Document:

FORM
      OF 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:
      November 6, 2007

     

     

    
      
        	No. W-[ ]	
                [    
]
                  Warrants

              

      

    

     

    WARRANT
      TO PURCHASE COMMON STOCK

     

    OF

     

    CHINA
      PRECISION STEEL, INC.

     

    THIS
      CERTIFIES THAT, for value received, Roth
      Capital Partners LLC
      (“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 May 6, 2008 (the “Effective
      Date”),
      to
      purchase up to [ ] ( ) 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 $[ ] (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 Placement Agency
      Agreement, dated as of October 31, 2007, by and between the Holder and the
      Company.

     

    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.

     

    
      
        
        

      

      
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      “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 or if actively traded over-the-counter, the Fair Market
      Value shall be deemed to be the last reported sale price of the Common Stock
      on
      such exchange or over-the-counter on the last business day before the effective
      date of the exercise of the Warrant; 

     

    (b) If
      actively traded over-the-counter, but no sale is made on such day, the mean
      of
      the closing bid and asked prices such day on such over-the-counter quotation;
      and 

     

    (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 Global 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, after [May [6], 2008] and 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) a fraction, the numerator of which is the Fair
      Market Value of a share of Common Stock on the last business day immediately
      preceding the exercise date less the Purchase Price therefore and the
      denominator of which is such Fair Market Value (a “Cashless
      Exercise”).
      

     

    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.

     

    
      
        
        

      

      
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    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,
      stock dividend 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.

     

    
      
        
        

      

      
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    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. REPRESENTATIONS
      AND COVENANTS. The Company hereby covenants that all shares issuable upon
      exercise of this Warrant shall be duly authorized and, when delivered upon
      such
      exercise, shall be validly issued, fully paid and non-assessable and 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 that at all times there shall be reserved
      for issuance and delivery upon exercise of this Warrant such number of shares
      of
      Common Stock or other shares of capital stock of the Company as from time to
      time are issuable upon exercise of this Warrant.

     

    7. REGISTRATION.
      If the Company proposes to register any of its Common Stock under the Securities
      Act in connection with the resale of such Common Stock by certain of its
      stockholders solely for cash, 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 all of the Warrant Shares, that the Holder has requested
      to be included in such registration. 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 the Holder has
      elected to include 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.

     

    8.2 Except
      as
      provided in Section 8.3 below, 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.

     

    
      
        
        

      

      
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    8.3 This
      Warrant may not be sold, transferred, assigned or hypothecated (any such action,
      a “Transfer”) by the Holder except to (i) one or more persons, each of whom on
      the date of transfer is an officer of the Holder; (ii) a general partnership
      or
      general partnerships, the general partners of which are the Holder and one
      or
      more persons, each of whom on the date of transfer is an officer of the Holder;
      (iii) a successor to the Holder in any merger or consolidation; (iv) a purchaser
      of all or substantially all of the Holder’s assets; (v) any person receiving
      this Warrant from one or more of the persons listed in this Section 8.3 at
      such
      person’s death pursuant to will, trust or the laws of intestate succession, or
      (vi) after one year from the date of this Warrant, any person receiving the
      Warrant from the persons listed in this Section 8.3 (and each such person shall
      be deemed a “Holder” hereunder). This Warrant may be divided or combined, upon
      request to the Company by the Holder, into a certificate or certificates
      representing the right to purchase the same aggregate number of Shares. If
      at
      the time of a Transfer, a registration statement is not in effect to register
      the shares issuable upon exercise of this Warrant, the Company may require
      the
      Holder to make such representations, and may place such legends on certificates
      representing this Warrant, as may be reasonably required in the opinion of
      counsel to the Company to permit a Transfer without such
      registration.

     

    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:

     

    
      
        
        

      

      
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    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.

     

    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 10.

     

    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 stock split, stock dividend,
      combination, recapitalization or 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

     

    
      
        
        

      

      
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    (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, split
      dividend, reclassification, consolidation, merger, conveyance, dissolution,
      liquidation, winding-up, redemption or conversion is to take place, and as
      applicable, any adjustments to the Purchase Price or number of shares of Common
      Stock issuable upon exercise hereof or 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 parties hereto have executed this Warrant as of this
      6th
      day of
      November, 2007.

     

    CHINA
      PRECISION STEEL, INC.

     

    By:___________________________

    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:
      +852-2854-1121

    

    To
      the
      Holder:

     

    Roth
      Capital Partners LLC

    24
      Corporate Plaza

    Newport
      Beach, CA 92660

     

    Facsimile:
      +1-949-720-7227

     

    

     

    [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.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    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-FORM
      OF SUBSCRIPTION AGREEMENT

     

    This
      subscription agreement (this “Subscription
      Agreement”)
      is
      dated November 1, 2007, by and between
      _____________________ (“Buyer”)
      and
      China Precision Steel, Inc., a Colorado corporation (“Seller”),
      whereby the parties agree as follows:

     

    1. Subscription.

     

    
      	 	
              a)

            	
              Buyer
                agrees to buy and the Seller agrees to sell and issue to Buyer
                ______________ shares of common stock, $.001 par value per share
                (the
                “Common
                Stock”),
                of the Seller (the “Shares”)
                for a purchase price per Share of $6.75 (the “Purchase
                Price”),
                for an aggregate of $___________ (the “Aggregate
                Purchase Price”),
                together with warrants to purchase ____________ shares of Common
                Stock
                (the “Warrants”),
                at an exercise price of $8.45 per share, subject to the terms and
                conditions set forth therein in the form attached hereto as Exhibit
                A.
                The shares of Common Stock and Warrants to be issued to the Buyer
                are
                hereinafter referred to as the “Securities”).
                

            

    

     

    
      	 	
              b)

            	
              The
                Securities and the shares of Common Stock underlying the Warrants
                (the
                "Warrant Shares") have been registered on a Form S-3, File No.
                333-143454, which registration statement (the “Registration
                Statement”)
                has been declared effective by the Securities and Exchange Commission,
                has
                remained effective since such date and is effective on the date
                hereof.

            

    

     

    
      	 	
              c)

            	
              
                On
                  November 6, 2007 (the “Closing
                  Date”),
                  subject to receipt by Tri-State Title (the “Escrow
                  Agent”)
                  of the Aggregate Purchase Price, Seller shall authorize Corporate
                  Stock
                  Transfer, Inc. (the “Transfer
                  Agent”)
                  to register the Securities in the name or names as designated by
                  Buyer and
                  to deliver such Securities by courier to the address designated
                  by Buyer
                  (the “Delivery
                  Instructions”),
                  in each case as set forth on the signature page hereto. The Securities
                  delivered on the Closing Date shall be unlegended and free of any
                  resale
                  restrictions. Prior to the Closing Date, the Buyer shall wire the
                  Aggregate Purchase Price to the Escrow Agent to hold in escrow
                  pursuant to
                  the wire instructions set forth on the signature page hereto.
                  

              

            

      	 	 	 

      	 	
              d)

            	
              Seller
                shall be entitled to receive the Aggregate Purchase Price from the
                Escrow Agent only after the Escrow Agent has received written confirmation
                (which confirmation may be electronic) from Buyer (the “Confirmation”)
                that (i) Buyer has received the unlegended Securities from the Seller
                in
                accordance with the Delivery Instructions and (ii) if such Securities
                have
                been delivered to Buyer’s prime broker for deposit (the “Deposit”)
                with The Depository Trust Company (“DTC”),
                that such Securities have been so deposited. Buyer shall use
                commercially reasonable efforts to provide
                the Confirmation to the Escrow Agent as promptly as practicable,
                but in no
                event later than three
                business
                days,
                after receipt and, if applicable, the Deposit of the unlegended Securities
                (the “Confirmation
                Date”).
                If (i) by 5:00 pm, New York time, on the Confirmation Date, the
                Confirmation has not been received by Seller and Buyer has not
                unreasonably objected in writing to Seller as to the form and substance
                of
                the delivery of the unlegended Securities and (ii) Seller has otherwise
                received written notice from the courier service that delivery has
                been
                effected in accordance with Delivery Instructions, then Seller and
                the
                Placement Agent shall be entitled to instruct the Escrow Agent to
                release
                the applicable Aggregate Purchase
                Price.

            

    

     

    2. Seller
      Representations, Warranties and Covenants.
      The
      Seller represents and warrants that: 

     

    (a)
      It
      has full right, power and authority to enter into this Subscription Agreement
      and to perform all of its obligations hereunder; 

    

    (b)
      This
      Subscription Agreement has been duly authorized and executed by and constitutes
      a valid and binding agreement of the Seller enforceable in accordance with
      its
      terms; 

    

    (c)
      The
      execution and delivery of this Subscription Agreement and the consummation
      of
      the transactions contemplated hereby do not conflict with or result in a breach
      of (i) the Seller’s certificate of incorporation or by-laws, or (ii) any
      material agreement to which the Seller is a party or by which any of its
      property or assets is bound; 

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    (d)
      Neither Seller nor any person acting on its behalf has provided Buyer or its
      respective agents or counsel with any information that the Seller believes
      constitutes material, non-public information except insofar as the existence
      and
      terms of the proposed transactions contemplated hereby may constitute such
      information. Seller covenants and agrees that neither it nor any person acting
      on its behalf will provide Buyer or its agents or counsel with any information
      that Seller believes constitutes material non-public information, unless prior
      thereto Buyer shall have executed a written agreement regarding the
      confidentiality of such information; 

    

    (e)
      Seller agrees to maintain the listing of the Common Stock upon each national
      securities exchange and automated quotation system, if any, upon which its
      shares of Common Stock are listed and shall maintain the effectiveness of the
      Registration Statement, until the expiration of the Warrants. The Seller agrees
      not to take any action which would be reasonably expected to result in the
      delisting or suspension of the Common Stock on each national securities exchange
      and automated quotation system, if any, upon which its shares of Common Stock
      are listed. 

    

      (f)
        Seller agrees that, if (i) all or any portion of the Warrants are exercised
        at a
        time when there is either an effective registration statement covering the
        issuance or resale of the Warrant Shares or (ii) the Warrants are exercised
        as a
“cashless exercise” (as defined in the Warrant), the shares of Common Stock to
        be issued upon exercise of the Warrant shall be unlegended and free of resale
        restrictions.

    3. Buyer
      Representations, Warranties and Acknowledgments.
      The
      Buyer represents and warrants that: (a) it has full right, power and authority
      to enter into this Subscription Agreement and to perform all of its obligations
      hereunder; (b) this Subscription Agreement has been duly authorized and executed
      by and constitutes a valid and binding agreement of the Buyer enforceable in
      accordance with its terms; (c) the execution and delivery of this Subscription
      Agreement and the consummation of the transactions contemplated hereby do not
      conflict with or result in a breach of (i) the Buyer’s certificate of
      incorporation or by-laws, or (ii) any material agreement or any law or
      regulation to which the Buyer is a party or by which any of its property or
      assets is bound; and (d) prior to the execution hereof, Buyer has received
      in
      portable document format the Prospectus Supplement, and the Base Prospectus,
      dated July 16, 2007, relating to the Securities.

     

    4. Seller
      Covenants.
      The
      Seller undertakes to the Buyer that: 

     

    (a)
      no
      later than 8:30
      am,
      New York time, on the business day following the execution of this
      Subscription Agreement, Seller will issue a press release and file a current
      report on Form 8-K with the Securities and Exchange Commission disclosing the
      transactions contemplated by this Subscription Agreement and the Placement
      Agency Agreement; and 

    

    (b)
      no
      later than one business day following the Closing Date, Seller will issue a
      press release and file a current report on Form 8-K with the Securities and
      Exchange Commission disclosing the closing of the transactions contemplated
      by
      this Subscription Agreement and the Placement Agency Agreement.

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

    5. Conditions
      to Closing.
      The
      obligations of the Buyer hereunder shall be subject to (a) the accuracy of
      the
      representations and warranties on the part of the Seller set forth herein and
      in
      the Placement Agency Agreement, dated as of October 31, 2007, between the Seller
      and Roth Capital Partners, LLC (the “Placement
      Agency Agreement”),
      in
      each case as of the date hereof and as of the Closing Date as though then made,
      (b) the timely performance by the Seller of its covenants and other obligations
      hereunder and under the Placement Agency Agreement, and (iii) the satisfaction
      by the Seller of all additional conditions as set forth in Section 5 of the
      Placement Agency Agreement.

     

    6. Third-Party
      Beneficiary.
      Seller
      agrees that the Buyer shall be a third party beneficiary of the representations,
      warranties and covenants given by the Seller in the Placement Agency Agreement.
      

     

    7. Miscellaneous.

     

    
      	 	
              a)

            	
              This
                Subscription Agreement constitutes the entire understanding and agreement
                between the parties with respect to its subject matter and there
                are no
                agreements or understandings with respect to the subject matter hereof
                which are not contained in this Subscription Agreement. This Subscription
                Agreement may be modified only in writing signed by the parties
                hereto.

            

    

     

    
      	 	
              b)

            	
              This
                Subscription Agreement may be executed in any number of counterparts,
                all
                of which taken together shall constitute one and the same instrument
                and
                shall become effective when counterparts have been signed by each
                party
                and delivered to the other parties hereto, it being understood that
                all
                parties need not sign the same counterpart. Execution may be made
                by
                delivery by facsimile.

            

    

     

    
      	 	
              c)

            	
              The
                provisions of this Subscription Agreement are severable and, in the
                event
                that any court or officials of any regulatory agency of competent
                jurisdiction shall determine that any one or more of the provisions
                or
                part of the provisions contained in this Subscription shall, for
                any
                reason, be held to be invalid, illegal or unenforceable in any respect,
                such invalidity, illegality or unenforceability shall not affect
                any other
                provision or part of a provision of this Subscription Agreement and
                this
                Subscription Agreement shall be reformed and construed as if such
                invalid
                or illegal or unenforceable provision, or part of such provision,
                had
                never been contained herein, so that such provisions would be valid,
                legal
                and enforceable to the maximum extent possible, so long as such
                construction does not materially adversely effect the economic rights
                of
                either party hereto.

            

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              d)

            	
              All
                communications hereunder,
                except as may be otherwise specifically provided herein, shall be
                in
                writing and shall be mailed, hand delivered, sent by a recognized
                overnight courier service such as Federal Express, or sent via facsimile
                and confirmed by letter, to the party to whom it is addressed at
                the
                following addresses or such other address as such party may advise
                the
                other in writing:

            

    

     

    To
      the
      Seller: as set forth on the signature page hereto.

     

    To
      the
      Buyer: as
      set
      forth on the signature page hereto.

     

    All
      notices hereunder shall be effective upon receipt by the party to which it
      is
      addressed.

     

    
      	 	
              e)

            	
              This
                Agreement shall be governed by and interpreted in accordance with
                the laws
                of the State of New York for contracts to be wholly performed in
                such
                state and without giving effect to the principles thereof regarding
                the
                conflict of laws. To the extent determined by such court, the prevailing
                party shall reimburse the other party for any reasonable legal fees
                and
                disbursements incurred in enforcement of, or protection of any of
                its
                rights under this Agreement and the
                Warrant.

            

    

     

    *****

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    

    If
      the
      foregoing correctly sets forth our agreement, please confirm this by signing
      and
      returning to us the duplicate copy of this letter.

     

    
      	 	 	 
	 	AGREED AND
              ACCEPTED:
	 	 
	 	 
	 	SELLER:
	 	 
	 	CHINA
              PRECISION STEEL, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title: 

    

     

    Address
      for Notice:

    China
      Precision Steel, Inc.

    8th
      Floor,
      Teda Building

    87
      Wing
      Lok Street

    Sheung
      Wan, Hong Kong

    Facsimile:
      +852-2854-1121

    Attention:
      Company Secretary

     

    With
      a
      copy to:

     

    K&L
      Gates

    One
      Lincoln Street

    Boston,
      MA 02111

    Facsimile:
      1-617-261-3175

    Attention:
      Barbara A. Jones/Amy Ling

    

    Wire
      Instructions for Escrow Account:

     

    
      
        	
                Bank
                  Name:

              	
                The
                  Bank of New York

              
	
                Bank
                  Address:

              	
                1
                  Wall Street, New York, NY 10286

              
	
                ABA
                  Number:

              	
                021
                  000 018

              
	
                Beneficiary:

              	
                Pershing
                  LLC

              
	
                Beneficiary
                  A/C:

              	
                890
                  051238 5

              
	
                Ultimate
                  beneficiary:

              	
                Tri-State
                  Title & Escrow, LLC

              
	
                Ultimate
                  A/C:

              	
                2S7-001214
                  (S not 5)

              
	
                Bank
                  Reference: 

              	
                China
                  Precision Steel

              

      

    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	BUYER:
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title:

    

    
      

      Name,
        address and tax I.D. for registration of certificate(s):

      

      Name:
        _______________________________________

      

      Address:
        ______________________________________

      

      ______________________________________

      

      ______________________________________

      

      Tax
        ID:
        _______________________________________

      

       

      Facsimile:

      Attention:

       

      Delivery
        Instructions if Different from Above:

       

      Name:
        _______________________________________

      

      Address:
        _______________________________________

      

      ________________________________________

      

      ________________________________________

      

      Attention:
        _______________________________________

      

      Contact
        Telephone: ________________________________

      

      Facsimile:
        ________________________________________

      

      Email:
        _________________________________________

    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    FORM
      OF WARRANT

     

    

     

    
      
        
        

      

      
        -7-

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