Document:

COMMON
      STOCK PURCHASE WARRANT

     

     

    THE
      WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
      DELIVERABLE UPON EXERCISE HEREUNDER, HAVE NOT BEEN AND WILL NOT BE REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES
      LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED
      WITHOUT REGISTRATION UNDER THE ACT UNLESS PURSUANT TO (A) AN OPINION OF COUNSEL,
      IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT
      THAT
      REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) AN
      EXEMPTION FROM REGISTRATION UNDER THE ACT IN RELIANCE UPON RULE 144 PROMULGATED
      THEREUNDER.

     

    Date:
      February 22, 2007

     

     

    
      	
              No. W-4

            	
              666,667
                Warrants 

            

    

     

     

    WARRANT
      TO PURCHASE COMMON STOCK

     

    OF

     

    CHINA
      PRECISION STEEL, INC.

     

    THIS
      CERTIFIES THAT, for value received, Belmont Capital Group Limited (“Holder”), is
      entitled, subject to the terms and conditions of this Common Stock Purchase
      Warrant (this “Warrant”), at any time or from time to time after the date hereof
      (the “Effective Date”), to purchase up to six hundred and sixty-six thousand six
      hundred and sixty-seven (666,667) shares (the “Warrant Shares”) of Common Stock
      (as defined below), from China Precision Steel, Inc., a Colorado corporation
      (the “Company”), at an exercise price per share equal to $3.00 (the “Purchase
      Price). This Warrant shall expire at 5:00 p.m. Eastern Time on that date which
      is thirty-six (36) months from the date of this Warrant (the “Expiration Date”).
      Both the number of shares of Common Stock purchasable upon exercise of this
      Warrant and the Purchase Price are subject to adjustment and change as provided
      herein. This Warrant is issued in connection with that certain Consulting
      Agreement (the “Consulting Agreement”), dated as of December 2, 2005, by and
      between the Holder and Partner Success Holdings Limited, pursuant to which
      the
      Holder was granted a 3-year option to invest up to US$2.0 million in the Company
      as partial compensation for services render thereunder.

     

    1. CERTAIN
      DEFINITIONS. As used in this Warrant the following terms shall have the
      following respective meanings:

     

    “1933
      Act” shall mean the Securities Act of 1933, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Common
      Stock” shall mean the common stock of the Company, par value $0.001 per share,
      and any other securities at any time receivable or issuable upon exercise of
      this Warrant.

     

    “Excluded
      Registration” means (i) a registration relating to the sale of securities to
      employees of the Company or a subsidiary pursuant to a stock option, stock
      purchase, or similar plan; (ii) a registration relating to an SEC Rule 145
      transaction; (iii) a registration on any form that does not include
      substantially the same information as would be required to be included in a
      registration statement covering the resale by stockholders of the Company’s
      Common Stock; or (iv) a registration in which the only Common Stock being
      registered is Common Stock issuable upon conversion of debt securities that
      are
      also being registered.

     

    “Fair
      Market Value” or “FMV” of a share of Common Stock as of a particular date shall
      mean: 

     

    (a) If
      traded
      on a securities exchange, the Fair Market Value shall be deemed to be the
      average of the closing prices of the Common Stock of the Company on such
      exchange over the five (5) business days ending immediately prior to the
      applicable date of valuation; 

     

    (b) If
      actively traded over-the-counter, the Fair Market Value shall be deemed to
      be
      the average of the closing bid prices over the 30-day period ending immediately
      prior to the applicable date of valuation; and 

     

    (c) 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.

     

    “SEC”
      shall mean the Securities and Exchange Commission.

     

    “Trading
      Day” means a day on which the Common Stock is listed or quoted for trading on
      the date in question on The NASDAQ Capital Market, The NASDAQ National Market,
      the OTC Bulletin Board or any other recognized exchange in the United
      States.

     

    2. EXERCISE
      OF WARRANT 

     

    2.1
       Exercise,
      Payment.
      Subject
      to compliance with the terms and conditions of this Warrant and applicable
      securities laws, this Warrant may be exercised, in whole or in part at any
      time
      or from time to time, on or before the Expiration Date by the delivery
      (including, without limitation, delivery by facsimile) of the form of Notice
      of
      Exercise attached hereto as Exhibit 1 (the “Notice of Exercise”), duly executed
      by the Holder, at the address of the Company as set forth herein, and as soon
      as
      practicable after such date,

     

    (a) surrendering
      this Warrant at the address of the Company, and

     

    (b) providing
      payment, by check or by wire transfer, of an amount equal to the product
      obtained by multiplying the number of shares of Common Stock being purchased
      upon such exercise by the then effective Purchase Price (the “Exercise Amount”),
      or 

     

    
      
        
        

      

      
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    (c) in
      lieu
      of tendering the Exercise Amount, the Warrants may be exercised by surrendering
      this Certificate together with irrevocable instructions to the Company 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) tha 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”).

     

    2.2 Common
      Stock Certificates; Fractional Shares.
      Following the Company’s receipt of a Notice of Exercise, the Company will use
      commercially reasonable efforts to cause the delivery within three (3) Trading
      Days of such receipt, to the person or persons entitled to receive the same,
      a
      certificate or certificates for the number of whole shares of Common Stock
      issuable upon such exercise. The Company shall register the number of shares
      of
      Common Stock issuable upon exercise on the share register of the Company. No
      fractional shares or scrip representing fractional shares of Common Stock shall
      be issued upon an exercise of this Warrant.

     

    2.3 Partial
      Exercise: Effective Date of Exercise.
      In case
      of any partial exercise of this Warrant, the Holder and the Company shall cancel
      this Warrant upon surrender hereof and shall execute and deliver a new Common
      Stock Purchase Warrant of like tenor and date for the balance of the shares
      of
      Common Stock purchasable hereunder. This Warrant shall be deemed to have been
      exercised immediately prior to the close of business on the date of its
      surrender for exercise as provided above. The Company acknowledges that the
      person entitled to receive the shares of Common Stock issuable upon exercise
      of
      this Warrant shall be treated for all purposes as the holder of record of such
      shares as of the close of business on the date the Holder is deemed to have
      exercised this Warrant.

     

    3. TAXES.
      The Company shall pay all taxes and other governmental charges that may be
      imposed in respect of the delivery of shares upon exercise of this Warrant;
      provided, however, that the Company shall not be required to pay any tax or
      other charge imposed in connection with any transfer involved in the delivery
      of
      any certificate for shares of Common Stock in any name other than that of the
      Holder of this Warrant, and in such case the Company shall not be required
      to
      deliver any stock certificate until such tax or other charge has been paid,
      or
      it has been established to the Company’s reasonable satisfaction that no tax or
      other charge is due.

     

    4. ADJUSTMENT
      OF PURCHASE PRICE AND NUMBER OF COMMON STOCK. The number of shares of Common
      Stock deliverable upon exercise of this Warrant (or any shares of stock or
      other
      securities or property receivable upon exercise of this Warrant) and the
      Purchase Price are subject to adjustment upon occurrence of the following
      events:

     

    4.1 Adjustment
      for Stock Splits, Stock Subdivisions or Combinations of Shares of Common
      Stock.
      The
      Purchase Price of this Warrant shall be proportionally decreased and the number
      of shares of Common Stock deliverable upon exercise of this Warrant (or any
      shares of stock or other securities at the time deliverable upon exercise of
      this Warrant) shall be proportionally increased to reflect any stock split
      or
      subdivision of the Company’s Common Stock. The Purchase Price of this Warrant
      shall be proportionally increased and the number of shares of Common Stock
      deliverable upon exercise of this Warrant (or any shares of stock or other
      securities at the time deliverable upon exercise of this Warrant) shall be
      proportionally decreased to reflect any combination of the Company’s Common
      Stock.

     

    
      
        
        

      

      
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    4.2 Reclassification.
      If the
      Company, by reclassification of securities or otherwise, shall change any of
      the
      securities as to which purchase rights under this Warrant exist into the same
      or
      a different number of securities of any other class or classes, this Warrant
      shall thereafter represent the right to acquire such number and kind of
      securities as would have been issuable as the result of such change with respect
      to the securities that were subject to the purchase rights under this Warrant
      immediately prior to such reclassification or other change and the Purchase
      Price therefore shall be appropriately adjusted, all subject to further
      adjustment as provided in this Section 4. No adjustment shall be made pursuant
      to this Section 4.2 upon any conversion or redemption of the Common Stock which
      is the subject of Section 4.4.

     

    4.3 Adjustment
      for Capital Reorganization, Merger or Consolidation.
      In case
      of any capital reorganization of the capital stock of the Company (other than
      a
      combination, reclassification, exchange or subdivision of shares otherwise
      provided for herein), or any merger or consolidation of the Company with or
      into
      another corporation, or the sale of all or substantially all the assets of
      the
      Company then, and in each such case, as a part of such reorganization, merger,
      consolidation, sale or transfer, lawful provision shall be made so that the
      Holder of this Warrant shall thereafter be entitled to receive upon exercise
      of
      this Warrant (in all cases without regard to any limitations on the exercise
      of
      this Warrant), during the period specified herein and upon payment of the
      Purchase Price then in effect, the number of shares of stock or other securities
      or property of the successor corporation resulting from such reorganization,
      merger, consolidation, sale or transfer that a holder of the shares deliverable
      upon exercise of this Warrant would have been entitled to receive in such
      reorganization, consolidation, merger, sale or transfer if this Warrant had
      been
      exercised immediately before such reorganization, merger, consolidation, sale
      or
      transfer, all subject to further adjustment as provided in this Section 4.
      The
      foregoing provisions of this Section 4.3 shall similarly apply to successive
      reorganizations, consolidations, mergers, sales and transfers and to the stock
      or securities of any other corporation that are at the time receivable upon
      the
      exercise of this Warrant. If the per-share consideration payable to the Holder
      hereof for shares in connection with any such transaction is in a form other
      than cash or marketable securities, then the value of such consideration shall
      be determined in good faith by the Company’s Board of Directors. In all events,
      appropriate adjustment (as determined in good faith by the Company’s Board of
      Directors) shall be made in the application of the provisions of this Warrant
      with respect to the rights and interests of the Holder after the transaction,
      to
      the end that the provisions of this Warrant shall be applicable after that
      event, as near as reasonably may be, in relation to any shares or other property
      deliverable after that event upon exercise of this Warrant.

     

    4.4 Conversion
      of Common Stock.
      If all
      or any portion of the authorized and outstanding shares of Common Stock of
      the
      Company are redeemed or converted or reclassified into other securities or
      property pursuant to the Company’s Articles of Incorporation or otherwise, or
      the Common Stock otherwise ceases to exist, then, in such case, the Holder
      of
      this Warrant, upon exercise hereof at any time after the date on which the
      Common Stock is so redeemed or converted, reclassified or ceases to exist (the
      “Termination Date”), shall receive, in lieu of the number of shares of Common
      Stock that would have been deliverable upon such exercise immediately prior
      to
      the Termination Date, the securities or property that would have been received
      if this Warrant had been exercised in full and the Common Stock received
      thereupon had been simultaneously converted immediately prior to the Termination
      Date, all subject to further adjustment as provided in this Warrant.
      Additionally, the Purchase Price shall be immediately adjusted to equal the
      quotient obtained by dividing (x) the aggregate Purchase Price of the maximum
      number of shares of Common Stock for which this Warrant was exercisable
      immediately prior to the Termination Date by (y) the number of shares of Common
      Stock of the Company for which this Warrant is exercisable immediately after
      the
      Termination Date, all subject to further adjustment as provided
      herein.

     

    
      
        
        

      

      
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    5. LOSS
      OR
      MUTILATION. Upon receipt of evidence reasonably satisfactory the Company of
      the
      ownership of and the loss, theft, destruction or mutilation of this Warrant,
      and
      of indemnity reasonably satisfactory to it, and (in the case of mutilation)
      upon
      surrender and cancellation of this Warrant, the Company will cause to be
      executed and delivered in lieu thereof a new Warrant of like tenor as the lost,
      stolen, destroyed or mutilated Warrant.

     

    6. REPRESENTATION.
      The Company hereby covenants that all shares issuable upon exercise of this
      Warrant, when delivered upon such exercise, shall be free and clear of all
      liens, security interests, charges and other encumbrances or restrictions on
      sale and free and clear of all preemptive rights, except encumbrances or
      restrictions arising under federal or state securities laws. Further, the
      Company hereby covenants to reserve such number of authorized but unissued
      shares of Common Stock for issuance upon exercise of this Warrant.

     

    7. PIGGY-BACK
      REGISTRATION. If
      the
      Company proposes to register (including, for this purpose, a registration
      effected by the Company for stockholders other than the Holder) any of its
      Common Stock under the Securities Act in connection with the public offering
      of
      such securities solely for cash (other than in an Excluded Registration), the
      Company shall, at such time, promptly give the Holder notice of such
      registration. Upon the request of the Holder given within fifteen (15) days
      after such notice is given by the Company, the Company shall cause to be
      registered such number of shares of Common Stock with respect to which a Notice
      of Exercise has been received by the Company. The Company shall have the right
      to terminate or withdraw any registration initiated by it under this Section
      7
      before the effective date of such registration, whether or not any Holder has
      elected to include any Warrant Shares in such registration. 

     

    8. RESTRICTIONS
      ON TRANSFER.

     

    8.1 The
      Holder, by acceptance hereof, agrees that, absent an effective registration
      statement filed with the SEC under the 1933 Act, covering the disposition or
      sale of this Warrant or the Common Stock issued or issuable upon exercise hereof
      or the Common Stock issuable upon conversion thereof, as the case may be, and
      registration or qualification under applicable state securities laws, such
      Holder will not sell, transfer, pledge, or hypothecate any or all such Warrants
      or Common Stock, as the case may be, unless either (i) the Company has received
      an opinion of counsel, in form and substance reasonably satisfactory to the
      Company, to the effect that such registration under the 1933 Act is not required
      in connection with such disposition or (ii) the sale of such securities is
      made
      pursuant to Rule 144 under the 1933 Act or pursuant to some other applicable
      exemption from registration.

     

    
      
        
        

      

      
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    8.2 In
      addition to the foregoing restrictions on transfer, this Warrant may not be
      transferred by the Holder without the prior written consent of the Company,
      which consent may not be unreasonably withheld. In the event of a transfer
      to
      which the Company has previously consented in writing, this Warrant and all
      rights hereunder may be transferred by the Holder upon delivery of the form
      of
      Assignment attached hereto as Exhibit 2 (the “Assignment”), duly executed by the
      Holder, surrender of this Warrant properly endorsed at the address of the
      Company set forth herein and payment of any necessary transfer tax or other
      governmental charge imposed upon such transfer. Upon any partial transfer,
      the
      Holder and Company will cause to be issued and delivered to the Holder a new
      Warrant or Warrants with respect to the portion of this Warrant not so
      transferred. Each taker and holder of this Warrant, by taking or holding the
      same, consents and agrees that when this Warrant shall have been so endorsed,
      the person in possession of this Warrant may be treated by the Company, and
      all
      other persons dealing with this Warrant, as the absolute owner hereof for any
      purpose and as the person entitled to exercise the rights represented hereby,
      any notice to the contrary notwithstanding; provided, however that until a
      transfer of this Warrant is duly registered on the books of the Company, the
      Company may treat the Holder hereof as the owner for all purposes.

     

    9. COMPLIANCE
      WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder hereby
      represents, warrants and covenants that it is an “accredited investor” as that
      term is defined under Rule 501 of Regulation D, that any shares of stock
      purchased upon exercise of this Warrant or acquired upon conversion thereof
      shall be acquired for investment only and not with a view to, or for sale in
      connection with, any distribution thereof, that the Holder has had such
      opportunity as such Holder has deemed adequate to obtain from representatives
      of
      the Company such information as is necessary to permit the Holder to evaluate
      the merits and risks of its investment in the Company; that the Holder is able
      to bear the economic risk of holding such shares as may be acquired pursuant
      to
      the exercise of this Warrant for an indefinite period; that the Holder
      understands that the shares of stock acquired pursuant to the exercise of this
      Warrant or acquired upon conversion thereof may not be registered under the
      1933
      Act (unless otherwise required pursuant to exercise by the Holder of the
      registration rights, if any, previously granted to the Holder) and will be
      “restricted securities” within the meaning of Rule 144 under the 1933 Act and
      that the exemption from registration under Rule 144 will not be available for
      at
      least one year from the date of exercise of this Warrant, and even then will
      not
      be available unless a public market then exists for the stock, adequate
      information concerning the Company is then available to the public, and other
      terms and conditions of Rule 144 are complied with; and that all stock
      certificates representing shares of stock issued to the Holder upon exercise
      of
      this Warrant or upon conversion of such shares may have affixed thereto a legend
      substantially in the following form:

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.
      THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
      AND
      MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY
      APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION
      THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
      FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
      OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
      SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE
      IS
      IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
      LAWS.

     

    
      
        
        

      

      
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    10. NO
      RIGHTS
      OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the Holder to
      any
      voting rights or other rights as a stockholder of the Company. In the absence
      of
      affirmative action by such Holder to purchase Common Stock by exercise of this
      Warrant, no provisions of this Warrant, and no enumeration herein of the rights
      or privileges of the Holder hereof shall cause such Holder hereof to be a
      stockholder of the Company for any purpose.

     

    11. NOTICES.
      All notices and other communications required or permitted hereunder shall
      be in
      writing and shall be mailed by registered or certified mail, postage prepaid,
      return receipt requested, or by telecopier, or by email or otherwise delivered
      by hand or by messenger, addressed or telecopied to the person to whom such
      notice or communication is being given at its address set forth after its
      signature hereto. In order to be effective, a copy of any notice or
      communication sent by telecopier or email must be sent by registered or
      certified mail, postage prepaid, return receipt requested, or delivered
      personally to the person to whom such notice or communication is being at its
      address set forth after its signature hereto. If notice is provided by mail,
      notice shall be deemed to be given five (5) business days after proper deposit
      with the United States mail or nationally recognized overnight courier, or
      immediately upon personally delivery thereof, to person to whom such notice
      or
      communication is being at such address. If notice is provided by telecopier,
      notice shall be deemed to be given upon confirmation by the telecopier machine
      of the receipt of such notice at the telecopier number provided above. If notice
      is provided by email, notice shall be deemed to be given upon confirmation
      by
      the sender’s email program of the receipt of such notice at the email address
      provided after the signature of the person to whom such notice or communication
      is being. The addresses set forth after the signatures hereto may be changed
      by
      written notice complying with the terms of this Section 11.

     

    12. HEADINGS.
      The headings in this Warrant are for purposes of convenience in reference only,
      and shall not be deemed to constitute a part hereof.

     

    13. GOVERNING
      LAW. This Warrant shall be construed and enforced in accordance with, and
      governed by, the laws of the State of New York.

     

    14. NOTICES
      OF RECORD DATE. In case the Company shall take a record of the holders of its
      Common Stock (or other stock or securities at the time receivable upon the
      exercise of this Warrant), for the purpose:

     

    (a) of
      any
      consolidation or merger of the Company with or into another corporation, any
      capital reorganization of the Company, any reclassification of the capital
      stock
      of the Company, or any conveyance of all or substantially all of the assets
      of
      the Company to another corporation in which holders of the Company’s stock are
      to receive stock, securities or property of another corporation; or

     

    (b) of
      any
      voluntary dissolution, liquidation or winding-up of the Company; or

     

    
      
        
        

      

      
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    (c) of
      any
      redemption of any outstanding capital stock of the Company; then, and in each
      such case,

     

    the
      Company will mail or cause to be mailed to the Holder of this Warrant a notice
      specifying, as the case may be, the date on which such reorganization,
      reclassification, consolidation, merger, conveyance, dissolution, liquidation,
      winding-up, redemption or conversion is to take place, and the time, if any
      is
      to be fixed, as of which the holders of record of Common Stock (or such stock
      or
      securities as at the time are receivable upon the exercise of this Warrant)
      shall be entitled to exchange their shares of Common Stock (or such other stock
      or securities) for securities or other property deliverable upon such
      reorganization, reclassification, consolidation, merger, conveyance,
      dissolution, liquidation or winding-up. Such notice shall be delivered at least
      thirty (30) days prior to the date of the proposed action therein
      specified.

     

    15. SEVERABILITY.
      If any term, provision, covenant or restriction of this Warrant is held by
      a
      court of competent jurisdiction to be invalid, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions of this Warrant
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated.

     

    16. SATURDAYS,
      SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a Saturday, Sunday or
      legal holiday, the Expiration Date shall automatically be extended until 5:00
      p.m. on the next business day.

     

    17. REMEDIES.
      In addition to being entitled to exercise all rights provided herein or granted
      by law, including recovery of damages, the Holder and the Company will be
      entitled to specific performance hereunder. The parties agree that monetary
      damages alone may not be adequate compensation for any loss incurred by reason
      of any breach of obligations hereunder and agrees to waive in any action for
      specific performance of any such obligation the defense that remedy at law
      would
      be adequate.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Company has duly issued this Warrant as of this
      22nd
      day of
      February, 2007.

     

    
      
        	 	 	 
	 	CHINA
                PRECISION
                STEEL, INC.
	 
 	 
 	 
 
	 	By:  	/s/
                Wo Hing Li 
	 	
                
Name:
                Wo Hing Li
	 	Title:
                President

      

       

      
        	 	Address for Notices:
	 	 
	 	To the Issuer:
	 	 
	 	8th
                Floor, Teda Building
	 	87 Wing Lok Street
	 	Sheung Wan, Hong Kong
	 	Facsimile: +1-86-21-2854-1122
	 	 
	 	To the Holder:
	 	 
	 	Belmont Capital Group Limited
	 	Suite C, 20th
                Floor Neich Tower,
	 	128 Gloucester Road,
	 	WanChai, Hong Hong
	 	 

      

    

     

    [SIGNATURE
      PAGE TO WARRANT]

     

    
      
        
        

      

      
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    EXHIBIT
      1

     

    NOTICE
      OF
      EXERCISE

     

    (To
      be
      executed upon exercise of Warrant)

     

    WARRANT
      NO. ___

     

    The
      undersigned hereby irrevocably elects to exercise the right of purchase
      represented by the within Warrant Certificate for, and to purchase thereunder,
      securities of China Precision Steel, Inc., as provided for therein, and (check
      the applicable box): 

     

    □
      Tenders
      herewith payment of the exercise price in full in the form of cash, a certified
      or official bank check in same-day funds, or electronic funds transfer in the
      amount of $ for such securities. 

     

    □
      Pursuant
      to the Cashless Exercise feature set forth in Section 2.1(c). 

     

    Please
      issue a certificate or certificates for such securities in the name of, and
      pay
      any cash for any fractional share to (please print name, address and social
      security number):

     

     

    Name:

     

    Address:

     

    Signature:

     

     

    Note:
      The
      above signature should correspond exactly with the name on the first page of
      this Warrant Certificate or with the name of the assignee appearing in the
      assignment form below.

     

    If
      said
      number of shares shall not be all the shares purchasable under the within
      Warrant Certificate, a new Warrant Certificate is to be issued in the name
      of
      said undersigned for the balance remaining of the shares purchasable thereunder
      rounded up to the next higher whole number of shares.

     

    
      
        
        

      

      
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    EXHIBIT
      2

     

    ASSIGNMENT

     

    (TO
      BE
      EXECUTED ONLY UPON ASSIGNMENT OF WARRANT CERTIFICATE)

     

    WARRANT
      NO.-___

     

    

     

    For
      value
      received, hereby sells, assigns and transfers unto ______________ the within
      Warrant Certificate, together with all right, title and interest therein, and
      does hereby irrevocably constitute and appoint ______________ attorney, to
      transfer said Warrant Certificate on the books of the within-named Company
      with
      respect to the number of Warrants set forth below, with full power of
      substitution in the premises:

     

    

     

    
      	
              NAME(S)
                OF ASSIGNEE(S)

            	 	
              ADDRESS(ES)
                OF ASSIGNEE(S)

            	 	
              #
                OR WARRANTS

            
	             
              	 	                
              	 	                     
              
	                   
              	 	                
              	 	                   
              
	                      
              	 	                     
              	 	                 
              

    

    

     

    And
      if
      said number of Warrants shall not be all the Warrants represented by the Warrant
      Certificate, a new Warrant Certificate is to be issued in the name of said
      undersigned for the balance remaining of the Warrants registered by said Warrant
      Certificate.

     

    

     

    Dated:
      _______________, 200_

     

    

     

    Signature:________________________________

     

    

     

    Notice:
      The signature to the foregoing Assignment must correspond to the name as written
      upon the face of this security in every particular, without alteration or any
      change whatsoever; signature(s) must be guaranteed by an eligible guarantor
      institution (banks, stock brokers, savings and loan associations and credit
      unions with membership in an approved signature guarantee medallion program)
      pursuant to Securities and Exchange Commission Rule l7Ad-15.

     

    
      
        
        

      

      
        -
          11
          -Unassociated Document

    

      COMMON
        STOCK PURCHASE WARRANT

       

      

       

      THE
        WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
        DELIVERABLE UPON EXERCISE HEREUNDER, HAVE NOT BEEN AND WILL NOT BE REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES
        LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED
        WITHOUT REGISTRATION UNDER THE ACT UNLESS PURSUANT TO (A) AN OPINION OF COUNSEL,
        IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT
        THAT
        REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) AN
        EXEMPTION FROM REGISTRATION UNDER THE ACT IN RELIANCE UPON RULE 144 PROMULGATED
        THEREUNDER.

       

      Date:
        February 22, 2007

       

       

      
        	
                No. W-3

              	
                100,000
                  Warrants 

              

      

       

       

      WARRANT
        TO PURCHASE COMMON STOCK

       

      OF

       

      CHINA
        PRECISION STEEL, INC.

       

      THIS
        CERTIFIES THAT, for value received, CCG Elite Investor Relations (“Holder”), is
        entitled, subject to the terms and conditions of this Common Stock Purchase
        Warrant (this “Warrant”), at any time or from time to time after the date hereof
        (the “Effective Date”), to purchase up to one hundred thousand (100,000) shares
        (the “Warrant Shares”) of Common Stock (as defined below), from China Precision
        Steel, Inc., a Colorado corporation (the “Company”), at an exercise price per
        share equal to $3.60 (the “Purchase Price). This Warrant shall expire at 5:00
        p.m. Eastern Time on that date which is thirty-six (36) months from the date
        of
        this Warrant (the “Expiration Date”). Both the number of shares of Common Stock
        purchasable upon exercise of this Warrant and the Purchase Price are subject
        to
        adjustment and change as provided herein. This Warrant is issued in connection
        with that certain Letter of Engagement, dated as of December 4, 2006 by and
        between the Holder and Shanghai Chengtong Precision Strip Co., Ltd.

       

      1. CERTAIN
        DEFINITIONS. As used in this Warrant the following terms shall have the
        following respective meanings:

       

      “1933
        Act” shall mean the Securities Act of 1933, as amended.

       

      “Common
        Stock” shall mean the common stock of the Company, par value $0.001 per share,
        and any other securities at any time receivable or issuable upon exercise
        of
        this Warrant.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      “Fair
        Market Value” or “FMV” of a share of Common Stock as of a particular date shall
        mean: 

       

      (a) If
        traded
        on a securities exchange, the Fair Market Value shall be deemed to be the
        average of the closing prices of the Common Stock of the Company on such
        exchange over the five (5) business days ending immediately prior to the
        applicable date of valuation; 

       

      (b) If
        actively traded over-the-counter, the Fair Market Value shall be deemed to
        be
        the average of the closing bid prices over the 30-day period ending immediately
        prior to the applicable date of valuation; and 

       

      (c) 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.

       

      “SEC”
        shall mean the Securities and Exchange Commission.

       

      “Trading
        Day” means a day on which the Common Stock is listed or quoted for trading on
        the date in question on The NASDAQ Capital Market, The NASDAQ National Market,
        the OTC Bulletin Board or any other recognized exchange in the United
        States.

       

      2. EXERCISE
        OF WARRANT 

       

      2.1
         Exercise,
        Payment.
        Subject
        to compliance with the terms and conditions of this Warrant and applicable
        securities laws, this Warrant may be exercised, in whole or in part at any
        time
        or from time to time, on or before the Expiration Date by the delivery
        (including, without limitation, delivery by facsimile) of the form of Notice
        of
        Exercise attached hereto as Exhibit 1 (the “Notice of Exercise”), duly executed
        by the Holder, at the address of the Company as set forth herein, and as
        soon as
        practicable after such date,

       

      (a) surrendering
        this Warrant at the address of the Company, and

       

      (b) providing
        payment, by check or by wire transfer, of an amount equal to the product
        obtained by multiplying the number of shares of Common Stock being purchased
        upon such exercise by the then effective Purchase Price (the “Exercise Amount”),
        or 

       

      (c) in
        lieu
        of tendering the Exercise Amount, the Warrants may be exercised by surrendering
        this Certificate together with irrevocable instructions to the Company 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) tha 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”).

       

      2.2 Common
        Stock Certificates; Fractional Shares.
        Following the Company’s receipt of a Notice of Exercise, the Company will use
        commercially reasonable efforts to cause the delivery within three (3) Trading
        Days of such receipt, to the person or persons entitled to receive the same,
        a
        certificate or certificates for the number of whole shares of Common Stock
        issuable upon such exercise. The Company shall register the number of shares
        of
        Common Stock issuable upon exercise on the share register of the Company.
        No
        fractional shares or scrip representing fractional shares of Common Stock
        shall
        be issued upon an exercise of this Warrant.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      2.3 Partial
        Exercise: Effective Date of Exercise.
        In case
        of any partial exercise of this Warrant, the Holder and the Company shall
        cancel
        this Warrant upon surrender hereof and shall execute and deliver a new Common
        Stock Purchase Warrant of like tenor and date for the balance of the shares
        of
        Common Stock purchasable hereunder. This Warrant shall be deemed to have
        been
        exercised immediately prior to the close of business on the date of its
        surrender for exercise as provided above. The Company acknowledges that the
        person entitled to receive the shares of Common Stock issuable upon exercise
        of
        this Warrant shall be treated for all purposes as the holder of record of
        such
        shares as of the close of business on the date the Holder is deemed to have
        exercised this Warrant.

       

      3. TAXES.
        The Company shall pay all taxes and other governmental charges that may be
        imposed in respect of the delivery of shares upon exercise of this Warrant;
        provided, however, that the Company shall not be required to pay any tax
        or
        other charge imposed in connection with any transfer involved in the delivery
        of
        any certificate for shares of Common Stock in any name other than that of
        the
        Holder of this Warrant, and in such case the Company shall not be required
        to
        deliver any stock certificate until such tax or other charge has been paid,
        or
        it has been established to the Company’s reasonable satisfaction that no tax or
        other charge is due.

       

      4. ADJUSTMENT
        OF PURCHASE PRICE AND NUMBER OF COMMON STOCK. The number of shares of Common
        Stock deliverable upon exercise of this Warrant (or any shares of stock or
        other
        securities or property receivable upon exercise of this Warrant) and the
        Purchase Price are subject to adjustment upon occurrence of the following
        events:

       

      4.1 Adjustment
        for Stock Splits, Stock Subdivisions or Combinations of Shares of Common
        Stock.
        The
        Purchase Price of this Warrant shall be proportionally decreased and the
        number
        of shares of Common Stock deliverable upon exercise of this Warrant (or any
        shares of stock or other securities at the time deliverable upon exercise
        of
        this Warrant) shall be proportionally increased to reflect any stock split
        or
        subdivision of the Company’s Common Stock. The Purchase Price of this Warrant
        shall be proportionally increased and the number of shares of Common Stock
        deliverable upon exercise of this Warrant (or any shares of stock or other
        securities at the time deliverable upon exercise of this Warrant) shall be
        proportionally decreased to reflect any combination of the Company’s Common
        Stock.

       

      4.2 Reclassification.
        If the
        Company, by reclassification of securities or otherwise, shall change any
        of the
        securities as to which purchase rights under this Warrant exist into the
        same or
        a different number of securities of any other class or classes, this Warrant
        shall thereafter represent the right to acquire such number and kind of
        securities as would have been issuable as the result of such change with
        respect
        to the securities that were subject to the purchase rights under this Warrant
        immediately prior to such reclassification or other change and the Purchase
        Price therefore shall be appropriately adjusted, all subject to further
        adjustment as provided in this Section 4. No adjustment shall be made pursuant
        to this Section 4.2 upon any conversion or redemption of the Common Stock
        which
        is the subject of Section 4.4.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      4.3 Adjustment
        for Capital Reorganization, Merger or Consolidation.
        In case
        of any capital reorganization of the capital stock of the Company (other
        than a
        combination, reclassification, exchange or subdivision of shares otherwise
        provided for herein), or any merger or consolidation of the Company with
        or into
        another corporation, or the sale of all or substantially all the assets of
        the
        Company then, and in each such case, as a part of such reorganization, merger,
        consolidation, sale or transfer, lawful provision shall be made so that the
        Holder of this Warrant shall thereafter be entitled to receive upon exercise
        of
        this Warrant (in all cases without regard to any limitations on the exercise
        of
        this Warrant), during the period specified herein and upon payment of the
        Purchase Price then in effect, the number of shares of stock or other securities
        or property of the successor corporation resulting from such reorganization,
        merger, consolidation, sale or transfer that a holder of the shares deliverable
        upon exercise of this Warrant would have been entitled to receive in such
        reorganization, consolidation, merger, sale or transfer if this Warrant had
        been
        exercised immediately before such reorganization, merger, consolidation,
        sale or
        transfer, all subject to further adjustment as provided in this Section 4.
        The
        foregoing provisions of this Section 4.3 shall similarly apply to successive
        reorganizations, consolidations, mergers, sales and transfers and to the
        stock
        or securities of any other corporation that are at the time receivable upon
        the
        exercise of this Warrant. If the per-share consideration payable to the Holder
        hereof for shares in connection with any such transaction is in a form other
        than cash or marketable securities, then the value of such consideration
        shall
        be determined in good faith by the Company’s Board of Directors. In all events,
        appropriate adjustment (as determined in good faith by the Company’s Board of
        Directors) shall be made in the application of the provisions of this Warrant
        with respect to the rights and interests of the Holder after the transaction,
        to
        the end that the provisions of this Warrant shall be applicable after that
        event, as near as reasonably may be, in relation to any shares or other property
        deliverable after that event upon exercise of this Warrant.

       

      4.4 Conversion
        of Common Stock.
        If all
        or any portion of the authorized and outstanding shares of Common Stock of
        the
        Company are redeemed or converted or reclassified into other securities or
        property pursuant to the Company’s Articles of Incorporation or otherwise, or
        the Common Stock otherwise ceases to exist, then, in such case, the Holder
        of
        this Warrant, upon exercise hereof at any time after the date on which the
        Common Stock is so redeemed or converted, reclassified or ceases to exist
        (the
“Termination Date”), shall receive, in lieu of the number of shares of Common
        Stock that would have been deliverable upon such exercise immediately prior
        to
        the Termination Date, the securities or property that would have been received
        if this Warrant had been exercised in full and the Common Stock received
        thereupon had been simultaneously converted immediately prior to the Termination
        Date, all subject to further adjustment as provided in this Warrant.
        Additionally, the Purchase Price shall be immediately adjusted to equal the
        quotient obtained by dividing (x) the aggregate Purchase Price of the maximum
        number of shares of Common Stock for which this Warrant was exercisable
        immediately prior to the Termination Date by (y) the number of shares of
        Common
        Stock of the Company for which this Warrant is exercisable immediately after
        the
        Termination Date, all subject to further adjustment as provided
        herein.

       

      5. LOSS
        OR
        MUTILATION. Upon receipt of evidence reasonably satisfactory the Company
        of the
        ownership of and the loss, theft, destruction or mutilation of this Warrant,
        and
        of indemnity reasonably satisfactory to it, and (in the case of mutilation)
        upon
        surrender and cancellation of this Warrant, the Company will cause to be
        executed and delivered in lieu thereof a new Warrant of like tenor as the
        lost,
        stolen, destroyed or mutilated Warrant.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      6. REPRESENTATION.
        The Company hereby covenants that all shares issuable upon exercise of this
        Warrant, when delivered upon such exercise, shall be free and clear of all
        liens, security interests, charges and other encumbrances or restrictions
        on
        sale and free and clear of all preemptive rights, except encumbrances or
        restrictions arising under federal or state securities laws. Further, the
        Company hereby covenants to reserve such number of authorized but unissued
        shares of Common Stock for issuance upon exercise of this Warrant.

       

      7. RESTRICTIONS
        ON TRANSFER.

       

      7.1 The
        Holder, by acceptance hereof, agrees that, absent an effective registration
        statement filed with the SEC under the 1933 Act, covering the disposition
        or
        sale of this Warrant or the Common Stock issued or issuable upon exercise
        hereof
        or the Common Stock issuable upon conversion thereof, as the case may be,
        and
        registration or qualification under applicable state securities laws, such
        Holder will not sell, transfer, pledge, or hypothecate any or all such Warrants
        or Common Stock, as the case may be, unless either (i) the Company has received
        an opinion of counsel, in form and substance reasonably satisfactory to the
        Company, to the effect that such registration under the 1933 Act is not required
        in connection with such disposition or (ii) the sale of such securities is
        made
        pursuant to Rule 144 under the 1933 Act or pursuant to some other applicable
        exemption from registration.

       

      7.2 In
        addition to the foregoing restrictions on transfer, this Warrant may not
        be
        transferred by the Holder without the prior written consent of the Company,
        which consent may not be unreasonably withheld. In the event of a transfer
        to
        which the Company has previously consented in writing, this Warrant and all
        rights hereunder may be transferred by the Holder upon delivery of the form
        of
        Assignment attached hereto as Exhibit 2 (the “Assignment”), duly executed by the
        Holder, surrender of this Warrant properly endorsed at the address of the
        Company set forth herein and payment of any necessary transfer tax or other
        governmental charge imposed upon such transfer. Upon any partial transfer,
        the
        Holder and Company will cause to be issued and delivered to the Holder a
        new
        Warrant or Warrants with respect to the portion of this Warrant not so
        transferred. Each taker and holder of this Warrant, by taking or holding
        the
        same, consents and agrees that when this Warrant shall have been so endorsed,
        the person in possession of this Warrant may be treated by the Company, and
        all
        other persons dealing with this Warrant, as the absolute owner hereof for
        any
        purpose and as the person entitled to exercise the rights represented hereby,
        any notice to the contrary notwithstanding; provided, however that until
        a
        transfer of this Warrant is duly registered on the books of the Company,
        the
        Company may treat the Holder hereof as the owner for all purposes.

       

      8. COMPLIANCE
        WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder hereby
        represents, warrants and covenants that it is an “accredited investor” as that
        term is defined under Rule 501 of Regulation D, that any shares of stock
        purchased upon exercise of this Warrant or acquired upon conversion thereof
        shall be acquired for investment only and not with a view to, or for sale
        in
        connection with, any distribution thereof, that the Holder has had such
        opportunity as such Holder has deemed adequate to obtain from representatives
        of
        the Company such information as is necessary to permit the Holder to evaluate
        the merits and risks of its investment in the Company; that the Holder is
        able
        to bear the economic risk of holding such shares as may be acquired pursuant
        to
        the exercise of this Warrant for an indefinite period; that the Holder
        understands that the shares of stock acquired pursuant to the exercise of
        this
        Warrant or acquired upon conversion thereof may not be registered under the
        1933
        Act (unless otherwise required pursuant to exercise by the Holder of the
        registration rights, if any, previously granted to the Holder) and will be
        “restricted securities” within the meaning of Rule 144 under the 1933 Act and
        that the exemption from registration under Rule 144 will not be available
        for at
        least one year from the date of exercise of this Warrant, and even then will
        not
        be available unless a public market then exists for the stock, adequate
        information concerning the Company is then available to the public, and other
        terms and conditions of Rule 144 are complied with; and that all stock
        certificates representing shares of stock issued to the Holder upon exercise
        of
        this Warrant or upon conversion of such shares may have affixed thereto a
        legend
        substantially in the following form:

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      THE
        SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
        ACT
        OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.
        THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
        AND
        MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY
        APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION
        THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
        FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
        ISSUER
        OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
        SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE
        IS
        IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
        LAWS.

       

      9. NO
        RIGHTS
        OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the Holder
        to any
        voting rights or other rights as a stockholder of the Company. In the absence
        of
        affirmative action by such Holder to purchase Common Stock by exercise of
        this
        Warrant, no provisions of this Warrant, and no enumeration herein of the
        rights
        or privileges of the Holder hereof shall cause such Holder hereof to be a
        stockholder of the Company for any purpose.

       

      10. NOTICES.
        All notices and other communications required or permitted hereunder shall
        be in
        writing and shall be mailed by registered or certified mail, postage prepaid,
        return receipt requested, or by telecopier, or by email or otherwise delivered
        by hand or by messenger, addressed or telecopied to the person to whom such
        notice or communication is being given at its address set forth after its
        signature hereto. In order to be effective, a copy of any notice or
        communication sent by telecopier or email must be sent by registered or
        certified mail, postage prepaid, return receipt requested, or delivered
        personally to the person to whom such notice or communication is being at
        its
        address set forth after its signature hereto. If notice is provided by mail,
        notice shall be deemed to be given five (5) business days after proper deposit
        with the United States mail or nationally recognized overnight courier, or
        immediately upon personally delivery thereof, to person to whom such notice
        or
        communication is being at such address. If notice is provided by telecopier,
        notice shall be deemed to be given upon confirmation by the telecopier machine
        of the receipt of such notice at the telecopier number provided above. If
        notice
        is provided by email, notice shall be deemed to be given upon confirmation
        by
        the sender’s email program of the receipt of such notice at the email address
        provided after the signature of the person to whom such notice or communication
        is being. The addresses set forth after the signatures hereto may be changed
        by
        written notice complying with the terms of this Section 10.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      11. HEADINGS.
        The headings in this Warrant are for purposes of convenience in reference
        only,
        and shall not be deemed to constitute a part hereof.

       

      12. GOVERNING
        LAW. This Warrant shall be construed and enforced in accordance with, and
        governed by, the laws of the State of New York.

       

      13. NOTICES
        OF RECORD DATE. In case the Company shall take a record of the holders of
        its
        Common Stock (or other stock or securities at the time receivable upon the
        exercise of this Warrant), for the purpose:

       

      (a) of
        any
        consolidation or merger of the Company with or into another corporation,
        any
        capital reorganization of the Company, any reclassification of the capital
        stock
        of the Company, or any conveyance of all or substantially all of the assets
        of
        the Company to another corporation in which holders of the Company’s stock are
        to receive stock, securities or property of another corporation; or

       

      (b) of
        any
        voluntary dissolution, liquidation or winding-up of the Company; or

       

      (c) of
        any
        redemption of any outstanding capital stock of the Company; then, and in
        each
        such case,

       

      the
        Company will mail or cause to be mailed to the Holder of this Warrant a notice
        specifying, as the case may be, the date on which such reorganization,
        reclassification, consolidation, merger, conveyance, dissolution, liquidation,
        winding-up, redemption or conversion is to take place, and the time, if any
        is
        to be fixed, as of which the holders of record of Common Stock (or such stock
        or
        securities as at the time are receivable upon the exercise of this Warrant)
        shall be entitled to exchange their shares of Common Stock (or such other
        stock
        or securities) for securities or other property deliverable upon such
        reorganization, reclassification, consolidation, merger, conveyance,
        dissolution, liquidation or winding-up. Such notice shall be delivered at
        least
        thirty (30) days prior to the date of the proposed action therein
        specified.

       

      14. SEVERABILITY.
        If any term, provision, covenant or restriction of this Warrant is held by
        a
        court of competent jurisdiction to be invalid, void or unenforceable, the
        remainder of the terms, provisions, covenants and restrictions of this Warrant
        shall remain in full force and effect and shall in no way be affected, impaired
        or invalidated.

       

      15. SATURDAYS,
        SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a Saturday, Sunday
        or
        legal holiday, the Expiration Date shall automatically be extended until
        5:00
        p.m. on the next business day.

       

      16. REMEDIES.
        In addition to being entitled to exercise all rights provided herein or granted
        by law, including recovery of damages, the Holder and the Company will be
        entitled to specific performance hereunder. The parties agree that monetary
        damages alone may not be adequate compensation for any loss incurred by reason
        of any breach of obligations hereunder and agrees to waive in any action
        for
        specific performance of any such obligation the defense that remedy at law
        would
        be adequate.

       

      [SIGNATURE
        PAGE FOLLOWS]

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have executed this Warrant as of
        this 22nd
        day of
        February, 2007.

       

      

       

      CHINA
        PRECISION STEEL, INC.

       

      

       

      By:
        /s/ Wo Hing
        Li               

      Name:
        Wo
        Hing Li

      Title:
        President 

      

      Address
        for Notices:

       

      To
        the
        Issuer:

      

      8th
        Floor,
        Teda Building

      87
        Wing
        Lok Street

      Sheung
        Wan, Hong Kong

      Facsimile:
        +1-86-21-2854-1122

      

       

      To
        the
        Holder:

       

      Room
        1308, 13th
        Floor

      9
        Queen’s
        Road Central, Hong Kong 

      

       

      

       

      [SIGNATURE
        PAGE TO WARRANT]

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      EXHIBIT
        1

       

      NOTICE
        OF
        EXERCISE

       

      (To
        be
        executed upon exercise of Warrant)

       

      WARRANT
        NO. ___

       

      The
        undersigned hereby irrevocably elects to exercise the right of purchase
        represented by the within Warrant Certificate for, and to purchase thereunder,
        securities of China Precision Steel, Inc., as provided for therein, and (check
        the applicable box): 

       

      □
        Tenders
        herewith payment of the exercise price in full in the form of cash, a certified
        or official bank check in same-day funds, or electronic funds transfer in
        the
        amount of $ for such securities. 

       

      □
        Pursuant
        to the Cashless Exercise feature set forth in Section 2.1(c). 

       

      Please
        issue a certificate or certificates for such securities in the name of, and
        pay
        any cash for any fractional share to (please print name, address and social
        security number):

       

      

       

      Name:

       

      Address:

       

      Signature:

       

      

       

      Note:
        The
        above signature should correspond exactly with the name on the first page
        of
        this Warrant Certificate or with the name of the assignee appearing in the
        assignment form below.

       

      If
        said
        number of shares shall not be all the shares purchasable under the within
        Warrant Certificate, a new Warrant Certificate is to be issued in the name
        of
        said undersigned for the balance remaining of the shares purchasable thereunder
        rounded up to the next higher whole number of shares.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      EXHIBIT
        2

       

      ASSIGNMENT

       

      (TO
        BE
        EXECUTED ONLY UPON ASSIGNMENT OF WARRANT CERTIFICATE)

       

      WARRANT
        NO.-___

       

      

       

      For
        value
        received, hereby sells, assigns and transfers unto ______________ the within
        Warrant Certificate, together with all right, title and interest therein,
        and
        does hereby irrevocably constitute and appoint ______________ attorney, to
        transfer said Warrant Certificate on the books of the within-named Company
        with
        respect to the number of Warrants set forth below, with full power of
        substitution in the premises:

       

      

       

      
        	
                NAME(S)
                  OF ASSIGNEE(S)

                 

              	
                ADDRESS(ES)
                  OF ASSIGNEE(S)

                 

              	
                #
                  OR WARRANTS

                 

              
	
                ________________________

                 

              	
                ________________________

                 

              	
                ________________________

                 

              
	
                ________________________

                 

              	
                ________________________

                 

              	
                ________________________

                 

              
	
                ________________________

                 

              	
                ________________________

                 

              	
                ________________________

                 

              

      

      

       

      And
        if
        said number of Warrants shall not be all the Warrants represented by the
        Warrant
        Certificate, a new Warrant Certificate is to be issued in the name of said
        undersigned for the balance remaining of the Warrants registered by said
        Warrant
        Certificate.

       

      

       

      Dated:
        _______________, 200_

       

      

       

      Signature:________________________________

       

      

       

      Notice:
        The signature to the foregoing Assignment must correspond to the name as
        written
        upon the face of this security in every particular, without alteration or
        any
        change whatsoever; signature(s) must be guaranteed by an eligible guarantor
        institution (banks, stock brokers, savings and loan associations and credit
        unions with membership in an approved signature guarantee medallion program)
        pursuant to Securities and Exchange Commission Rule l7Ad-15.

       

       

      10

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