Document:

INSTRUCTION
      SHEET FOR INVESTOR

     

    (to
      be
      read in conjunction with the entire Stock Purchase Agreement and Investor
      Questionnaire)

    

    A. Complete
      the following items in the Stock Purchase Agreement and in the Investor
      Questionnaire:

     

    1. Provide
      the information regarding the investor requested on the signature pages
      (page 2 and on Annex II the Investor Questionnaire). Please submit a
      separate Stock Purchase Agreement and Investor Questionnaire for each individual
      fund/entity that will hold the Securities. The Stock Purchase Agreement and
      the
      Investor Questionnaire must be executed by an individual authorized to bind
      the
      investor.

    

    2. Return
      the signed Stock Purchase Agreement and Investor Questionnaire to: 

    

    
      	
              Kirkpatrick
                & Lockhart Preston Gates Ellis LLP

              One
                Lincoln Street

              Boston,
                MA 02111

              Attn:
                Barbara A. Jones, Esq.

              Phone:
                (617) 951-9096

              Fax:
                (617) 261-3175

            	 
	
               

              And
                fax copies to:

               

              China
                Precision Steel, Inc.

              8th
                Floor, Teda Building

              87
                Wing Lok Street

              Sheung
                Wan, Hong Kong

              Attn:
                Wo Hing Li, President

              Phone:
                +1-852-8543-8223

              Fax:
                +1-852-2854-1121

               

              American
                Union Securities, Inc.

              100
                Wall Street

              New
                York, NY 10005

              Attn:
                John Leo, President

              Phone:
                +1-212-232-0120

              Fax:
                +1-212-785-5867

               

              Investors
                outside the United States should also fax a copy to:

               

              Belmont
                Capital Group Limited

              Suite
                C, 20th
                Floor Neich Tower

              128
                Gloucester Road, Wanchai

              Hong
                Kong

              Attn:
                Tracy Hung Wan

              Phone:
                +852-2517-6262

              Fax:
                +852-2548-7788

            	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    An
      executed original Stock Purchase Agreement and Investor Questionnaire or a
      fax
      thereof must be received by 2:00 p.m., Eastern time, on a date to be determined
      and distributed to the investor at a later date.

    

    
      	
              B.

            	
              Instructions
                regarding the transfer of funds for the purchase of Securities will
                be
                faxed to the investor by the Placement Agents at a later
                date.

            

    

     

    
      
        
        

      

      
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    STOCK
      PURCHASE AGREEMENT

    

    China
      Precision Steel, Inc.

    8th
      Floor,
      Teda Building

    87
      Wing
      Lok Street

    Sheung
      Wan, Hong Kong

    

    Ladies
      & Gentlemen: 

    

    The
      undersigned (the “Investor”) hereby confirms its agreement with you, in
      accordance with and pursuant to the Terms and Conditions for Purchase of
      Securities (the “Terms and Conditions”) set forth in Annex I, together with the
      Exhibits thereto, and the Investor Questionnaire as set forth in Annex II,
      each
      of which is attached hereto and incorporated herein by reference, as
      follows:

    

    1. This
      Securities Purchase Agreement (the “Agreement”) is made as of the date set forth
      below among China Precision Steel, Inc., a Colorado corporation (the “Company”),
      and the Investor.

    

    2. The
      Company has authorized the sale and issuance of at least 6,666,666 shares (the
      “Securities”) of common stock of the Company, par value US$0.001 per share (the
“Common Stock”), in a private placement (the “Offering”) to certain accredited
      investors in the United States and elsewhere in reliance upon available
      exemptions from the U.S. Securities Act of 1933, as amended (the “Securities
      Act”).

    

    3. The
      Company and the Investor agree that the Investor will purchase from the Company
      ___________ shares, for a purchase price of US$3.00 per share, or an aggregate
      purchase price of US$_______________, pursuant to the Terms and Conditions.
      Unless otherwise requested by the Investor, certificates representing the
      Securities purchased by the Investor will be registered in the Investor’s name
      and address as set forth below.

    

    4. The
      Investor represents that, except as set forth below, (a) it has had no position,
      office or other material relationship within the past three years with the
      Company or persons known to it to be affiliates of the Company, (b) neither
      it,
      nor any group of which it is a member or to which it is related, beneficially
      owns (including the right to acquire or vote) any securities of the Company
      and
      (c) it is not a Registered Representative at a NASD member firm and has no
      direct or indirect affiliation or association with any NASD member firm as
      of
      the date hereof. Exceptions:

     

    
      
        

      

       

      
        

      

    (If
      no
      exceptions, write “none.” If left blank, response will be deemed to be
“none.”)

    

    
      
        
        

      

      
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    Please
      confirm that the foregoing correctly sets forth the agreement between us by
      signing in the space provided below for that purpose. By executing this
      Agreement, you acknowledge that the Company may use the information in
      paragraphs 4 and 5 above and the name and address information below in
      preparation of the Registration Statement (as defined in Annex I).

    

    Dated
      as
      of February ____, 2007

    

    AGREED
      AND ACCEPTED: 

    

    
      	
              China
                Precision Steel, Inc.

            	 	
              Investor:
                _______________________________

            
	 	 	 
	 	 	
              By:
                ___________________________________

            
	 	 	 
	
              __________________________________

            	 	
              Print
                Name: _____________________________

            
	
              By:
                

            	 	 
	
              Title:
                

            	 	
              Title:
                __________________________________

            
	 	 	 
	 	 	
              Address:
                _______________________________

            
	 	 	 
	 	 	
              ______________________________________

            
	 	 	 
	 	 	
              Tax
                ID No. _____________________________

            
	 	 	 
	 	 	
              Contact
                name: __________________________

            
	 	 	 
	 	 	
              Telephone:
                _____________________________

            
	 	 	 
	 	 	
              Name
                in which shares should be registered (if different):

            
	 	 	 
	 	 	
              _____________________________________

            

    

    

    
      
        
        

      

      
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    ANNEX
      I

    

    TERMS
      AND CONDITIONS FOR PURCHASE OF SECURITIES

    

    1.  Authorization
      and Sale of the Securities.
      Subject
      to these Terms and Conditions, the Company has authorized the issuance and
      sale
      of at least 6,666,666 shares
      of
      its Common Stock in the Offering. The Company reserves the right, in its sole
      discretion, to increase or decrease this number at any time prior to the
      Closing. 

     

    2.  Agreement
      to Sell and Purchase the Securities; Subscription Date.

     

    2.1  At
      the
      Closing (as defined in Section 3), the Company will issue and sell to the
      Investor, and the Investor will purchase from the Company upon the terms and
      conditions hereinafter set forth, the number of Securities set forth in
      paragraph 4 of the Stock Purchase Agreement to which these Terms and Conditions
      are attached at the purchase price set forth thereon (collectively, the
“Agreement”).

     

    2.2  As
      part
      of the Offering, the Company may enter into the same form of Stock Purchase
      Agreement, including these Terms and Conditions, with certain other investors
      (the “Other Investors”) and complete sales of Securities to them. The Investor
      and the Other Investors are hereinafter sometimes collectively referred to
      as
      the “Investors,” and this Agreement and the Stock Purchase Agreements (including
      the Terms and Conditions) executed by the Other Investors are hereinafter
      sometimes collectively referred to as the “Agreements.” The Company may accept
      executed Agreements from Investors for the purchase of Securities until the
      date
      (the “Subscription Date”) on which the Company has (i) executed Agreements
      with Investors for the purchase of Securities, and (ii) notified each of
      American Union Securities, Inc., in its capacity as U.S. placement agent for
      the
      Offering (the “U.S. Placement Agent”) and Belmont Capital Group Limited, in its
      capacity as international placement agent for the Offering (the “International
      Placement Agent and together with the U.S. Placement Agent, the “Placement
      Agents”), in writing that it will no longer accept Agreements from Investors for
      the purchase of Securities in the Offering, but in no event shall the
      Subscription Date be later than February 16, 2007. Each Investor must complete
      a
      Stock Purchase Agreement and an Investor Questionnaire (in the form attached
      as
      Annex II to the Stock Purchase Agreement) in order to purchase Securities in
      the
      Offering.

     

    2.3  The
      Investor acknowledges that the Company intends to pay to the U.S. Placement
      Agent at Closing (as defined below), subject to certain conditions, (i) an
      amount in cash, unless otherwise agreed upon, equal to 5% of the gross proceeds
      received by the Company in the Offering and (ii) warrants to purchase the
      equivalent of 4.25% of the Securities sold to the Investors on behalf of the
      Company. The Investor further acknowledges that the Company intends to pay
      to
      the International Placement Agent at Closing, subject to certain conditions,
      (i)
      cash in the amount of 5% of the gross proceeds received by the Company in the
      Offering and (ii) warrants to purchase the equivalent of 4.25% of the
      Securities. Additional compensation in the form of cash and securities may
      be
      payable to the Placement Agents if certain events occur in connection with
      the
      Offering. The Placement Agents are also entitled to reimbursement of their
      out-of-pocket expenses incurred in connection with the Offering. 

     

    
      
        
        

      

      
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    3.  Delivery
      of the Securities at Closing.
      

     

    3.1  The
      completion of the purchase and sale of the Securities (the “Closing”) shall
      occur (the “Closing Date”) on or about February 16, 2007, at the offices of the
      Company’s counsel. At the Closing, the Company shall deliver to the Investor one
      or more stock certificates representing the number of Securities set forth
      in
      paragraph 4 of the Stock Purchase Agreement, each such certificate to be
      registered in the name of the Investor or, if so indicated on the signature
      page
      of the Stock Purchase Agreement, in the name of a nominee designated by the
      Investor. 

     

    3.2  The
      obligation of the Company to issue the Securities to the Investor shall be
      subject to the following conditions, any one or more of which may be waived
      by
      the Company: (a) receipt by the Company of a certified or official bank check
      or
      wire transfer of funds in the full amount of the purchase price for the
      Securities being purchased hereunder as set forth in paragraph 4 of the Stock
      Purchase Agreement; (b) receipt of executed Agreements from Investors
      purchasing an aggregate investment in the Common Stock of no less than US$20
      million, (c) completion of the purchases and sales under the Agreements with
      the
      Other Investors; (d) the accuracy of the representations and warranties made
      by
      the Investors and the fulfillment of those undertakings of the Investors to
      be
      fulfilled prior to the Closing; and (e) the absence of any threat of or pending
      legal action, suit or proceeding which seeks to restrain or prohibit the
      transactions contemplated by the Agreements.

    

    3.3  The
      Investor’s obligation to purchase the Securities shall be subject to the
      following conditions, any one or more of which may be waived by the Investor:
      (a) Investors shall have executed Agreements for the purchase of Securities
      so
      as to constitute an aggregate investment in the Common Stock of no less than
      US$20 million; (b) the representations and warranties of the Company set forth
      herein shall be true and correct as of the Closing Date in all material respects
      (except for representations and warranties that speak as of a specific date,
      which representations and warranties shall be true and correct as of such date);
      (c) the Investor shall have received such documents as such Investor shall
      reasonably have requested, including, a standard opinion of Company Counsel
      as
      to the matters set forth in Section 4.2 and as to exemption from the
      registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”), of the offer and sale of the Securities; (d) the absence of
      any threat of or pending legal action, suit or proceeding which seeks to
      restrain or prohibit the transactions contemplated by the Agreements; (e) each
      of the Placement Agents shall agree to refrain from selling or transferring
      shares beneficially owned by it prior to the date of this Agreement or received
      as compensation in accordance with Section 2.3 hereof for such period and in
      such form as may be agreed with the Company; and (f) the Limited Standstill
      Agreements, substantially in the form attached hereto as ExhibitB, shall be
      executed and delivered by each of the Company’s directors and executive officer;
      and (g) Mr. Wo Hing Li, the Company’s President and substantial shareholder,
      shall deliver a certificate to the Investors pursuant to which he agrees to
      deliver to the Company for cancellation such number of shares as the Company
      shall be required to issue pursuant to Section 5.1 hereof.

     

    
      
        
        

      

      
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    4.  Representations,
      Warranties and Covenants of the Company.
      The
      Company hereby represents and warrants to, and covenants with, the Investor,
      as
      follows:

     

    4.1  Organization.
      The
      Company is duly organized and validly existing in good standing under the laws
      of the jurisdiction of its organization. Each of the Company and its
      Subsidiaries (as defined in Rule 405 under the Securities Act) has full
      power and authority to own, operate and occupy its properties and to conduct
      its
      business as presently conducted and as described in the documents filed by
      the
      Company under the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”), including, without limitation, the Company’s Quarter Report on Form 10-Q
      for the quarter ended December 31, 2006, the Company’s Current Reports on Form
      8-K, dated February 13, 2007 and dated January 4, 2007, the Company’s Definitive
      Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders, dated
      November 22, 2006, and any other reports or documents filed by the Company
      under
      the Exchange Act since February 13, 2007 (the “Exchange Act Documents”), and is
      registered or qualified to do business and in good standing in each jurisdiction
      in which the nature of the business conducted by it or the location of the
      properties owned or leased by it requires such qualification and where the
      failure to be so qualified would have a material adverse effect upon the
      condition (financial or otherwise), earnings, business or business prospects,
      properties or operations of the Company and its Subsidiaries, considered as
      one
      enterprise (a “Material Adverse Effect”), and no proceeding has been instituted
      in any such jurisdiction, revoking, limiting or curtailing, or seeking to
      revoke, limit or curtail, such power and authority or qualification.

     

    4.2  Due
      Authorization and Valid Issuance.
      The
      Company has all requisite power and authority to execute, deliver and perform
      its obligations under the Agreements, and the Agreements have been duly
      authorized and validly executed and delivered by the Company and, assuming
      due
      authorization, execution and delivery by the Investors, constitute legal, valid
      and binding agreements of the Company enforceable against the Company in
      accordance with their terms, except as rights to indemnity and contribution
      may
      be limited by state or federal securities laws or the public policy underlying
      such laws, except as enforceability may be limited by applicable bankruptcy,
      insolvency, reorganization, moratorium or similar laws affecting creditors’ and
      contracting parties’ rights generally and except as enforceability may be
      subject to general principles of equity (regardless of whether such
      enforceability is considered in a proceeding in equity or at law). The
      Securities being purchased by the Investor hereunder, upon issuance and payment
      therefor pursuant to this Agreement, will be duly authorized, validly issued,
      fully-paid and non-assessable. 

     

    4.3  Non-Contravention.
      The
      execution and delivery of the Agreements, the issuance and sale of the
      Securities under the Agreements, the fulfillment of the terms of the Agreements
      and the consummation of the transactions contemplated thereby will not
      (A) conflict with or constitute a violation of, or default (with the
      passage of time or otherwise) under, (i) any material bond, debenture, note
      or other evidence of indebtedness, lease, contract, indenture, mortgage, deed
      of
      trust, loan agreement, joint venture or other agreement or instrument to which
      the Company or any Subsidiary is a party or by which it or any of its
      Subsidiaries or their respective properties are bound, (ii) the charter,
      by-laws or other organizational documents of the Company or any Subsidiary,
      or
      (iii) any law, administrative regulation, ordinance or order of any court
      or governmental agency, arbitration panel or authority applicable to the Company
      or any Subsidiary or their respective properties, except in the case of
      clauses (i) and (iii) for any such conflicts, violations or defaults which
      are not reasonably likely to have a Material Adverse Effect or (B) result
      in the creation or imposition of any lien, encumbrance, claim, security interest
      or restriction whatsoever upon any of the material properties or assets of
      the
      Company or any Subsidiary or an acceleration of indebtedness pursuant to any
      obligation, agreement or condition contained in any material bond, debenture,
      note or any other evidence of indebtedness or any material indenture, mortgage,
      deed of trust or any other agreement or instrument to which the Company or
      any
      Subsidiary is a party or by which any of them is bound or to which any of the
      material property or assets of the Company or any Subsidiary is subject. No
      consent, approval, authorization or other order of, or registration,
      qualification or filing with, any regulatory body, administrative agency, or
      other governmental body in the United States or any other person is required
      for
      the execution and delivery of the Agreements and the valid issuance and sale
      of
      the Securities to be sold pursuant to the Agreements, other than such as have
      been made or obtained, and except for any post-closing securities filings or
      notifications required to be made under federal or state securities laws or
      under the rules of The Nasdaq Capital Market.

     

    
      
        
        

      

      
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    4.4  Capitalization.
      The
      capitalization of the Company as of December 31, 2006 is as set forth in the
      most recent applicable Exchange Act Documents, increased as set forth in the
      next sentence. The Company has not issued any capital stock since that date
      other than pursuant to (i) employee benefit plans disclosed in the Exchange
      Act
      Documents, (ii) outstanding warrants, options or other securities disclosed
      in
      the Exchange Act Documents, (iii) the Stock Exchange Agreement and related
      transactions as disclosed in the Exchange Act Documents and the Agreements.
      The
      outstanding shares of capital stock of the Company have been duly and validly
      issued and are fully paid and nonassessable, have been issued in compliance
      with
      all federal and state securities laws, and were not issued in violation of
      any
      preemptive rights or similar rights to subscribe for or purchase securities.
      Except (i) as set forth in or contemplated by the Exchange Act Documents or
      in
      the Agreements and (ii) for warrants for 100,000 shares of Common Stock issuable
      to CCG Elite Investor Relations upon the consummation of the transactions
      contemplated by the Agreements, excercisable at the purchase price of $3.00
      per
      share, there are no outstanding rights (including, without limitation,
      preemptive rights), warrants or options to acquire, or instruments convertible
      into or exchangeable for, any unissued shares of capital stock or other equity
      interest in the Company or any Subsidiary, or any contract, commitment,
      agreement, understanding or arrangement of any kind to which the Company is
      a
      party or of which the Company has knowledge and relating to the issuance or
      sale
      of any capital stock of the Company or any Subsidiary, any such convertible
      or
      exchangeable securities or any such rights, warrants or options, other than
      an
      executory agreement between the Company and Wo Hing Li for the conversion,
      subject to shareholder approval and upon and subject to the occurrence of
      certain events (including the consummation of the transactions contemplated
      herein), into Common Stock or otherwise of such amounts as may then remain
      due
      and payable to Wo Hing Li. Except as set forth in the Exchange Act Documents
      or
      otherwise herein, the issue and sale of the Securities will not obligate the
      Company to issue shares of Common Stock or other securities to any person and
      will not result in a right of any holder of the Company’s securities to adjust
      the exercise, conversion, exchange or reset price under such securities. Without
      limiting the foregoing, no preemptive right, co-sale right, right of first
      refusal, registration right, or other similar right exists with respect to
      the
      Securities or the issuance and sale thereof, except (i) with respect to the
      right of Shu Keung Leung to register up to 1,268,150 shares of Common Stock
      owned by him on the Registration Statement (as defined in Section 8.1 below),
      and (ii) as otherwise set forth herein (including Exhibit B attached hereto) or
      in the Exchange Act Documents. No further approval or authorization of any
      stockholder, the Board of Directors of the Company or others is required for
      the
      issuance and sale of the Securities. The Company owns the entire equity interest
      in each of its Subsidiaries, free and clear of any pledge, lien, security
      interest, encumbrance, claim or equitable interest, other than as described
      in
      the Exchange Act Documents. Except as disclosed in the Exchange Act Documents
      or
      otherwise herein, there are no stockholders agreements, voting agreements or
      other similar agreements with respect to the Common Stock to which the Company
      is a party or, to the knowledge of the Company, between or among any of the
      Company’s stockholders.

     

    
      
        
        

      

      
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    4.5  Legal
      Proceedings.
      There
      is no material legal or governmental proceeding pending or, to the knowledge
      of
      the Company, threatened to which the Company or any Subsidiary is or may be
      a
      party or of which the business or property of the Company or any Subsidiary
      is
      subject that is not disclosed in the Exchange Act Documents.

     

    4.6  Financial
      Statements.
      The
      financial statements of the Company and the related notes contained in the
      Exchange Act Documents present fairly, in accordance with generally accepted
      accounting principles, the financial position of the Company and its
      Subsidiaries as of the dates indicated, and the results of its operations and
      cash flows for the periods therein specified consistent with the books and
      records of the Company and its Subsidiaries. Such financial statements
      (including the related notes) have been prepared in accordance with generally
      accepted accounting principles applied on a consistent basis throughout the
      periods therein specified, except as may be disclosed in
      the
      notes to such financial statements, or in the case of unaudited statements,
      as
      may be permitted by the Securities and Exchange Commission (the “SEC”) and
      except as disclosed in the Exchange Act Documents. The other financial
      information pertaining to the Company and contained in the Exchange Act
      Documents has been prepared on a basis consistent with the financial statements
      of the Company.

     

    4.7  No
      Material Adverse Change.
      Except
      as disclosed in the Exchange Act Documents, since December 31, 2006, there
      has
      not been (i) any material adverse change in the financial condition or
      earnings of the Company and its Subsidiaries considered as one enterprise,
      (ii) any material adverse event affecting the Company or its Subsidiaries,
      (iii) any obligation, direct or contingent, that is material to the Company
      and its Subsidiaries considered as one enterprise, incurred by the Company,
      except obligations incurred in the ordinary course of business, (iv) any
      dividend or distribution of any kind declared, paid or made on the capital
      stock
      of the Company or any of its Subsidiaries, or (v) any loss or damage
      (whether or not insured) to the physical property of the Company or any of
      its
      Subsidiaries which has been sustained which has a Material Adverse
      Effect.

     

    4.8  Reporting
      Status; Disclosure.
      The
      Company has filed in a timely manner all documents and reports that the Company
      was required to file under the Exchange Act during the twelve months preceding
      the date of this Agreement or has received a valid extension of such time of
      filing and has filed any such documents and reports prior to the expiration
      of
      any such extension. The Exchange Act Documents complied in all material respects
      with the applicable requirements of the SEC, including the rules and regulations
      promulgated under the Securities Act and the Exchange Act as required as of
      their respective filing dates and the information contained therein was
      accurate, true and complete in all material respects as of such filing date.
      The
      representations and warranties of the Company contained in this Section 4
      as of the date hereof and as of the Closing Date are accurate, true and complete
      in all material respects.

     

    
      
        
        

      

      
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    4.9  Nasdaq
      Compliance;
      Listing
      of the Shares. (a) The Company’s Common Stock is registered pursuant to
      Section 12(b) of the Exchange Act and is listed on The Nasdaq Capital
      Market (“Nasdaq”), and the Company has taken no action designed to, or likely to
      have the effect of, terminating the registration of the Common Stock under
      the
      Exchange Act or de-listing the Common Stock from Nasdaq. In accordance with
      Nasdaq Marketplace Rule 4350(i), shareholder approval for the issuance of the
      Securities was obtained at the Company’s Annual Meeting of Shareholders on
      December 27, 2006, as reported in the Exchange Act Documents. (b) The Company
      shall comply with all requirements of the NASD with respect to the issuance
      of
      the Securities and the listing thereof on Nasdaq. The Company shall use its
      best
      efforts to take such actions as may be necessary after the Closing for the
      listing of the Securities on Nasdaq. 

     

    4.10  No
      Manipulation of Stock.
      The
      Company has not taken and will not take any action designed to or that might
      reasonably be expected to cause or result in stabilization or manipulation
      of
      the price of the Common Stock to facilitate the sale or resale of the
      Securities.

     

    4.11  Company
      not an “Investment Company”.
      The
      Company is not, and as a result of the transactions contemplated by this
      Agreement will not be, an “investment company” or an entity “controlled” by an
“investment company” within the meaning of the Investment Company
      Act.

     

    4.12  Transactions
      with Affiliates and Employees.
      Except
      as set forth in the Exchange Act Documents, none of the officers or directors
      of
      the Company is a party to any transaction with the Company (other than for
      services as officers and directors), since the beginning of the current fiscal
      year in excess of $120,000 other than (a) payment of salary or consulting fees
      for services rendered, (b) reimbursement for expenses incurred or advances
      made
      on behalf of the Company, (c) interests arising solely as a shareholder of
      the
      Company or its subsidiaries, and (d) employee benefits, including stock option
      agreements under any stock option plan of the Company.

     

    4.13  Accountants.
      To the
      Company’s knowledge, Murrell, Hall, McIntosh & Co. PLLP are independent
      accountants as required by the Securities Act and the rules and regulations
      promulgated thereunder.

     

    4.14  Contracts.
      The
      contracts described in the Exchange Act Documents that are material to the
      Company are in full force and effect on the date hereof, and neither the Company
      nor, to the Company's knowledge, any other party to such contracts is in breach
      of or default under any of such contracts which would have a Material Adverse
      Effect.

     

    4.15  Taxes.
      The
      Company has filed all necessary federal, state and foreign income and franchise
      tax returns and has paid or accrued all taxes shown as due thereon, and the
      Company has no knowledge of a tax deficiency which has been or might be asserted
      or threatened against it which would have a Material Adverse Effect.

     

    
      
        
        

      

      
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    4.16  Transfer
      Taxes.
      On the
      Closing Date, all stock transfer or other taxes (other than income taxes) which
      are required to be paid in connection with the sale and transfer of the
      Securities to be sold to the Investor hereunder will be, or will have been,
      fully paid or provided for by the Company and all laws imposing such taxes
      will
      be or will have been fully complied with.

     

    4.17  Private
      Offering.
      The
      Company has not distributed and will not distribute prior to the Closing Date
      any offering material in connection with this Offering and sale of the
      Securities other than the exhibits attached hereto and the corporate
      presentation containing certain financial projections which constitute material
      non-public information (the “Corporate Presentation”). The Company has not in
      the past nor will it hereafter take any action to sell, offer for sale or
      solicit offers to buy any securities of the Company which would bring the offer,
      issuance or sale of the Securities as contemplated by this Agreement, within
      the
      provisions of Section 5 of the Securities Act, unless such offer, issuance
      or
      sale was or shall be within the exemptions of Section 4 of the Securities Act
      and Regulation S promulgated thereunder. However, the Company shall not be
      restricted from the issuance of (i) Common Stock to the Wo Hing Li upon
      conversion of certain outstanding debt owed thereto, subject to shareholder
      approval and upon and subject to the occurrence of certain events, (ii) equity
      securities or warrants or other convertible securities issued, sold or otherwise
      disposed of pursuant to lending/credit arrangements to which the Company or
      its
      Subsidiaries are a party, (iii) equity securities issued or sold in connection
      with commercial or strategic partnership arrangements entered into for primarily
      non-equity financing purposes, (iv) equity securities issued on a pro rata
      basis
      to all holders of a class of outstanding equity securities of the Company as
      a
      result of a stock split or stock dividend, (v) equity securities or options
      to
      acquire equity securities issued pursuant to employee stock option, purchase
      or
      similar equity-based stock incentive plans in effect as of the date of this
      Agreement, (vi) equity securities sold or otherwise disposed of pursuant to
      plans adopted in compliance with Rule 10b5-1 under the Exchange Act, and (vii)
      equity securities issued in connection with acquisitions where such equity
      securities are issued by the Company as consideration to the purchaser in such
      acquisition. 

     

    4.18  Limited
      Standstill.
      The
      Company will make available to the Investors on the Closing Date copies of
      the
      Limited Standstill Agreements, substantially in the form attached hereto as
      Exhibit B, executed by each of the Company’s directors, the Company’s President
      and the Company’s Chief Financial Officer. The Company represents and warrants
      to the Investors that, as of the date of the Agreements, no other member of
      the
      Company’s management owns equity securities or securities or instruments
      convertible into or exchangeable for equity securities of the
      Company.

     

    4.19  Foreign
      Corrupt Practices; Anti Money Laundering.
      Neither
      the Company, nor to the knowledge of the Company, any agent or other person
      acting on behalf of the Company, has violated in any material respect any
      provision of the Foreign Corrupt Practices Act of 1977, as amended, at any
      time
      the Company has been subject thereto. The operations of the Company and its
      subsidiaries are and have been conducted at all times in compliance with the
      money laundering statutes of applicable jurisdictions, the rules and regulations
      thereunder and any related or similar rules, regulations or guidelines, issued,
      administered or enforced by any applicable governmental authority (collectively,
      the “Money Laundering Laws”) and no action, suit or proceeding by or before any
      court or governmental authority or arbitrator involving the Company or its
      subsidiaries with respect to the Money Laundering Laws is pending or, to the
      Company’s knowledge, threatened.

     

    
      
        
        

      

      
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    4.20  Acknowledgement
      Regarding Investors’ Purchase of Securities.
      The
      Company acknowledges and agrees that each of the Investors is acting solely
      in
      the capacity of an arm’s length purchaser with respect to the Agreements and the
      transactions contemplated thereby. The Company further represents to each
      Investor that the Company’s decision to enter into this Agreement has been based
      solely on the independent evaluation of the transactions contemplated hereby
      by
      the Company and its representations.

     

    4.21  Disclosure.
      Following the issuance of the press release and the Form 8-K in accordance
      with
      Section 10 hereof, the Investors will not, to the Company’s knowledge, possess
      any material non-public information concerning the Company. The Company
      acknowledges that the Investor is relying on the representations,
      acknowledgements and agreements made by the Company in this Section 4 and
      elsewhere in this Agreement in making decisions concerning an investment in
      the
      Company’s securities.

     

    5.  Additional
      Covenants of the Company.

     

    5.1  The
      Company agrees to reserve for issuance on the Closing Date an aggregate of
      2,000,000 shares of Common Stock (the “Make Good Shares”) for issuance to
      Investors in accordance with the following:

     

    (a) If
      the
      Company’s net income for the fiscal year ending June 30, 2007, is less than
      US$10.4 million, as set forth in the Company’s audited financial statements as
      filed with the SEC in the Company’s Annual Report on Form 10-K for the fiscal
      year ended June 30, 2007 (and any amendments thereto), then the Company shall
      provide to the Company’s Transfer Agent an instruction notice substantially in
      the form attached hereto as Exhibit A, with a copy to Investors, to issue
      2,000,000 Make Good Shares to the Investors on a pro-rata basis; provided,
      however, that if no Make Good Shares are to be issued pursuant to this Section
      5.1(a), then such shares shall continue to be reserved by the Company for
      issuance, if required, in accordance with Section 5.1(b) below;

     

    (b) If
      no
      Make Good Shares are required to be issued pursuant to Section 5.1(a) above
      and
      the Company’s net income for the fiscal year ending June 30, 2008, is less than
      95% of projected net income of US$13.1 million, that is US$12,445,000, as set
      forth in the Company’s audited financial statements as filed with the SEC in the
      Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2008
      (and any amendments thereto), then the Company shall provide to the Company’s
      Transfer Agent an instruction notice substantially in the form attached hereto
      as Exhibit A, with a copy to Investors, to issue 2,000,000 Make Good Shares
      to
      the Investors on a pro-rata basis.

     

    (c) In
      the
      event that liquidated damages are required to be paid to Investors as set forth
      in Section 8.1 below in connection with a Registration Default (as defined
      below), then, prior to the determination required under Section 5.4(a) and
      (b)
      above, the amount of any such liquidated damages required to be paid pursuant
      to
      Section 8.1 shall be deducted from the required net income amount set forth
      in
      Section 5.1 (a) and (b) above with respect to the fiscal year in which such
      liquidated damages are paid. 

     

    
      
        
        

      

      
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    (d) No
      portion of the Make Good Shares may be transferred to Investors or registered
      for resale prior to the filing of the Company’s Form 10-K for the respective
      fiscal year or, if later, thirty (30) days after the effective date of the
      Registration Statement for the Securities sold in the Offering. 

    

    6.  Representations,
      Warranties and Covenants of the Investor.

     

    6.1  The
      Investor represents and warrants to, and covenants with, the Company that:
      (i) the Investor is either an “accredited investor” as defined in
      Regulation D under the Securities Act or a non-U.S. person as defined in
      Regulation S under the Securities Act who is acquiring the Securities in an
      offshore transaction, and the Investor is also knowledgeable, sophisticated
      and
      experienced in making, and is qualified to make decisions with respect to
      investments in shares presenting an investment decision like that involved
      in
      the purchase of the Securities, including investments in securities issued
      by
      the Company and investments in comparable companies, and has requested,
      received, reviewed and considered all information it deemed relevant in making
      an informed decision to purchase the Securities; (ii) the Investor
      understands that the Securities are “restricted securities” and have not been
      registered under the Securities Act and is acquiring the number of Securities
      set forth in paragraph 4 of the Stock Purchase Agreement in the ordinary course
      of its business and for its own account and not with a view towards, or for
      resale in connection with, the public sale or distribution thereof, except
      pursuant to sales registered or exempted under the Securities Act (including
      pursuant to the Registration Statement (as defined in Section 8.1 below), and
      has no agreement or understanding, directly or indirectly, with any person
      to
      distribute any of the Securities; (iii) the Investor will not, directly or
      indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
      any offers to buy, purchase or otherwise acquire or take a pledge of) any of
      the
      Securities except in compliance with the Securities Act, applicable state
      securities laws and the respective rules and regulations promulgated thereunder;
      (iv) the Investor has completed or caused to be completed and delivered to
      the Company the Investor Questionnaire and has answered all questions on the
      Investor Questionnaire for use in preparation of the Registration Statement
      and
      the answers thereto are true, correct and complete in all material respects
      as
      of the date hereof and will be true, correct and complete in all material
      respects as of the Closing Date; (v) the Investor will notify the Company
      immediately of any change in any of such information until such time as the
      Investor has sold all of its Securities or until the Company is no longer
      required to keep the Registration Statement effective; (vi) the Investor has,
      in
      connection with its decision to purchase the number of Securities set forth
      in
      paragraph 4 of the Stock Purchase Agreement, relied only upon the Exchange
      Act
      Documents and the representations and warranties of the Company contained
      herein; and (vii) the Investor has reviewed the Company’s Exchange Act
      Documents, and specifically has read and understands the “Risk Factors”
contained therein and has considered those and other risks in deciding to
      purchase the Securities; and (viii) the Investor is not purchasing the
      Securities as a result of any advertisement, article, notice or other
      communication regarding the Securities published in any newspaper, magazine
      or
      similar media or broadcast over television or radio or presented at any seminar
      or any other general solicitation or general advertisement. The Investor
      understands that its acquisition of the Securities has not been registered
      under
      the Securities Act or registered or qualified under any state securities law
      in
      reliance on specific exemptions therefrom, which exemptions may depend upon,
      among other things, the representations of the Investor, including the bona
      fide
      nature of the Investor’s investment intent, as contained herein. The Investor
      acknowledges and agrees that a restrictive legend will be included on the
      Securities as follows:

     

    THE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR ANY STATE IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
      OF
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND, ACCORDINGLY, MAY NOT BE
      OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHETICATED EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN ACCORDANCE WITH AN
      EXEMPTION THEREFROM, IF AVAILABLE, OR IN A TRANSACTION NOT SUBJECT TO THE
      REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS, AS EVIDENCED BY AN OPINION OF COUNSEL FOR THE TRANSFEROR
      REASONABLY SATISFACTORY TO THE COMPANY, PROVIDED THAT NO SUCH OPINION OR ANY
      CONSENT BY THE COMPANY SHALL BE REQUIRED FOR PLEDGE OF THE SECURITIES PURSUANT
      TO A BONA FIDE MARGIN OR FINANCING ARRANGEMENT. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    6.2  The
      Investor acknowledges that no action has been or will be taken in any
      jurisdiction outside the United States by the Company that would permit an
      offering of the Securities, or possession or distribution of offering materials
      in connection with the issue of the Securities, in any jurisdiction outside
      the
      United States where legal action by the Company for that purpose is required.
      Each Investor outside the United States will comply with all applicable laws
      and
      regulations in each foreign jurisdiction in which it purchases, offers, sells
      or
      delivers Securities or has in its possession or distributes any offering
      material, in all cases at its own expense.

     

    6.3  The
      Investor further represents and warrants to, and covenants with, the Company
      that (i) the Investor has full right, power, authority and capacity to
      enter into this Agreement and to consummate the transactions contemplated hereby
      and has taken all necessary action to authorize the execution, delivery and
      performance of this Agreement; and (ii) this Agreement constitutes a valid
      and binding obligation of the Investor enforceable against the Investor in
      accordance with its terms, except as enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
      creditors’ and contracting parties’ rights generally and except as
      enforceability may be subject to general principles of equity (regardless of
      whether such enforceability is considered in a proceeding in equity or at law)
      and except as the indemnification agreements of the Investors herein may be
      legally unenforceable.

     

    6.4  Investor
      will not, prior to the effectiveness of the Registration Statement, directly
      or
      indirectly, sell, offer to sell, solicit offers to buy, dispose of, loan, pledge
      or grant any right with respect to (collectively, a "Disposition") the
      Securities in violation of the Securities Act. The Investor has not, during
      the
      15 days prior to the date of this Agreement, directly or indirectly, traded
      in
      the Securities or established any hedge or other position in the Securities
      that
      is outstanding on the Closing Date and that is designed to or expected to lead
      to or result in a Disposition by the Investor or any other person or entity,
      nor
      will Investor engage in any hedging or other transaction which is designed
      to or
      could reasonably be expected to lead to or result in a Disposition of Securities
      by the Investor or any other person or entity in violation of the Securities
      Act. For purposes of the preceding sentence, “hedging or other transactions”
would include without limitation effecting any short sale or having in effect
      any short position (whether or not such sale or position is against the box
      and
      regardless of when such position was entered into) or any purchase, sale or
      grant of any right (including without limitation any put or call option) with
      respect to the Securities of the Company or with respect to any security (other
      than a broad-based market basket or index) that includes, relates to or derives
      any significant part of its value from the Securities. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    6.5  The
      Investor understands that nothing in the Exchange Act Documents, this Agreement
      or any other materials presented to the Investor in connection with the purchase
      and sale of the Securities constitutes legal, tax or investment advice. The
      Investor has consulted such legal, tax and investment advisors as it, in its
      sole discretion, has deemed necessary or appropriate in connection with its
      purchase of Securities.

     

    6.6  The
      Investor represents to the Company that, at all time during the Offering, the
      Investor has maintained in confidence all material non-public information
      relating to the Company received by the Investor from the Company or the
      Placement Agents, and covenants that from the date hereof it will maintain
      in
      confidence all material non-public information regarding the Offering and the
      Corporate Presentation received by the Investor from the Company or the
      Placement Agents until such information (a) is disclosed by the Company pursuant
      to Section 10 below or otherwise, (b) becomes generally publicly available
      other
      than through a violation of this provision by the Investor or its agents, or
      (c)
      is required to be disclosed in legal, regulatory or administrative proceedings
      or similar process; provided, however, that before making any disclosure in
      reliance on this Section 6.6, the Investor will give the Company at least
      fifteen (15) days prior written notice ( or such shorter period as may be
      required by law) specifying the circumstances giving rise thereto and will
      furnish only that portion of the non-public information which is legally
      required and will exercise its commercially reasonable efforts to ensure that
      confidential treatment will be accorded any non-public information so furnished.
      

     

    6.7  The
      Investor acknowledges that it has independently evaluated the merits of the
      transaction contemplated by this Agreement, that it has independently determined
      to enter into the transaction contemplated hereby, that it is not relying on
      any
      advice from or evaluation by any Other Investor, and that it is not acting
      in
      concert with any Other Investor in making its purchase of the Securities
      hereunder. The Investor acknowledges that the Investors have not taken any
      actions that would deem the Investors to be members of a “group” for purposes of
      Section 13(d) of the Exchange Act.

     

    6.8  The
      Investor agrees to comply with the requirements of Regulation M, if applicable,
      with respect to the sale of the Securities by the Investor. The Investor hereby
      confirms its understanding that it may not cover short sales made prior to
      the
      effective date of the Registration Statement with Securities registered for
      resale thereon. The Investor acknowledges that it does not intend to cover
      short
      positions made by it before the effective date with Securities held by it and
      registered on the Registration Statement.

     

    
      
        
        

      

      
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    7.  Survival
      of Representations, Warranties and Agreements.
      Notwithstanding any investigation made by any party to this Agreement, all
      covenants, agreements, representations and warranties made by the Company and
      the Investor herein shall survive the execution of this Agreement, the delivery
      to the Investor of the Securities being purchased and the payment
      therefor.

     

    8.  
      Registration of the Securities; Compliance with the Securities
      Act.

     

    8.1  Registration
      Requirement.
      Subject
      to the terms and limitations hereof, the Company shall file a registration
      statement on Form S-3, if available, or other appropriate registration document
      under the Securities Act (the “Registration Statement”) for resale of the
      Securities and those shares held by certain existing shareholders of the Company
      (the “Registrable Securities”) and shall use its reasonable best efforts to
      maintain the Registration Statement effective for a period of twenty-four (24)
      months at the Company’s expense (the “Effectiveness Period”). The Company shall
      file such Registration Statement no later than ninety (90) days after the
      Closing Date (the “Filing Default”), and shall use reasonable best efforts to
      cause such Registration Statement to become effective within one hundred and
      fifty (150) days after the Closing Date (the “Effectiveness Default”, and each
      of an Effectiveness Default and a Filing Default, a “Registration Default”).
      Subject to the conditions and limitations hereof, including the limitations
      set
      forth in Sections 8.2 and 8.3, in the event of a Registration Default, the
      Company shall be required to make a cash payment, as liquidated damages, to
      the
      Investor for each 30-day period of a Registration Default, in an amount equal
      to
      of 1.0% of the aggregate purchase price (the “Purchase Price”) paid by the
      Investor as set forth in paragraph 4 of the Stock Purchase Agreement; provided,
      however, that in no event shall the aggregate amount payable hereunder with
      respect to a Registration Default exceed 6% of the Purchase Price paid by the
      Investor; and provided, further, that the Company shall have no obligation
      to
      pay any such liquidated damages to the Investor during a Registration Default
      for any delay substantially due to (i) issues raised by the SEC, the NASD or
      Nasdaq relating to the applicability of Rule 415 under the Securities Act to
      the
      Registration Statement, the resale of the Securities, the form or structure
      of
      the Offering, or the acts or omissions of persons or entities other than the
      Company, or (ii) information required from the Investor. The liquidated damages
      payable herein shall apply on a pro-rata basis for any portion of a 30-day
      period of a Registration Default. For the avoidance of doubt, any right to
      receive such cash payment shall be the Investor’s sole and exclusive remedy for
      the failure of the Company to satisfy the obligations under this Section 8.1.
      

     

    8.2  Rule
      415; Cutback.
      Notwithstanding the registration obligations set forth in Section 8.1, in the
      event the SEC informs the Company that all of the Registrable Securities cannot,
      as a result of the application of Rule 415, be registered for resale on a single
      registration statement, the Company agrees to promptly (i) inform each of the
      holders thereof and use its reasonable best efforts to file amendments to the
      Initial Registration Statement as required by the SEC and/or (ii) withdraw
      the
      Initial Registration Statement and file a new registration statement (a
“New
      Registration Statement”),
      in
      either case covering the maximum number of Registrable Securities permitted
      to
      be registered by the SEC on Form S-3 or such other form available to register
      for resale the Registrable Securities.  In such event, the Investors shall
      have the right to have all of their shares registered in such Initial
      Registration Statement, as amended, or New Registration Statement, as the case
      may be, before any other shareholder of the Company shall have the right to
      register its Registrable Securities.  In the event the Company amends the
      Initial Registration Statement or files a New Registration Statement, as the
      case may be, under clauses (i) or (ii) above, the Company will use its
      reasonable best efforts to file with the SEC, as promptly as allowed by SEC
      or
      staff guidance provided to the Company or to registrants of securities in
      general, one or more registration statements on Form S-3 or such other form
      available to register for resale those Registrable Securities that were not
      registered for resale on the Initial Registration Statement, as amended, or
      the
      New Registration Statement (the “Remainder
      Registration Statements”).

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    8.3  Limitation
      to Registration Requirement.
      The
      Company shall not be obligated to effect any registration of the Registrable
      Securities or take any other action pursuant to this Section 8 (i) in any
      particular jurisdiction in which the Company would be required to execute a
      general consent to service of process in effecting such registration,
      qualification or compliance unless the Company is already subject to service
      in
      such jurisdiction and except as may be required by the Securities Act, or (ii)
      during any period in which the Company suspends the rights of an Investor after
      giving the Investor a Suspension Notice (defined below) pursuant to Section
      8.8
      hereof. 

     

    8.4  Expenses
      of Registration.
      Except
      as otherwise expressly set forth, the Company shall bear all expenses incurred
      by the Company in compliance with the registration obligation of the Company,
      including, without limitation, all registration and filing fees, printing
      expenses, fees and disbursements of counsel for the Company incurred in
      connection with any registration, qualification or compliance pursuant to the
      Agreements. All underwriting discounts, selling commissions and expense
      allowances applicable to the sale by the Investor of Registrable Securities
      and
      all fees and disbursements of counsel for the Investor shall be borne by the
      Investor.

     

    8.5  Registration
      Procedures.
      The
      Company shall:

     

    (a)  Subject
      to the prompt receipt of necessary information from the Investors, prepare
      and
      file with the SEC such amendments and supplements to the Registration Statement
      and the prospectus used in connection with the Registration Statement as may
      be
      necessary to comply with the provisions of the Securities Act with respect
      to
      the disposition of securities covered by the Registration
      Statement;

     

    (b)  Respond
      as promptly as reasonably practicable to any comments received from the SEC
      with
      respect to the Registration Statement or any amendment thereto.

     

    (c)  Notify
      the Investor as promptly as reasonably practicable and (if requested by any
      such
      person) confirm such notice in writing no later than one trading day following
      the day (A) when a prospectus or any prospectus supplement or post-effective
      amendment to the Registration Statement is proposed to be filed and (B) with
      respect to the Registration Statement or any post-effective amendment, when
      the
      same has become effective; 

     

    (d)  Furnish
      such number of prospectuses and other documents incident thereto, including
      supplements and amendments, as the Investor may reasonably request, together
      with a copy of a letter from the Company substantially in the form attached
      hereto as Exhibit C; 

     

    
      
        
        

      

      
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    (e)  Use
      its
      reasonable best efforts to avoid the issuance of, or, if issued, obtain the
      withdrawal of (i) any order suspending the effectiveness of the Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment; 

     

    (f)  Use
      its
      reasonable best efforts to comply with all applicable rules and regulations
      of
      the U.S. federal and state securities laws applicable to the Registration
      Statement; and

     

    (g)  Take
      such
      action, consistent with Section 11 below, as is necessary to cause the Company’s
      transfer agent promptly after the effective date of the Registration Statement,
      to effect the removal of the legend set forth in Section 6.1 above.

    

    8.6  Statement
      of Beneficial Ownership.
      The
      Company may require the Investor to furnish to the Company a certified statement
      as to the number of shares of Common Stock beneficially owned by such Investor
      and the controlling person thereof and any other such information regarding
      the
      Investor, the Registrable Securities held by the Investor and the intended
      method of disposition of such securities as shall be reasonably required with
      respect to the registration of the Investor’s Registrable Securities. The
      Investor hereby understands and agrees that the Company may, in its sole
      discretion, exclude the Investor’s shares of Common Stock from the Registration
      Statement in the event that the Investor fails to provide such information
      requested by the Company within the time period reasonably specified by the
      Company or is required to do so by applicable law.

     

    8.7  Compliance.
      The
      Investor covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to such Investor in connection
      with sales of Registrable Securities pursuant to the registration statement
      required hereunder.

     

    8.8  Transfer
      of Securities After Registration; Suspension.

     

    (a) The
      Investor agrees that it will not effect any disposition of the Securities or
      its
      right to purchase the Securities that would constitute a sale within the meaning
      of the Securities Act except as contemplated in the Registration Statement
      referred to in Section 8.1 and as described below or as otherwise permitted
      by law, and that it will promptly notify the Company of any changes in the
      information set forth in the Registration Statement regarding the Investor
      or
      its plan of distribution.

    

    (b) Except
      in
      the event that paragraph (c) below applies, the Company shall (i) if deemed
      necessary by the Company, prepare and file from time to time with the SEC a
      post-effective amendment to the Registration Statement or a supplement to the
      related Prospectus or a supplement or amendment to any document incorporated
      therein by reference or file any other required document so that such
      Registration Statement will not contain an untrue statement of a material fact
      or omit to state a material fact required to be stated therein or necessary
      to
      make the statements therein not misleading, and so that, as thereafter made
      available to or, if required, delivered to purchasers of the Securities being
      sold thereunder in accordance with the Securities Act, such Prospectus will
      not
      contain an untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein,
      in
      light of the circumstances under which they were made, not misleading;
      (ii) to the extent required under the Securities Act, provide the Investor
      copies of any documents filed pursuant to Section 8.8(b)(i); and
      (iii) inform each Investor that the Company has complied with its
      obligations in Section 8.8(b)(i) (or that, if the Company has filed a
      post-effective amendment to the Registration Statement which has not yet been
      declared effective, the Company will notify the Investor to that effect, will
      use its commercially reasonable efforts to secure the effectiveness of such
      post-effective amendment as promptly as possible and will promptly notify the
      Investor pursuant to Section 8.8(b)(i) hereof when the amendment has
      become effective).

     

    
      
        
        

      

      
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    (c) Subject
      to paragraph (d) below, in the event (i) of any request by the SEC or any
      other federal or state governmental authority during the period of effectiveness
      of the Registration Statement for amendments or supplements to a Registration
      Statement or related Prospectus or for additional information, (ii) of the
      issuance by the SEC or any other federal or state governmental authority of
      any
      stop order suspending the effectiveness of a Registration Statement or the
      initiation of any proceedings for that purpose, (iii) of the receipt by the
      Company of any notification with respect to the suspension of the qualification
      or exemption from qualification of any of the Securities for sale in any
      jurisdiction or the initiation or threatening of any proceeding for such
      purpose, or (iv) of any event or circumstance which, upon the advice of its
      counsel, necessitates the making of any changes in the Registration Statement
      or
      Prospectus, or any document incorporated or deemed to be incorporated therein
      by
      reference, so that, in the case of the Registration Statement, it will not
      contain any untrue statement of a material fact or any omission to state a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading, and that in the case of the Prospectus, it will not
      contain any untrue statement of a material fact or any omission to state a
      material fact required to be stated therein or necessary to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading, then the Company shall deliver a certificate in writing to the
      Investor (the “Suspension Notice”) to the effect of the foregoing and, upon
      receipt of such Suspension Notice, the Investor will refrain from selling any
      Securities pursuant to the Registration Statement (a “Suspension”) until the
      Investor’s receipt of notice from the Company that a supplemented or amended
      Prospectus has been prepared and filed by the Company with the SEC and is
      available electronically, or, if required in accordance with the Securities
      Act,
      until it is advised in writing by the Company that the current Prospectus may
      be
      used, and has received copies of any additional or supplemental filings that
      are
      incorporated or deemed incorporated by reference in any such Prospectus. In
      the
      event of any Suspension, the Company will use its commercially reasonable
      efforts to cause the use of the Prospectus so suspended to be resumed as soon
      as
      reasonably practicable after the delivery of a Suspension Notice to the
      Investor. 

    

    (d)  Provided
      that a Suspension is not then in effect, the Investor may sell Securities under
      the Registration Statement, provided that it arranges for delivery of a current
      Prospectus to the transferee of such Securities, if required under applicable
      law. Upon receipt of a request therefor, the Company has agreed, if required
      under applicable law, to provide an adequate number of current Prospectuses
      to
      the Investor and to supply copies to any other parties requiring such
      Prospectuses.

     

    (e)  In
      the
      event of a sale of Securities by the Investor pursuant to the Registration
      Statement, the Investor must also deliver to the Company’s transfer agent, with
      a copy to the Company, a certificate of subsequent sale substantially in the
      form included in Exhibit C attached hereto, so that the Securities may be
      properly transferred.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    8.9  Indemnification.
      For the
      purpose of this Section 8.9:

     

    (i) the
      term
“Selling Holder” shall include the Investor and any affiliate of such
      Investor;

    

    (ii) the
      term
“Registration Statement” shall include the Prospectus in the form first filed
      with the SEC pursuant to Rule 424(b) of the Securities Act or filed as part
      of the Registration Statement at the time of effectiveness if no
      Rule 424(b) filing is required, together with any exhibit, supplement or
      amendment included in or relating to the Registration Statement referred to
      in
      Section 8.5; and

    

    (iii) the
      term
“untrue statement” shall include any untrue statement or alleged untrue
      statement, or any omission or alleged omission to state in the Registration
      Statement a material fact required to be stated therein or necessary to make
      the
      statements therein, in the light of the circumstances under which they were
      made, not misleading.

    

    (a) The
      Company agrees to indemnify and hold harmless each Selling Holder from and
      against any losses, claims, damages or liabilities to which such Selling Holder
      may become subject (under the Securities Act or otherwise) insofar as such
      losses, claims, damages or liabilities (or actions or proceedings in respect
      thereof) arise out of, or are based upon (i) any breach of the
      representations or warranties of the Company contained herein or failure to
      comply with the covenants and agreements of the Company contained herein,
      (ii) any untrue statement of a material fact contained in the Registration
      Statement as amended at the time of effectiveness or any omission of a material
      fact required to be stated therein or necessary to make the statements therein
      not misleading, or (iii) any failure by the Company to fulfill any
      undertaking included in the Registration Statement as amended at the time of
      effectiveness, and the Company will reimburse such Selling Holder for any
      reasonable legal or other expenses reasonably incurred in investigating,
      defending or preparing to defend any such action, proceeding or claim, or
      preparing to defend any such action, proceeding or claim, provided,
      however,
      that
      the Company shall not be liable in any such case to the extent that such loss,
      claim, damage or liability arises out of, or is based upon, an untrue statement
      made in such Registration Statement or any omission of a material fact required
      to be stated therein or necessary to make the statements therein not misleading
      in reliance upon and in conformity with written information furnished to the
      Company by or on behalf of such Selling Holder specifically for use in
      preparation of the Registration Statement or the failure of such Selling Holder
      to comply with its covenants and agreements contained in Section 8.8 hereof
      respecting sale of the Securities or any statement or omission in any Prospectus
      that is corrected in any subsequent Prospectus. The Company shall reimburse
      each
      Selling Holder for the amounts provided for herein on demand as such expenses
      are incurred.

    

    (b) The
      Investor agrees to indemnify and hold harmless the Company and each person,
      if
      any, who controls the Company within the meaning of Section 15 of the
      Securities Act, each officer of the Company who signs the Registration Statement
      and each director of the Company from and against any losses, claims, damages
      or
      liabilities to which the Company (or any such officer, director or controlling
      person) may become subject (under the Securities Act or otherwise), insofar
      as
      such losses, claims, damages or liabilities (or actions or proceedings in
      respect thereof) arise out of, or are based upon, (i) any failure to comply
      with
      the covenants and agreements contained in Section 8.8 hereof respecting
      sale of the Securities, or (ii) any untrue statement of a material fact
      contained in the Registration Statement or any omission of a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading if such untrue statement or omission was made in reliance upon and
      in
      conformity with written information furnished by or on behalf of the Investor
      specifically for use in preparation of the Registration Statement, and the
      Investor will reimburse the Company (or such officer, director or controlling
      person), as the case may be, for any legal or other expenses reasonably incurred
      in investigating, defending or preparing to defend any such action, proceeding
      or claim; provided
      that the
      Investor’s obligation to indemnify the Company shall be limited to the net
      amount received by the Investor from the sale of the Securities.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    (c) Promptly
      after receipt by any indemnified person of a notice of a claim or the beginning
      of any action in respect of which indemnity is to be sought against an
      indemnifying person pursuant to this Section 8.9, such indemnified person
      shall notify the indemnifying person in writing of such claim or of the
      commencement of such action, but the omission to so notify the indemnifying
      person will not relieve it from any liability which it may have to any
      indemnified person under this Section 8.9 (except to the extent that such
      omission materially and adversely affects the indemnifying person’s ability to
      defend such action) or from any liability otherwise than under this
      Section 8.9. Subject to the provisions hereinafter stated, in case any such
      action shall be brought against an indemnified person, the indemnifying person
      shall be entitled to participate therein, and, to the extent that it shall
      elect
      by written notice delivered to the indemnified person promptly after receiving
      the aforesaid notice from such indemnified person, shall be entitled to assume
      the defense thereof, with counsel reasonably satisfactory to such indemnified
      person. After notice from the indemnifying person to such indemnified person
      of
      its election to assume the defense thereof, such indemnifying person shall
      not
      be liable to such indemnified person for any legal expenses subsequently
      incurred by such indemnified person in connection with the defense thereof,
      provided,
      however,
      that if
      there exists or shall exist a conflict of interest that would make it
      inappropriate, in the opinion of counsel to the indemnified person, for the
      same
      counsel to represent both the indemnified person and such indemnifying person
      or
      any affiliate or associate thereof, the indemnified person shall be entitled
      to
      retain its own counsel at the expense of such indemnifying person; provided,
      however, that no indemnifying person shall be responsible for the fees and
      expenses of more than one separate counsel (together with appropriate local
      counsel) for all indemnified parties. In no event shall any indemnifying person
      be liable in respect of any amounts paid in settlement of any action unless
      the
      indemnifying person shall have approved the terms of such settlement;
provided
      that
      such consent shall not be unreasonably withheld. No indemnifying person shall,
      without the prior written consent of the indemnified person, effect any
      settlement of any pending or threatened proceeding in respect of which any
      indemnified person is or could have been a party and indemnification could
      have
      been sought hereunder by such indemnified person, unless such settlement
      includes an unconditional release of such indemnified person from all liability
      on claims that are the subject matter of such proceeding.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    (d) If
      the
      indemnification provided for in this Section 8.9 is unavailable to or
      insufficient to hold harmless an indemnified person under subsection (a) or
      (b)
      above in respect of any losses, claims, damages or liabilities (or actions
      or
      proceedings in respect thereof) referred to therein, then each indemnifying
      person shall contribute to the amount paid or payable by such indemnified person
      as a result of such losses, claims, damages or liabilities (or actions in
      respect thereof) in such proportion as is appropriate to reflect the relative
      fault of the Company on the one hand and the Investor, as well as any Other
      Investors under such registration statement, on the other in connection with
      the
      statements or omissions or other matters which resulted in such losses, claims,
      damages or liabilities (or actions in respect thereof), as well as any other
      relevant equitable considerations. The relative fault shall be determined by
      reference to, among other things, in the case of an untrue statement, whether
      the untrue statement relates to information supplied by the Company on the
      one
      hand or an Investor or other Investors on the other and the parties’ relative
      intent, knowledge, access to information and opportunity to correct or prevent
      such untrue statement. The Company and the Investor agree that it would not
      be
      just and equitable if contribution pursuant to this subsection (d) were
      determined by pro rata allocation (even if the Investor and Other Investors
      were
      treated as one entity for such purpose) or by any other method of allocation
      which does not take into account the equitable considerations referred to above
      in this subsection (d). The amount paid or payable by an indemnified person
      as a
      result of the losses, claims, damages or liabilities (or actions in respect
      thereof) referred to above in this subsection (d) shall be deemed to include
      any
      legal or other expenses reasonably incurred by such indemnified person in
      connection with investigating or defending any such action or claim.
      Notwithstanding the provisions of this subsection (d), the Investor shall not
      be
      required to contribute any amount in excess of the amount by which the net
      amount received by the Investor from the sale of the Securities to which such
      loss relates exceeds the amount of any damages which such Investor has otherwise
      been required to pay by reason of such untrue statement. No person guilty of
      fraudulent misrepresentation (within the meaning of Section 11(f) of the
      Securities Act) shall be entitled to contribution from any person who was not
      guilty of such fraudulent misrepresentation. The Investor’s obligations in this
      subsection to contribute shall be in proportion to such Investor’s sale of
      Securities to which such loss relates and shall not be joint with any Other
      Investors.

    

    (e) The
      parties to this Agreement hereby acknowledge that they are sophisticated
      business persons who were represented by counsel during the negotiations
      regarding the provisions hereof including, without limitation, the provisions
      of
      this Section 8.9, and are fully informed regarding said provisions. They
      further acknowledge that the provisions of this Section 8.9 fairly allocate
      the risks in light of the ability of the parties to investigate the Company
      and
      its business in order to assure that adequate disclosure is made in the
      Registration Statement as required by the Securities Act and the Exchange Act.
      The parties are advised that federal or state public policy as interpreted
      by
      the courts in certain jurisdictions may be contrary to certain of the provisions
      of this Section 8.9, and the parties hereto hereby expressly waive and
      relinquish any right or ability to assert such public policy as a defense to
      a
      claim under this Section 8.9 and further agree not to attempt to assert any
      such defense.

    

    8.10  Termination
      of Conditions and Obligations.
      The
      conditions precedent imposed by Section 6 or this Section 8 upon the
      transferability of the Securities shall cease and terminate as to any particular
      number of the Securities when such Securities shall have been effectively
      registered under the Securities Act and sold or otherwise disposed of in
      accordance with the intended method of disposition set forth in the Registration
      Statement covering such Securities or at such time as an opinion of counsel
      reasonably satisfactory to the Company shall have been rendered to the effect
      that such conditions are not necessary in order to comply with the Securities
      Act.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    8.11  Information
      Available.
      So long
      as the Registration Statement is effective covering the resale of Securities
      owned by the Investor, the Company will furnish or otherwise make available
      to
      the Investor:

     

    (a) as
      soon
      as practicable after it is available, one copy (excluding exhibits) of its
      Annual Report on Form 10-K, which Annual Report on Form 10-K shall contain
      financial statements audited in accordance with generally accepted accounting
      principles by a national firm of certified public accountants;

    

    (b) upon
      the
      reasonable request of the Investor, all exhibits excluded by the parenthetical
      to subparagraph (a) of this Section 8.11 as filed with the SEC and all
      other information that is made available to stockholders; and

    

    (c) upon
      the
      reasonable request of the Investor, an adequate number of copies of the
      Prospectuses to supply to any other party requiring such Prospectuses; and,
      upon
      the reasonable request of the Investor, the President or the Chief Financial
      Officer of the Company (or an appropriate designee thereof) will meet with
      the
      Investor or a representative thereof at the Company’s headquarters to discuss
      all information relevant for disclosure in the Registration Statement covering
      the Securities and will otherwise cooperate with any Investor conducting an
      investigation for the purpose of reducing or eliminating such Investor’s
      exposure to liability under the Securities Act, including the reasonable
      production of information at the Company’s headquarters; provided, that the
      Company shall not be required to disclose any confidential information to or
      meet at its headquarters with any Investor until and unless the Investor shall
      have entered into a confidentiality agreement in form and substance reasonably
      satisfactory to the Company with the Company with respect thereto.

    

    9.  Rule
      144.
      The
      Company covenants that it will timely file the reports required to be filed
      by
      it under the Securities Act and the Exchange Act and the rules and regulations
      adopted by the SEC thereunder, and it will take such further action as any
      such
      Investor may reasonably request, all to the extent required from time to time
      to
      enable such Investor to sell Securities purchased hereunder without registration
      under the Securities Act within the limitation of the exemptions provided by
      (a)
      Rule 144 under the Securities Act, as such Rule may be amended from time to
      time, or (b) any similar rule or regulation hereafter adopted by the SEC.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    10.  Public
      Statements. 
      The Company shall, on or before 8:30 a.m., New York time, on the first Business
      Day following execution of the Agreements, issue a press release disclosing
      all
      material terms of the Offering, including the financial projections contained
      in
      the Corporate Presentation.  Within four (4) Business Days after the
      Closing Date, the Company shall file a Current Report on Form 8-K with the
      SEC
      (the “8-K Filing”) describing the terms of the Offering and including as
      exhibits to the 8-K Filing this Agreement in the form required by the Exchange
      Act.  Thereafter, the Company shall timely file any filings and notices
      required by the SEC or applicable law with respect to the Offering. The Company
      shall not include the name of any Investor in any press release without the
      prior written consent of such Investor.

     

    11.  Removal
      of Legends.
      Certificates evidencing the Securities shall not contain any legend (including
      the legend set forth in Section 6.1 above) (i) while the Registration Statement
      covering the resale of the Securities is effective under the Securities Act;
      (ii) if such Securities are sold pursuant to Rule 144 (assuming the transferor
      is not an affiliate of the Company); (iii) if such Securities are eligible
      for
      resale under Rule 144(k); or (iv) if such legend is not otherwise required
      under
      applicable requirements of the Securities Act. After the effective date of
      the
      Registration Statement or at such earlier time as a legend is no longer required
      for the Securities, the Company shall, no later than five business days
      following the delivery by an Investor to the Company or the Company’s transfer
      agent (with notice to the Company) of a legended certificate representing such
      Securities (endorsed or with stock powers attached, signatures guaranteed,
      and
      otherwise in form necessary to effect the re-issuance and/or transfer), take
      all
      action as is necessary for a certificate representing such Securities to be
      delivered to such Investor that is free from all restrictive and other legends.
      The Company shall cause its counsel to issue a legal opinion to the transfer
      agent with respect to such matters on the effective date. Any fees incurred
      by
      the transfer agent, counsel to the Company or otherwise associated with the
      issuance of such opinion, the removal of the legend, and the re-issuance of
      the
      certificates representing the Securities shall be borne by the Company. The
      Company may not make any notation on its records or give instructions to the
      transfer agent that enlarge the restrictions on transfer set forth in this
      Section 11 with respect to the Securities.

     

    12.  Notices.
      All
      notices, requests, consents and other communications hereunder shall be in
      writing, and shall be deemed given (i) if deposited in the U.S. mail, on
      the business day actually received, (ii) if delivered by overnight courier,
      on the next business day after delivery to such courier, (iii) if delivered
      by facsimile, upon electronic confirmation of receipt and shall be delivered
      as
      addressed as follows:

     

    (a) if
      to the
      Company, to:

    

    China
      Precision Steel, Inc.

    8th
      Floor,
      Teda Building

    87
      Wing
      Lok Street

    Sheung
      Wan, Hong Kong

    Fax:
      +1-822-2854-1121

    Attention:
      Leada Tak Tai Li, Chief Financial Officer

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

    (b) with
      a
      copy to:

    

    Kirkpatrick
      & Lockhart Preston Gates Ellis LLP

    One
      Lincoln Street

    Boston,
      MA 02111

    Fax:
      +1-617-261-3175

    Attn:
      Barbara A. Jones, Esq.

    

    (c) if
      to the
      Investor, at its address on the signature page hereto, or at such other address
      or addresses as may have been furnished to the Company in writing.

    

    13.  Changes.
      This
      Agreement may not be modified or amended except pursuant to an instrument in
      writing signed by the Company and the Investor.

     

    14.  Headings.
      The
      headings of the various sections of this Agreement have been inserted for
      convenience of reference only and shall not be deemed to be part of this
      Agreement.

     

    15.  Severability.
      In case
      any provision contained in this Agreement should be invalid, illegal or
      unenforceable in any respect, the validity, legality and enforceability of
      the
      remaining provisions contained herein shall not in any way be affected or
      impaired thereby.

     

    16.  Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York.

     

    17.  Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      constitute an original, but all of which, when taken together, shall constitute
      but one instrument, and shall become effective when one or more counterparts
      have been signed by each party hereto and delivered to the other
      parties.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    ANNEX
      II

    

    CHINA
      PRECISION STEEL, INC.

    

    INVESTOR
      QUESTIONNAIRE

    

    (ALL
      INFORMATION WILL BE TREATED CONFIDENTIALLY)

    

    
      	To:	
              China
                Precision Steel, Inc.

              
                8th
                  Floor, Teda Building

                87
                  Wing Lok Street

                Sheung
                  Wan, Hong Kong

              

            

    

    

    This
      Investor Questionnaire (“Questionnaire”) must be completed by each potential
      investor in connection with the offer and sale of the shares of the common
      stock, $0.001 par value per share (the “Securities), of China Precision Steel,
      Inc. (“CPSL”). The Securities are being offered and sold by CPSL without
      registration under the Securities Act of 1933, as amended (the “Act”), and the
      securities laws of certain states, in reliance on the exemptions contained
      in
      Section 4(2) of the Act and on Regulation D and Regulation S promulgated
      thereunder and in reliance on similar exemptions under applicable state laws.
      CPSL must determine that a potential investor meets certain suitability
      requirements before offering or selling Securities to such investor. The purpose
      of this Questionnaire is to assure CPSL that each investor will meet the
      applicable suitability requirements. The information supplied by you will be
      used in determining whether you meet such criteria, and reliance upon the
      private offering exemption from registration is based in part on the information
      herein supplied.

    

    This
      Questionnaire does not constitute an offer to sell or a solicitation of an
      offer
      to buy any security. Your answers will be kept strictly confidential. However,
      by signing this Questionnaire you will be authorizing CPSL to provide a
      completed copy of this Questionnaire to such parties as CPSL deems appropriate
      in order to ensure that the offer and sale of the Securities will not result
      in
      a violation of the Act or the securities laws of any state and that you
      otherwise satisfy the suitability standards applicable to purchasers of the
      Securities. All potential investors must answer all applicable questions and
      complete, date and sign this Questionnaire. Please print or type your responses
      and attach additional sheets of paper if necessary to complete your answers
      to
      any item.

    

    
      	A.	
              BACKGROUND
                INFORMATION

            

    

    

    Name:
      

    
      
        

      

    Business
      Address: 

    
      
        

      

    

    (Number
      and Street)

     

      
        

      

    

    
      
        	(City)	
                (State)

              	
                (Zip
                  Code)

              

      

    

             

    Telephone
      Number: (___) 

    
      
        

      

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

         

      

    

    Residence
      Address:

    
      
        

      

    

    (Number
      and Street)

     

    
      

      	(City)	
              (State)

            	
              (Zip
                Code)

            

    

     

    Telephone
      Number: (___)    

    
      
 

    If
      an
      individual:

    
      	
              Age:
                ____________

            	
              Citizenship:
                ________

            	
              Where
                registered to vote:
                ________

            

    

          

    If
      a
      corporation, partnership, limited liability company, trust or other
      entity:

     

    
      
        	
              	
                Type
                  of entity:
                  __________________________________________________________________________________________________________________

              
	 	 	 
	
              	State of formation: ________________	Date of formation:
                ________________

      

            

    

    Social
      Security or Taxpayer Identification No.

    
      
        

      

    Send
      all
      correspondence to (check one): ______ Residence Address ______
      Business Address

    

    Current
      ownership of securities of CPSL: __________
      shares of common stock, $0.001 value per share (the “Common Stock”); ___________
      options to purchase __________ shares of Common Stock

    

    
      	B.	
              STATUS
                AS ACCREDITED INVESTOR

            

    

    

    The
      undersigned is an “accredited investor” as such term is defined in Regulation D
      under the Act, as at the time of the sale of the Securities the undersigned
      falls within one or more of the following categories (Please
      initial one or more, as applicable):

     

    ____
      (1) a
      bank as
      defined in Section 3(a)(2) of the Act, or a savings and loan association or
      other institution as defined in Section 3(a)(5)(A) of the Act whether
      acting in its individual or fiduciary capacity; a broker or dealer registered
      pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance
      company as defined in Section 2(13) of the Act; an investment company
      registered under the Investment Corporation Act of 1940 or a business
      development company as defined in Section 2(a)(48) of that Act; a Small
      Business Investment Corporation licensed by the U.S. Small Business
      Administration under Section 301(c) or (d) of the Small Business Investment
      Act of 1958; a plan established and maintained by a state, its political
      subdivisions, or any agency or instrumentality of a state or its political
      subdivisions for the benefit of its employees, if such plan has total assets
      in
      excess of $5,000,000; an employee benefit plan within the meaning of the
      Employee Retirement Income Security Act of 1974 if the investment decision
      is
      made by a plan fiduciary, as defined in Section 3(21) of such Act, which is
      either a bank, savings and loan association, insurance company, or registered
      investment adviser, or if the employee benefit plan has total assets in excess
      of $5,000,000 or, if a self-directed plan, with the investment decisions made
      solely by persons that are accredited investors;

     

    
      

    

    
      1 
        As used in this Questionnaire, the term “net worth” means the excess of total
        assets over total liabilities. In computing net worth for the purpose of
        subsection (4), the principal residence of the investor must be valued at
        cost,
        including cost of improvements, or at recently appraised value by an
        institutional lender making a secured loan, net of encumbrances. In determining
        income, the investor should add to the investor’s adjusted gross income any
        amounts attributable to tax exempt income received, losses claimed as a limited
        partner in any limited partnership, deductions claimed for depiction,
        contributions to an IRA or KEOGH retirement plan, alimony payments, and any
        amount by which income from long-term capital gains has been reduced in arriving
        at adjusted gross income.

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    ____
      (2) a
      private
      business development company as defined in Section 202(a)(22) of the
      Investment Adviser Act of 1940;

    

    ____
      (3) an
      organization described in Section 501(c)(3) of the Internal Revenue Code of
      1986, as amended, corporation, Massachusetts or similar business trust, or
      partnership, not formed for the specific purpose of acquiring the Securities
      offered, with total assets in excess of $5,000,000;

    

    ____
      (4) a
      natural
      person whose individual net worth, or joint net worth with that person’s spouse,
      at the time of such person’s purchase of the Securities exceeds
      $1,000,000;

    

    ____
      (5) a
      natural
      person who had an individual income in excess of $200,000 in each of the two
      most recent years or joint income with that person’s spouse in excess of
      $300,000 in each of those years and has a reasonable expectation of reaching
      the
      same income level in the current year;

    

    ____
      (6) a
      trust,
      with total assets in excess of $5,000,000, not formed for the specific purpose
      of acquiring the Securities offered, whose purchase is directed by a
      sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
      and

    

    ____
      (7) an
      entity
      in which all of the equity owners are accredited investors (as defined
      above).

    

    
      
        
          	C.	
                  FOR
                    NON-U.S. PERSONS ACQUIRING IN RELIANCE UPON REGULATION S ONLY.
                    PLEASE
                    CHECK ALL BOXES THAT
                    APPLY.

                

        

      

    

     

    
      
        
          
            	1.	
                    The
                      undersigned has checked the following box as appropriate:
                      

                  

          

        

      

       

    

    
      	 	o	
              The
                undersigned is an “accredited investor” (as defined above in Part
                B).

            

    

     

    
      	 	o	
              The
                undersigned is not an accredited investor.

            

    

     

    
      
        	2.	o	The undersigned is not a “U.S. person” as defined in Rule
                902 of Regulation S under the Act. Specifically, the undersigned
                is
                not:

      

       

    

    
      	
            	
              ·

            	
              A
                natural person resident in the United
                States;

            

    

    
      	 	 	 

    

    
      	 	
              ·

            	
              A
                partnership or corporation organized or incorporated under the laws
                of the
                United States;

            

    

    
      	 	 	 

    

    
      	 	
              ·

            	
              An
                estate of which any executor or administrator is a U.S.
                person;

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              ·

            	
              A
                trust of which any trustee is a U.S.
                person;

            

    

    
      	 	 	 

    

    
      	 	
              ·

            	
              An
                agency or branch of a foreign entity located in the United
                States;

            

    

    
      	 	 	 

    

    
      	 	
              ·

            	
              A
                non-discretionary account or similar account (other than an estate
                or
                trust) held by a dealer or other fiduciary for the benefit or account
                of a
                U.S. person;

            

    

    
      	 	 	 

    

    
      	 	
              ·

            	
              A
                discretionary account or similar account (other than an estate or
                trust)
                held by a dealer or other fiduciary organized, incorporated, or (if
                an
                individual) resident in the United States;
                and

            

    

    
      	 	 	 

    

    
      	 	
              ·

            	
              A
                partnership or corporation if:

            

    

     

    Organized
      or incorporated under the laws of any foreign jurisdiction; and

     

    Formed
      by
      a U.S. person principally for the purpose of investing in securities not
      registered under the Act, unless it is organized or incorporated, and owned,
      by
      accredited investors (as defined in Rule
      501(a))
      who are
      not natural persons, estates or trusts.

    
       

      
        
          	3.	o	The Securities were not offered to the undersigned
                  in the
                  United States.

        

          

      

    

    
      
        
          
            	4.	o	The undersigned was physically outside the
                    United States
                    when the agreement to acquire the Securities was made. No documents
                    relating to the acquisition of the Securities were executed by
                    the
                    undersigned in the United States.

          

            

        

      

    

    
      
        
          
            	5.	o	The undersigned acknowledges that the Securities
                    were not
                    offered by means of any general solicitation or
                    advertising.

          

           

        

      

    

    
      
        
          
            	6.	o	The undersigned is purchasing the Securities
                    for its own
                    account for investment and not on behalf of or for the benefit
                    of any U.S.
                    person.

          

           

        

      

    

    
      
        
          
            	7.	o	The undersigned has not prearranged the sale
                    of the
                    Securities to any buyer in the United States and has no present
                    plan or
                    intention to engage in a distribution of the Securities in the
                    United
                    States.

          

            

        

      

    

    
      
        
          
            	8.	o	The undersigned agrees that, prior to the
                    expiration of a
                    period commencing on the closing of the Stock Purchase Agreement
                    and
                    ending one-year thereafter (the “Restricted Period”), no offers and sales
                    of the Securities shall be made to U.S. persons or for the account
                    or
                    benefit of U.S. persons except in compliance with U.S. federal
                    and state
                    securities laws. 

          

            

        

      

    

    
      
        
          
            	9.	o	If the undersigned is a distributor or dealer
                    with
                    respect to the Offering, the undersigned acknowledges and agrees
                    that it
                    is subject to the same restrictions as each other
                    Investor.

          

            

          
            
              
              

            

            
              4

              
                

              

            

            
              
              

            

          

           

        

      

    

    
      
        
          
            	10.	o	The undersigned has not engaged in and is
                    not aware of
                    any other person having engaged in any “directed selling efforts,” as that
                    term is defined in Rule 902 of Regulation S, in connection with
                    the
                    acquisition of the Securities.

          

           

        

      

    

    
      
        
          
            	11.	o	The undersigned will not make any sale, transfer
                    or other
                    disposition of the Securities in violation of the Act, the Securities
                    and
                    Exchange Act of 1934, as amended (the “Exchange Act”), or the rules and
                    regulations of the Securities and Exchange Commission (the “Commission”)
                    promulgated thereunder.

          

           

        

      

    

    Note:
      Each equity owner must submit an individual investor
      questionnaire.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the undersigned has executed this Questionnaire this _____
      day
      of February, 2007, and declares under oath that it is truthful and
      correct.

    
      	 	 	 
	 	 
	 	
              
Print
              Name
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              
Signature
	 	 	 
	 	Title: 
	 	
              
                

              

              (required
                for any purchaser that is a corporation, 

              partnership,
                trust or other
                entity)

            

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    EXHIBIT
      A

    

    INSTRUCTIONS
      TO ISSUE AND TRANSFER MAKE GOOD SHARES

    

    Pursuant
      to Section 5.1 of the Stock Purchase Agreement, dated as of February [20],
      2007,
      among China Precision Steel, Inc. (the “Company”) and the Investors named
      therein, the Company hereby instructs Corporate Stock Transfer, Inc., as the
      Company’s share registrar and transfer agent, as follows:

    

    These
      instructions are made pursuant to Section 5.1 [(a)] [(b)] [insert
      applicable section reference]
      of the
      Stock Purchase Agreement, dated February 16, 2007.

    

    The
      Company hereby certifies that the condition for issuance of the Make Good Shares
      as set forth such Section 5.1 [(a)] [(b)] [insert
      applicable section reference]
      [has]
      [has not] been satisfied as evidenced in the Company’s audited financial
      statements for the fiscal year ended June 30, 200[7] [8] [insert
      applicable year]
      and
      filed with the U.S. Securities Exchange Commission in the Company’s Annual
      Report on Form 10-K for such fiscal year on [insert
      date of SEC filing].

    

    Make
      Good
      Shares should be issued and transferred to the Investors pro-rata [insert
      as appropriate]
      as set
      forth below:

     

    
      	Amount of Make Good Shares	 	 
	to
              be
              issued:	 	   
              
	 	 	 
	Form
              of
              issuance:	 	   
              
	 	 	 
	Transferees:	 	[Include names of all
              Investors]
	
              Name:

            	 	  

	
              Address:

            	 	  

	
              City/State:

            	 	  

	
              Zip:

            	 	  

	
              Number
                of Shares:

            	 	  
              

    

     

    
      	 	 	 	 
	
            	 	 	CHINA PRECISION STEEL,
              INC. 
	 	 	 	 
	 	 	 	 
	Date: _________________________	 	 	By:
	
            	 	 	
              
                

              

              Name:

            
	
            	 	 	
              Title:

            

    

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    LIMITED
      STANDSTILL AGREEMENT

    

    This
      AGREEMENT (the “Agreement”) is made as of the ___ day of February, 2007, by the
      signatories hereto (each a “Holder”), in connection with their respective
      ownership of shares of China Precision Steel, Inc., a Colorado corporation
      (the
“Company”). Terms not otherwise defined herein are defined in the Stock Purchase
      Agreement among the Company and the Investors named therein; dated as of
      February 16, 2007 (the “Stock Purchase Agreement”).

     

    NOW
      THEREFORE, for good and valuable consideration, the sufficiency and receipt
      of
      which consideration are hereby acknowledged, Holder agrees as
      follows:

     

    1.  General.

     

    (a)  Holder
      is
      a director or executive officer of the Company and the beneficial owner of
      the
      amount of shares of the Common Stock, $0.001 par value, of the Company (“Common
      Stock”) and rights to purchase Common Stock as designated on the signature page
      hereto (collectively, the “Shares”). 

     

    (b)  Holder
      acknowledges that the Company has entered into or will enter into an agreement
      with each Investor (a “Stock Purchase Agreement”) for the sale to the Investors
      of an aggregate of at least $20,000,000 principal amount of Common Stock (the
      “Offering”). Holder understands that, as a condition to Closing, the Investors
      have required, and the Company has agreed to obtain, an agreement from the
      Holder to refrain from selling any securities of the Company in accordance
      with
      the terms and conditions set forth herein.

     

    2.  Share
      Restriction.

     

    (a)  Holder
      hereby agrees that during the period commencing on the effective date of the
      Registration Statement filed pursuant to Section 8 of the Stock Purchase
      Agreement and ending on the date that is twelve (12) months thereafter (the
      “Restriction Period”), the Holder will not offer, sell, contract to sell, sell
      any option or contract to purchase, purchase any option or contract to sell,
      sell short, grant any option, right or warrant to purchase, lend or otherwise
      transfer or dispose of any Shares or enter into any swap or other arrangement
      that transfers any economic consequences of ownership of Shares other than
      as
      may be required in the ordinary course of the Company’s business; provided,
      however, that 20% of the Holder’s Shares shall be released from and no longer
      subject to the foregoing restrictions after ninety (90) calendar days following
      the effective date of such Registration Statement, and further, provided, that
      such 20% may, at Holder’s option, be registered for resale under the Securities
      Act of 1933, as amended, on the Registration Statement to be filed pursuant
      to
      Section 8 of the Stock Purchase Agreement. The foregoing sentence shall not
      apply with respect to an offer made to all shareholders of the Company in
      connection with any merger, consolidation or similar transaction involving
      the
      Company. Holder further agrees that the Company is authorized to and the Company
      agrees to place “stop orders” on its books to prevent any transfer of Shares
      held by Holder in violation of this Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b)  Any
      subsequent issuance to and/or acquisition of Common Stock or the right to
      acquire Common Stock by Holder will be subject to the provisions of this
      Agreement; provided, however, that the Restriction Period shall not be extended
      hereby with respect thereto.

     

    (c)  Notwithstanding
      the foregoing restrictions on transfer, the Holder may, at any time and from
      time to time during the Restriction Period, transfer the Common Stock (i) as
      bona fide gifts or transfers by will or intestacy, (ii) to any trust for the
      direct or indirect benefit of the undersigned or the immediate family of the
      Holder, provided that any such transfer shall not involve a disposition for
      value, (iii) to a partnership which is the general partner of a partnership
      of
      which the Holder is a general partner, provided, that, in the case of any gift
      or transfer described in clauses (i), (ii) or (iii), each donee or transferee
      agrees in writing to be bound by the terms and conditions contained herein
      in
      the same manner as such terms and conditions apply to the undersigned. For
      purposes hereof, “immediate family” means any relationship by blood, marriage or
      adoption, not more remote than first cousin.

     

    3.  Miscellaneous.

     

    (a)  At
      any
      time, and from time to time, after the signing of this Agreement Holder will
      execute such additional instruments and take such action as may be reasonably
      requested by the Investors to carry out the intent and purposes of this
      Agreement. The Company agrees not to take any action or allow any act to be
      taken which would be inconsistent with this Agreement.

     

    (b)  This
      Agreement shall be governed, construed and enforced in accordance with the
      laws
      of the State of New York without regard to conflicts of laws principles that
      would result in the application of the substantive laws of another jurisdiction,
      except to the extent that the securities laws of the state in which Holder
      resides and federal securities laws may apply. Any proceeding brought to enforce
      this Agreement may be brought exclusively in courts sitting in New York County,
      New York.

     

    (c)  This
      Agreement contains the entire agreement of the Holder with respect to the
      subject matter hereof. This Agreement shall be binding upon Holder, its legal
      representatives, successors, heirs and assigns.

     

    (d)  This
      Agreement may be signed in counterpart and delivered by facsimile or electronic
      transmission and such facsimile or electronic transmission signed and delivered
      shall be enforceable.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, and intending to be legally bound hereby, Holder has executed
      this Agreement as of the day and year first above written.

    
      	 	 	 
	 	HOLDER:
	 	 
	 	 
	 	
              
(Signature
              of Holder)
	 	 
	 	 
	 	
              
(Print
              name of Holder)
	 	 
	 	 
	 	
              

              Number
                of shares of Common Stock

              Beneficially
                Owned

            
	 	 
	 	 
	 	
              

              Number
                of options, warrants or other rights

              to
                acquire Common Stock

            
	 	 
	 	 
	 	COMPANY:
	 	 
	 	CHINA PRECISION STEEL, INC.
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              

              Name:
                Wo Hing Li

              Title:
                President

            

    

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    CHINA
      PRECISION STEEL, INC.

    

    ___________________,
      2007

    

    Re: China
      Precision Steel, Inc.; Registration Statement on Form S-3

    

    Dear
      Investor:

    

    Please
      be
      advised that the Company’s Registration Statement on Form S-3 (Registration No.
      333-      ) (the “Registration
      Statement”)
      relating to the resale of your shares of common stock, $0.001 par value (the
      “Securities”),
      of
      the Company has been declared effective by the Securities and Exchange
      Commission and the prospectus dated ______________, 2007 (the “Prospectus”)
      is now
      available for use in connection therewith. As
      an Investor under the Registration Statement, you may have an obligation to
      deliver a copy of the Prospectus to each purchaser of your Securities, either
      directly or through the broker-dealer who executes the sale of your
      Securities.

    

    The
      Company is obligated to notify you in the event that it suspends trading under
      the Registration Statement in accordance with the terms of the Stock Purchase
      Agreement between the Company and you. During the period that the Registration
      Statement remains effective and trading thereunder has not been suspended,
      you
      will be permitted to sell your Securities which are included in the Prospectus
      under the Registration Statement. Upon a sale of any Securities under the
      Registration Statement, you or your broker will be required to deliver to the
      Transfer Agent, Corporate Stock Transfer, Inc. (1) your restricted stock
      certificate(s) representing the Securities, (2) instructions for transfer of
      the
      Securities sold, and (3) a representation letter from your broker, or from
      you
      if you are selling in a privately negotiated transaction, or from such other
      appropriate party, in the form of Exhibit 1
      attached
      hereto (the “Representation Letter”). The Representation Letter confirms that
      the Securities have been sold pursuant to the Registration Statement and in
      a
      manner described under the caption “Plan of Distribution” in the Prospectus and
      that such sale was made in accordance with all applicable securities laws,
      including any applicable prospectus delivery requirements.

    

    Please
      note that you are under no obligation to sell your Securities during the
      registration period. However, if you do decide to sell, you must comply with
      the
      requirements described in this letter or otherwise applicable to such sale.
      Your
      failure to do so may result in liability under the Securities Act of 1933,
      as
      amended, and the Securities Exchange Act of 1934, as amended. Please remember
      that all sales of your Securities must be carried out in the manner set forth
      under the caption “Plan of Distribution” in the Prospectus if you sell under the
      Registration Statement. The Company may require an opinion of counsel reasonably
      satisfactory to the Company if you choose another method of sale. You
      should consult with your own legal advisor(s) on an ongoing basis to ensure
      your
      compliance with the relevant securities laws and
      regulations.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    In
      order to maintain the accuracy of the Prospectus, you must notify the
      undersigned upon the sale, gift, or other transfer of any Securities by you,
      including the number of Securities being transferred, and in the event of any
      other change in the information regarding you which is contained in the
      Prospectus. For example, you must notify the undersigned if you enter into
      any
      arrangement with a broker-dealer for the sale of shares through a block trade,
      special offering, exchange distribution or secondary distribution or a purchase
      by a broker-dealer. Depending on the circumstances, such transactions may
      require the filing of a supplement to the prospectus in order to update the
      information set forth under the caption “Plan of Distribution” in the
      Prospectus.

    

    Should
      you need any copies of the Prospectus, or if you have any questions concerning
      the foregoing, please write to me at China Precision Steel, Inc., 8th
      Floor,
      Teda Building, 87 Wing Lok Street, Sheung Wan, Hong Kong. Thank
      you.

    
      	 	 	 
	 	
              Sincerely,

              

              CHINA
                PRECISION STEEL, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Wo
              Hing Li, President

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    Exhibit
      1

     

    CERTIFICATE
      OF SUBSEQUENT SALE

    

    Corporate
      Stock Transfer, Inc.

    3200
      Cherry Creek South Drive, Suite 430

    Denver,
      Colorado 80209

    

    
      	 	
              RE:

            	
              Sale
                of Shares of Common Stock of China Precision Steel, Inc. (the “Company”)
                pursuant to the Company’s Prospectus dated _____________, 2007 (the
                “Prospectus”)

            

    

    

    Dear
      Sir/Madam:

    

    The
      undersigned hereby certifies, in connection with the sale of shares of Common
      Stock of the Company included in the table of Investors in the Prospectus,
      that
      the undersigned has sold the shares pursuant to the Prospectus and in a manner
      described under the caption “Plan of Distribution” in the Prospectus and that
      such sale complies with all securities laws applicable to the undersigned,
      including, without limitation, applicable Prospectus delivery requirements
      of
      the Securities Act of 1933, as amended.

    

    Investor
      (the beneficial owner): 

    
      
        

      

    Record
      Holder (e.g., if held in name of nominee): 

    
      
        

      

    Restricted
      Stock Certificate No.(s): 

    
      
        

      

    Number
      of
      Shares Sold: 

    
      
        

      

    Date
      of
      Sale: 

    
      
        

      

    In
      the
      event that you receive a stock certificate(s) representing more shares of Common
      Stock than have been sold by the undersigned, then you should return to the
      undersigned a newly issued certificate for such excess shares in the name of
      the
      Record Holder and BEARING
      A RESTRICTIVE LEGEND.
      Further, you should place a stop transfer on your records with regard to such
      certificate.

    
      	 	 	 
	 	Very
              truly
              yours,
	 
 	 
 	 
 
	Dated:
              _________________________________	By:  
	 	
              
                

              

               

              Print
                Name:

              
                

              

              
                 

                Title: 

                
                  

                

              

            

    
      
        
        

      

      
        3Unassociated Document

     

    

    LIMITED
      STANDSTILL AGREEMENT

    

    This
      AGREEMENT (the “Agreement”) is made as of the ___ day of February, 2007, by the
      signatories hereto (each a “Holder”), in connection with their respective
      ownership of shares of China Precision Steel, Inc., a Colorado corporation
      (the
“Company”). Terms not otherwise defined herein are defined in the Stock Purchase
      Agreement among the Company and the Investors named therein; dated as of
      February ___, 2007 (the “Stock Purchase Agreement”).

     

    NOW
      THEREFORE, for good and valuable consideration, the sufficiency and receipt
      of
      which consideration are hereby acknowledged, Holder agrees as
      follows:

     

    1. General.

     

    (a) Holder
      is
      a director or executive officer of the Company and the beneficial owner of
      the
      amount of shares of the Common Stock, $0.001 par value, of the Company (“Common
      Stock”) and rights to purchase Common Stock as designated on the signature page
      hereto (collectively, the “Shares”). 

     

    (b) Holder
      acknowledges that the Company has entered into or will enter into an agreement
      with each Investor (a “Stock Purchase Agreement”) for the sale to the Investors
      of an aggregate of up to $20,000,000 principal amount of Common Stock (the
      “Offering”). Holder understands that, as a condition to Closing, the Investors
      have required, and the Company has agreed to obtain, an agreement from the
      Holder to refrain from selling any securities of the Company in accordance
      with
      the terms and conditions set forth herein.

     

    2. Share
      Restriction.

     

    (a) Holder
      hereby agrees that during the period commencing on the effective date of the
      Registration Statement filed pursuant to Section 8 of the Stock Purchase
      Agreement and ending on the date that is twelve (12) months thereafter (the
      “Restriction Period”), the Holder will not offer, sell, contract to sell, sell
      any option or contract to purchase, purchase any option or contract to sell,
      sell short, grant any option, right or warrant to purchase, lend or otherwise
      transfer or dispose of any Shares or enter into any swap or other arrangement
      that transfers any economic consequences of ownership of Shares other than
      as
      may be required in the ordinary course of the Company’s business; provided,
      however, that 20% of the Holder’s Shares shall be released from and no longer
      subject to the foregoing restrictions after ninety (90) calendar days following
      the effective date of such Registration Statement, and further, provided, that
      such 20% may, at Holder’s option, be registered for resale under the Securities
      Act of 1933, as amended, on the Registration Statement to be filed pursuant
      to
      Section 8 of the Stock Purchase Agreement. The foregoing sentence shall not
      apply with respect to an offer made to all shareholders of the Company in
      connection with any merger, consolidation or similar transaction involving
      the
      Company. Holder further agrees that the Company is authorized to and the Company
      agrees to place “stop orders” on its books to prevent any transfer of Shares
      held by Holder in violation of this Agreement.

     

    (b) Any
      subsequent issuance to and/or acquisition of Common Stock or the right to
      acquire Common Stock by Holder will be subject to the provisions of this
      Agreement; provided, however, that the Restriction Period shall not be extended
      hereby with respect thereto.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) Notwithstanding
      the foregoing restrictions on transfer, the Holder may, at any time and from
      time to time during the Restriction Period, transfer the Common Stock (i) as
      bona fide gifts or transfers by will or intestacy, (ii) to any trust for the
      direct or indirect benefit of the undersigned or the immediate family of the
      Holder, provided that any such transfer shall not involve a disposition for
      value, (iii) to a partnership which is the general partner of a partnership
      of
      which the Holder is a general partner, provided, that, in the case of any gift
      or transfer described in clauses (i), (ii) or (iii), each donee or transferee
      agrees in writing to be bound by the terms and conditions contained herein
      in
      the same manner as such terms and conditions apply to the undersigned. For
      purposes hereof, “immediate family” means any relationship by blood, marriage or
      adoption, not more remote than first cousin.

     

    3. Miscellaneous.

     

    (a) At
      any
      time, and from time to time, after the signing of this Agreement Holder will
      execute such additional instruments and take such action as may be reasonably
      requested by the Investors to carry out the intent and purposes of this
      Agreement. The Company agrees not to take any action or allow any act to be
      taken which would be inconsistent with this Agreement.

     

    (b) This
      Agreement shall be governed, construed and enforced in accordance with the
      laws
      of the State of New York without regard to conflicts of laws principles that
      would result in the application of the substantive laws of another jurisdiction,
      except to the extent that the securities laws of the state in which Holder
      resides and federal securities laws may apply. Any proceeding brought to enforce
      this Agreement may be brought exclusively in courts sitting in New York County,
      New York.

     

    (c) This
      Agreement contains the entire agreement of the Holder with respect to the
      subject matter hereof. This Agreement shall be binding upon Holder, its legal
      representatives, successors, heirs and assigns.

     

    (d) This
      Agreement may be signed in counterpart and delivered by facsimile or electronic
      transmission and such facsimile or electronic transmission signed and delivered
      shall be enforceable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, and intending to be legally bound hereby, Holder has executed
      this Agreement as of the day and year first above written.

     

    
      	 	 	 
	 	HOLDER:
	 	 
	 	 
	 	
              
                

              

              (Signature of Holder)

            
	 	 
	 
 	 
	 	
              
                

              

              (Print
                name of Holder)

            
	 	 
	 	 
	 	
              

              Number
                of shares of Common Stock

              Beneficially
                Owned

            
	 	 
	 	 
	 	
              

              Number
                of options, warrants or other rights

              to
                acquire Common Stock

            
	 	 

    

     

    
      	 	
              COMPANY:

            
	 	 	 
	 	CHINA
              PRECISION STEEL, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              Leada Tak Tai Li
	 	Title:
              Chief Financial Officer

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