Purchase
Price.  The purchase price, if any, of a restricted share
awards shall be determined by the Committee.

     

    (ii)          Consideration.  The
purchase price of Ordinary Shares acquired pursuant to the Restricted Share
Award shall be paid either:  (i) in cash at the time of purchase; (ii)
at the discretion of the Committee and to the extent permitted under applicable
law, according to a deferred payment or other similar arrangement with the
Participant; or (iii) in any other form of legal consideration that may be
acceptable to the Committee in its discretion.

     

    (iii)         Vesting.  Ordinary
Shares acquired under a Restricted Share Award may, but need not, be subject to
a share repurchase option in favor of the Corporation in accordance with a
vesting schedule to be determined by the Committee.

     

    (iv)         Participant’s Termination of
Service.  In the event of a Participant’s termination of
Continuous Service, the Corporation may repurchase or otherwise reacquire any or
all of the Ordinary Shares held by the Participant which have not vested as of
the date of termination under the terms of the Share Award Agreement for such
Restricted Share Award.

     

    (v)          Transferability.  Rights
to acquire Ordinary Shares under a Restricted Share Award shall be transferable
by the Participant only upon such terms and conditions as are set forth in the
Share Award Agreement for such Restricted Share Award, as the Committee shall
determine in its discretion, so long as Ordinary Shares granted under the
Restricted Share Award remains subject to the terms of the Share Award
Agreement.

    


    
      
        	
                8.

              	
                Changes
      in Capital Structure

              


      

    

     

    A.          No Limitations of
Rights.  The existence of outstanding Awards shall not affect
in any way the right or power of the Corporation or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Corporation's capital structure or its business, or any merger or
consolidation of the Corporation, or any issuance of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Ordinary Shares or
the rights thereof, or the dissolution or liquidation of the Corporation, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.

     

    B.          Changes in
Capitalization.  If the Corporation shall effect a subdivision
or consolidation of shares or other capital readjustment, the payment of a share
dividend, or other increase or reduction of the number of the Ordinary Shares
outstanding, without receiving consideration therefor in money, services or
property, then (i) the number, class, and per share price of Ordinary Shares
subject to outstanding Options and other Awards hereunder and (ii) the number
and class of shares then reserved for issuance under the Plan shall be
appropriately and proportionately adjusted.  No adjustment shall be
made in a manner which will result in an Award that is not subject to Section
409A of the Code becoming subject to Section 409A of the Code.  The
conversion of convertible securities of the Corporation shall not be treated as
effected “without receiving consideration.” The Committee shall make such
adjustments, and its determinations shall be final, binding and
conclusive.


    
      
         


      

      
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    C.          Merger, Consolidation or
Asset Sale. If the Corporation is merged or consolidated with another
entity or sells or otherwise disposes of substantially all of its assets to
another company while Options or Share Awards remain outstanding under the Plan,
unless provisions are made in connection with such transaction for the
continuance of the Plan and/or the assumption or substitution of such Options or
Share Awards with new options or share awards covering the shares of the
successor company, or parent or subsidiary thereof, with appropriate adjustments
as to the number and kind of shares and prices, then all outstanding Options and
Share Awards which have not been continued, assumed or for which a substituted
award has not been granted shall, whether or not vested or then exercisable,
unless otherwise specified in the applicable Share Option Agreement or Share
Award Agreement, terminate immediately as of the effective date of any such
merger, consolidation or sale.

     

    D.          Limitation on
Adjustment. Except as previously expressly provided, neither the issuance
by the Corporation of shares of any class, or securities convertible into shares
of any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Corporation convertible into such
shares or other securities, nor the increase or decrease of the number of
authorized shares, nor the addition or deletion of classes of shares, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number, class or price of Ordinary Shares then subject to outstanding Options or
Share Awards.

    


    
      
        	
                9.

              	
                Withholding
      of Taxes

              


      

    

     

    The
Corporation or an Affiliate shall have the right, before any certificate for any
Ordinary Shares is delivered, to deduct or withhold from any payment owed to a
Participant any amount that is necessary in order to satisfy any withholding
requirement that the Corporation or Affiliate in good faith believes is imposed
upon it in connection with Federal, state, or local taxes, or other applicable
tax authority, including transfer taxes, as a result of the issuance of, or
lapse of restrictions on, such Ordinary Shares, or otherwise require such
Participant to make provision for payment of any such withholding
amount.  Subject to such conditions as may be established by the
Committee, the Committee may permit a Participant to (i) have Ordinary Shares
otherwise issuable under an Option or Share Award withheld to the extent
necessary to comply with minimum statutory withholding rate requirements for
supplemental income, (ii) tender back to the Corporation Ordinary Shares
received pursuant to an Option or Share Award to the extent necessary to comply
with minimum statutory withholding rate requirements for supplemental income,
(iii) deliver to the Corporation previously acquired Ordinary Shares, (iv) have
funds withheld from payments of wages, salary or other cash compensation due the
Participant, or (v) pay the Corporation or its Affiliate in cash, in order to
satisfy part or all of the obligations for any taxes required to be withheld or
otherwise deducted and paid by the Corporation or its Affiliate with respect to
the Option or Share Award.

    


    
      
        	
                10.

              	
                Compliance
      with Law and Approval of Regulatory
Bodies

              


      

    

     

    A.          General
Requirements.  No Option or Share Award shall be exercisable,
no Ordinary Shares shall be issued, no certificates for Ordinary Shares shall be
delivered, and no payment shall be made under this Plan except in compliance
with all applicable federal and state laws and regulations (including, without
limitation, withholding tax requirements), any listing agreement to which the
Corporation is a party, and the rules of all domestic stock exchanges or
quotation systems on which the Corporation's shares may be
listed.  The Corporation shall have the right to rely on an opinion of
its counsel as to such compliance.  Any share certificate issued to
evidence Ordinary Shares when a Share Award is granted or for which an Option or
Share Award is exercised may bear such legends and statements as the Committee
may deem advisable to assure compliance with federal and state laws and
regulations.  No Option or Share Award shall be exercisable, no Share
Award shall be granted, no Ordinary Shares shall be issued, no certificate for
shares shall be delivered, and no payment shall be made under this Plan until
the Corporation has obtained such consent or approval as the Committee may deem
advisable from regulatory bodies having jurisdiction over such
matters.


    
      
         


      

      
        -8-

        
          

        

      

      
         


      

    

     

    B.          Participant
Representations.  The Committee may require that a Participant,
as a condition to receipt or exercise of a particular award, execute and deliver
to the Corporation a written statement, in form satisfactory to the Committee,
in which the Participant represents and warrants that the shares are being
acquired for such person's own account, for investment only and not with a view
to the resale or distribution thereof.  The Participant shall, at the
request of the Committee, be required to represent and warrant in writing that
any subsequent resale or distribution of Ordinary Shares by the Participant
shall be made only pursuant to either (i) a registration statement on an
appropriate form under the Securities Act of 1933, which registration statement
has become effective and is current with regard to the shares being sold, or
(ii) a specific exemption from the registration requirements of the
Securities Act of 1933, but in claiming such exemption the Participant shall,
prior to any offer of sale or sale of such shares, obtain a prior favorable
written opinion of counsel, in form and substance satisfactory to counsel for
the Corporation, as to the application of such exemption thereto.

    


    
      
        	
                11.

              	
                General
      Provisions

              


      

    

     

    A.          Effect on Employment and
Service.  Neither the adoption of this Plan, its operation, nor
any documents describing or referring to this Plan (or any part thereof) shall
(i) confer upon any individual any right to continue in the employ or service of
the Corporation or an Affiliate, (ii) in any way affect any right and power of
the Corporation or an Affiliate to change an individual’s duties or terminate
the employment or service of any individual at any time with or without
assigning a reason therefor or (iii) except to the extent the Committee grants
an Option or Share Award to such individual, confer on any individual the right
to participate in the benefits of the Plan.

     

    B.          Use of Proceeds. The
proceeds received by the Corporation from the sale of Ordinary Shares pursuant
to this Plan shall be used for general corporate purposes.

     

    C.          Unfunded
Plan.  The Plan, insofar as it provides for grants, shall be
unfunded, and the Corporation shall not be required to segregate any assets that
may at any time be represented by grants under this Plan.  Any
liability of the Corporation to any person with respect to any grant under this
Plan shall be based solely upon any contractual obligations that may be created
pursuant to this Plan.  No such obligation of the Corporation shall be
deemed to be secured by any pledge of, or other encumbrance on, any property of
the Corporation.

     

    D.          Rules of
Construction.  Headings are given to the Sections of this Plan
solely as a convenience to facilitate reference.  The reference to any
statute, regulation, or other provision of law shall be construed to refer to
any amendment to or successor of such provision of law.

     

    E.          Choice of
Law.  The Plan and all Share Option Agreements and Share Award
Agreements entered into under the Plan shall be interpreted under the law of the
State of New York excluding (to the greatest extent permissible by law) any rule
of law that would cause the application of the laws of any jurisdiction other
than the State of New York.

     

    F.          Fractional
Shares.  The Corporation shall not be required to issue
fractional shares pursuant to the Plan.  The Committee may provide for
elimination of fractional shares or the settlement of such fraction shares in
cash.

     

    G.          Foreign Employees. In
order to facilitate the making of any grant or combination of grants under the
Plan, the Committee may provide for such special terms for Awards to
Participants who are foreign nationals, or who are employed by the Corporation
or any Affiliate outside of the United States, as the Committee may consider
necessary or appropriate to accommodate differences in local law, tax policy or
custom. Moreover, the Committee may approve such supplements to, or amendments,
restatements or alternative versions of, the Plan as it may consider necessary
or appropriate for such purposes without thereby affecting the terms of the
Plan, as then in effect, unless the Plan could have been amended to eliminate
such inconsistency without further approval by the shareholders of the
Corporation.


    
      
         


      

      
        -9-

        
          

        

      

      
         


      

    

     

    H.          Compliance with Section 409A
and 457A of the Code. To the extent that an Award is intended to be
exempt from coverage by Section 409A of the Code or Section 457A of the Code,
the Committee may without the consent of the Participant, and without regard to
whether the amendment is adverse to the interests of the
Participant,  amend the terms of the Award as it deems appropriate to
provide for the exemption of such Award from such sections of the
Code.   To the extent that an Award is intended to be covered by
and comply with Section 409A of the Code, the Committee may without the consent
of the Participant, and without regard to whether the amendment is adverse to
the interests of the Participant, amend the terms of the Award as it deems
appropriate to comply with the rules of Section 409A of the Code.

     

    
      
        	
                12.

              	
                Amendment
      and Termination

              


      

    

     

    The Board
may amend or terminate this Plan from time to time; provided, however,
shareholder approval shall be required for any amendment that (i) increases the
aggregate number of Ordinary Shares that may be issued under the Plan, except as
contemplated by Section 5.A or 8.B, or (ii) shareholder approval is required by
the terms of any applicable law, regulation or rule, including the rules of any
market on which the Corporation shares are traded or exchanged on which the
Corporation shares are listed.  Except as specifically permitted by
the Plan, Share Option Agreement or Share Award Agreement or as required to
comply with applicable law, regulation or rule, no amendment shall, without a
Participant’s consent, adversely affect any rights of such Participant under any
Option or Share Award outstanding at the time such amendment is
made.  Any  amendment requiring shareholder approval shall
be approved by the shareholders of the Corporation within twelve (12) months of
the date such amendment is adopted by the Board.

    


    
      
        	
                13.

              	
                Effective
      Date of Plan

              


      

    

     

    The Plan
shall become effective as of November 16, 2010 upon adoption by the Board,
subject to approval within twelve (12) months by the shareholders holding a
simple majority of the votes of the shareholders entitled to vote and voting on
the proposal. . Unless and until the plan has been approved by the shareholders
of the Corporation, no Option may be exercised, and no Share Awards or Ordinary
Shares may be issued under the Plan.  In the event that the
shareholders of the Corporation shall not approve the Plan within such twelve
(12) month period, the Plan and any previously granted Option shall
terminate.


    
      
         


      

      
        -10-

        
          

        

      

      
         


      

    

     

    The
foregoing China Gerui Advanced Materials Group Limited 2010 Share Incentive Plan
was duly adopted and approved by the Board of Directors on the 16th day of
November 16, 2010.

     

    
      
        	 
      	
                CHINA
      GERUI ADVANCED MATERIALS GROUP LIMITED

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Mingwang Lu

              
	 
      	
                Name: 

              	
                Mingwang Lu

              
	 
      	
                Chairman
      and Chief Executive Officer

              
	 
      	 
      	 
      
	 
      	
                Date:

              	
                11/16/2010

              


      

    


    
      
         


      

      
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