Document:

Unassociated Document

     

    GENERAL
      STEEL HOLDINGS INC. 

    

    SUBSCRIPTION
      AGREEMENT

     

    THIS
      SUBSCRIPTION AGREEMENT (this “Agreement”)
      is
      made as of this 1st day of September 2005, by and between General Steel Holdings
      Inc., a Nevada corporation (the “Company”),
      and
      the undersigned investors (collectively, together with all successors and
      permitted assignors, the “Investor”).
      

     

    RECITALS

     

    Subject
      to the terms and conditions of this Agreement, the Investor desires to subscribe
      for and purchase, and the Company desires to issue and sell to the Investor,
      certain shares of the Company’s common stock, par value $0.001 per share (the
      "Common
      Shares").
      The
      Company is offering an aggregate of 3,333,333 shares of Common Stock in a
      private placement to the Investor and other investors at a purchase price of
      $1.50 per share (the “Purchase
      Stock Price”)
      and on
      the other terms and conditions contained in this Agreement (the “Offering”).
      

    

    Concurrently
      with the execution and delivery of this Agreement, the Company and the Investor
      are entering into and delivering a Registration Rights Agreement (in the form
      attached hereto as Exhibit
      A)
      and a
      Warrant Agreement (in the form attached hereto as Exhibit
      B).

     

    WITNESSETH

     

    THE
      PARTIES HEREBY AGREE AS FOLLOWS:

     

    
      	1. 
              	
              Definitions. The
                following terms shall have the
                meanings ascribed to them below:

            

    

     

    “Alloy
      Rod JV” shall
      have the meaning ascribed to that term in Section 6.2.

     

    “Agreement”
      shall
      have the meaning ascribed to that term in the Recitals. 

     

    “Articles
      of Incorporation”
      means
      the articles of incorporation previously adopted by resolution in writing of
      all
      shareholders of the Company.

     

    “Authorization” means
      any
      authorization, approval, consent, certificate, license, permit or franchise
      of
      or from any Governmental Entity or pursuant to any Law.

     

    “Capital
      Stock” means
      (a)
      in the case of a corporation, its shares of capital stock, (b) in the case
      of a
      partnership or limited liability company, its partnership or membership
      interests or units (whether general or limited), and (c) any other interest
      that
      confers on a Person the right to receive a share of the profits and losses
      of,
      or distribution of assets, of the issuing entity.

     

    “Centre”
      shall
      have the meaning ascribed to that term in Section 8.6(ii).

     

    “Closing”
      shall
      have the meaning ascribed to that term in Section 2.1(ii).

     

    “Common
      Shares”
shall
      have the meaning ascribed to that term in the Recitals.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Company”
      means
      General Steel Holdings Inc., a Nevada corporation. 

     

    “Company
      Permits” shall
      have the meaning ascribed to that term in Section 3.18.

     

    “Confidential
      Information” shall
      have the meaning ascribed to that term in Section 7.1(a).

     

    “Disclosing
      Party” shall
      have the meaning ascribed to that term in Section 7.2. 

     

    “Disclosure
      Documents”
shall
      have the meaning ascribed to that term in Section 4.5.

     

    “Disclosure
      Schedule” shall
      have the meaning ascribed to that term in Section 3.

     

    “Environmental
      Laws” shall
      have the meaning ascribed to that term in Section 3.19.

     

    “Equity
      Securities” means
      (a)
      Common Shares, and (b) options, warrants or other rights convertible into,
      or
      exercisable or exchangeable for, directly or indirectly, or otherwise entitling
      any Person to acquire, directly or indirectly, Common Shares.

     

    “Governmental
      Entity” means
      any
      entity or body exercising executive, legislative, judicial, regulatory or
      administrative functions of or pertaining to United States federal, state or
      local government or foreign, international, multinational or other government,
      including any department, commission, board, agency, bureau, official or other
      regulatory, administrative or judicial authority thereof. “Exchange
      Act”
      means
      the U.S. Securities Exchange Act of 1934, as amended.

     

    “Financial
      Statements”
      shall
      have the meaning ascribed to that term in Section 3.8. 

     

    “Indemnifiable
      Loss” shall
      have the meaning ascribed to that term in Section 8.2.

     

    “Indemnifying
      Party” shall
      have the meaning ascribed to that term in Section 8.3.

     

    “Indemnitee”
      shall
      have the meaning ascribed to that term in Section 8.2.

     

    “Investment
      Company” shall
      have the meaning ascribed to that term in Section 3.18.

     

    “Investor”
      means
      shall have the meaning ascribed to that term in the Recitals.

     

    “Material
      Adverse Effect” means
      any
      event that immediately causes a negative impact of 10% or more of either the
      Company’s revenue or net income.

     

    “Knowledge
      of the Company”
or
      any
      similar phrase means all matters that are known to, or that would reasonably
      be
      expected to be known as of the date of this Agreement, after a reasonable
      investigation sufficient to express an informed view, by the following persons:
      Henry
      Yu
      or
John
      Chen.

     

    “Law”
means
      any statute, law, ordinance, rule or regulation of any Governmental
      Entity.

     

    “Lien”
means,
      with respect to any property or asset, any mortgage, lien, pledge, charge,
      security interest, hypothecation or any other encumbrance in respect of such
      property or asset.

     

    “Lock
      Box”
shall
      have the meaning ascribed to that term in Section 6.1 “Lock
      Box Agent”
shall
      have the meaning ascribed to that term in Section 6.1.

     

    “Lock
      Box Agreement”
shall
      have the meaning ascribed to that term in Section 6.1.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Lock
      Box Amount”
shall
      have the meaning ascribed to that term in Section 6.1.

     

    “Net
      Proceeds” shall
      have the meaning ascribed to that term in Section 6.2.

     

    “Offering”
      shall
      have the meaning ascribed to that term in the Recitals.

     

    “Order” means
      any
      award, injunction, judgment, decree, order, ruling, subpoena or verdict or
      other
      decision issued, promulgated or entered by or with any Governmental Entity
      of
      competent jurisdiction.

     

    “Person”
      means
      any individual, corporation, partnership, limited partnership, proprietorship,
      association, limited liability company, firm, trust, estate or other enterprise
      or entity.

     

    “PRC”
      means
      the People’s Republic of China, but solely for the purposes of this Agreement,
      excluding the Hong Kong Special Administrative Region, Macau Special
      Administrative Region and the islands of Taiwan.

     

    “Purchase
      Price”
      shall
      have the meaning ascribed to that term in Section 2.1.

     

    “Purchase
      Stock Price”
shall
      mean US$1.50 per Common Share. 

     

    “Repurchase
      Date” shall
      have the meaning ascribed to that term in Section 6.1.

     

    “SEC”
      means
      the U.S. Securities and Exchange Commission.

     

    “SEC
      Documents” shall
      have the meaning ascribed to that term in Section 3.9.

     

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

     

    “Shares”
      shall
      have the meaning ascribed to that term in Section 2.1(i).

     

    “Statement
      Date”
      shall
      have the meaning ascribed to that term in Section 3.8.

     

     “Re-purchase
      Price” shall
      mean US$1.95 per Common Share.

     

    “SEC
      Documents” shall
      have the meaning ascribed to that term in Section 3.10.

     

    “Warrants”
      shall
      have the meaning ascribed to that term in Exhibit
      B.
      

     

    “Warrant
      Agreement” shall
      mean the agreement attached as Exhibit
      B
      hereto.

     

    
      	
              2.

            	
              Purchase
                and Sale.

            

    

     

    2.1 Subscription
      and Issuance of Common Shares. 

    (i) Subject
      to the terms and conditions of this Agreement, at the Closing (as defined
      below), the Investor agrees to subscribe for and purchase from the Company,
      and
      the Company agrees to issue and sell to the Investor 1,000,000 of Common Shares
      (the “Shares”)
      for
      the amount equal to the product of the number of Shares subscribed for by the
      Investor multiplied by the Purchase Stock Price (the “Purchase
      Price”).
      For
      each share purchased by the Investor, it shall also receive two Warrants.

     

    (ii) The
      purchase and sale of the Shares shall take place on September 1, 2005 (or such
      other date mutually agreed to by the parties) at a location to be mutually
      agreed by the parties (the “Closing”).
      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iii) At
      the
      Closing, (a) the Investor shall pay the aggregate Purchase Price by wire
      transfer in immediately available funds to the account designated in
Exhibit
      D
      of this
      Agreement, or by other payment method mutually agreed to between the Company
      and
      the Investor; and (b) the Company shall issue the Shares to the Investor, and
      deliver to the Investor certificate(s) representing the Shares duly registered
      in the Investor’s name(s).

    

    2.2 Legend.

    

    Any
      certificate or certificates representing the Shares shall bear the following
      legend:

    

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE
      SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE TRANSFER OF THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS
      SPECIFIED IN THE SUBSCRIPTION AGREEMENT DATED AS OF SEPTEMBER 1, 2005. A COPY
      OF
      SUCH CONDITION WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON
      WRITTEN REQUEST AND WITHOUT CHARGE. THESE SECURITIES MAY BE RESOLD OR
      TRANSFERRED ONLY (1) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OR THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, (2) OUTSIDE
      THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT,
      (3)
      IN RELIANCE UPON ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
      OF THE SECURITIES ACT SUBJECT, IN EACH CASE DESCRIBED ABOVE, TO THE RECEIPT
      BY
      THE COMPANY OF AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT
      FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (4) PURSUANT TO
      AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
      ACCORDANCE WITH APPLICABLE STATE AND OTHER SECURITIES LAWS. 

     

    2.3 Termination.
      This
      Agreement may be terminated at any time prior to the Closing:

    

    (i) by
      mutual
      written consent of the Company and the Investor;

    

    (ii) by
      the
      Investor, (A) upon a breach of any material representation and warranty,
      covenant or agreement on the part of the Company set forth in this Agreement,
      or
      if any material representation and warranty of the Company shall have become
      untrue in any material respect, in either case such that the conditions in
      Section 5 would be incapable of being satisfied by the date of the Closing
      or
      (B) if the Company shall not have satisfied any of the conditions in Section
      5
      by the date of the Closing; or

    

    (iii) by
      the
      Company, upon a breach of any material representation and warranty, covenant
      or
      agreement on the part of the Investor set forth in this Agreement, or if any
      material representation and warranty of the Investor shall have become untrue
      in
      any material respect, in either case such that the conditions in Section 5
      would
      be incapable of being satisfied by the date of the Closing.

    

    2.4 Effect
      of Termination.
      In the
      event this Agreement is terminated pursuant to Section 2.3, this Agreement
      shall
      forthwith become void, there shall be no liability on the part of the Company
      or
      the Investor to each other and all rights and obligations of any party hereto
      shall cease; provided,
      however,
      that
      nothing herein shall relieve any party from liability for the willful breach
      of
      any of its representations and warranties, covenants or agreements set forth
      in
      this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3. Representations
      and Warranties of the Company. Each
      of
      the Company and its subsidiaries hereby jointly and severally represents and
      warrants to the Investor that the statements in this Section 3 are true,
      complete and correct, except as set forth in the disclosure schedule
      accompanying this Agreement, which is attached to this Agreement (the
“Disclosure
      Schedule”).
      For
      the purposes of this Section 3, where any representation or warranty is given
      or
      made to a party’s best knowledge after due inquiry, or so far as a party is
      aware, or is qualified in some other manner having a similar effect, the
      statement shall be deemed to be supplemented by the additional statement that
      such party has made all reasonable, diligent and prudent inquiries of such
      party’s officers, directors, and other employees reasonably believed to have
      knowledge of the matter in question, prior to the date of this Agreement and
      prior to the Closing, according to the context: 

     

    3.1 Organization,
      Good Standing and Qualification.
      The
      Company is duly organized, validly existing and in good standing under the
      laws
      of the State of Nevada.

     

    3.2 Corporate
      Power and Authority. Each
      of
      the Company and its subsidiaries has all requisite corporate power and authority
      necessary to own or lease and operate its properties and assets and to carry
      on
      its business as now conducted and as proposed to be conducted and is duly
      qualified to transact business and is in good standing in each jurisdiction
      in
      which it owns or leases property or conducts business so as to require such
      qualification, except where the failure to so qualify would have a Material
      Adverse Effect. 

     

    3.3 Authorization.  The
      Company has the requisite power and authority to enter into this Agreement
      and
      any ancillary agreements to which it is or will be a party, including, without
      limitation the power and authority to issue, sell and deliver the Shares to
      be
      issued and sold hereunder. All corporate action on the part of the Company,
      its
      officers, directors and shareholders necessary for the authorization, execution
      and delivery of this Agreement, the performance of all obligations of the
      Company hereunder, and the authorization, issuance (or reservation for
      issuance), sale and delivery of the Shares being sold hereunder has been taken
      or will be taken prior to the Closing, and this Agreement constitutes the valid
      and legally binding obligation of the Company, enforceable in accordance with
      its terms, except (a) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, and other laws of general application affecting
      enforcement of creditors' rights generally; and (b) as limited by laws relating
      to the availability of specific performance, injunctive relief, or other
      equitable remedies. The issuance of the Shares is not subject to any preemptive
      right or right of first refusal, or if any preemptive right to the Investor
      or
      right of first refusal exists, waiver of such rights has been obtained from
      the
      holders thereof.

     

    3.4 Subsidiaries.
      Each
      Subsidiary of the Company is validly existing and in good standing under the
      laws of the jurisdiction of its formation, has all requisite power to own,
      lease
      and operate its properties and to carry on its business as now being conducted,
      and is duly qualified to do business and is in good standing in each
      jurisdiction in which it owns or leases property or conducts any business so
      as
      to require such qualification, except where the failure to be so qualified
      would
      not reasonably be expected to have a Material Adverse Effect. 

     

    3.5
      Capitalization; Valid Issuance. 

     

    (i) Upon
      payment of the Purchase Price by the Investor and delivery to the Investor
      of
      the certificates for the Shares, such Shares will be validly issued, fully
      paid
      and non-assessable. 

     

    (ii) The
      authorized Capital Stock of the Company consists of 75,000,000 Common Shares.
      All presently outstanding Common Shares of the Company are duly and validly
      issued, fully paid and non-assessable, and such Common Shares have been issued
      in full compliance with the requirements of all applicable securities laws
      and
      regulations.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (iii)
      Other than as set forth on Section 3.5 of the Disclosure Schedule (i) there
      are
      no existing rights, calls, or commitments of any character relating to the
      Common Shares or other Equity Securities of the Acquired Company, and (ii)
      no
      Person has any right of first refusal, pre-emptive right, subscription right
      or
      similar right with respect to any shares of Capital Stock or other Equity
      Securities of the Acquired Company.

     

    3.6 Governmental
      Consents. No
      consents, filings, Authorizations, Orders or other actions of any Governmental
      Authority are required to be obtained or made for the Company's execution,
      delivery and performance of this Agreement which have not already been obtained
      or made. No consent, approval, waiver or other action by any Person under any
      contract to which the Company is a party or by which the Company or any of
      its
      properties or assets are bound is required or necessary for the execution,
      delivery or performance of this Agreement by the Company and the consummation
      of
      the transactions contemplated hereby, except where the failure to obtain such
      consents would not have a Material Adverse Effect on the Company.

     

    3.7 Offering. Subject
      in part to the truth and accuracy of the Investor’s representations and
      warranties set forth in this Agreement, the offer, sale and issuance of the
      Common Shares as contemplated by this Agreement are exempt from the registration
      requirements of the Securities Act and any applicable state securities laws,
      and
      neither the Company nor any authorized agent acting on its behalf will take
      any
      action hereafter that would cause the loss of such exemption.

     

    3.8 Books
      and Records.
      All
      accounts, ledgers, material files, documents, instruments, papers, books and
      records relating to the business, operations, conditions (financial or other)
      of
      the Company, results of operations, and assets and properties of the Company,
      each as supplied to the Investor, are true, correct, complete and current in
      all
      material respects, there are no material inaccuracies or discrepancies of any
      kind contained or reflected therein, and they have been maintained in accordance
      with relevant legal requirements and high industry standards. 

     

    3.9 SEC
      Filings, Financial Statements.
      The
      Company has timely made all reports, schedules, forms, statements and other
      documents required to be filed by it with the SEC pursuant to the reporting
      requirements of the Exchange Act (all of the foregoing filed prior to the date
      hereof and all exhibits included therein and financial statements and schedules
      thereto and documents incorporated by reference therein, being hereinafter
      referred to as the “SEC
      Documents”).
      The
      Company has delivered or made available to the Investor true and complete copies
      of the SEC documents. As of their respective dates, the SEC Documents complied
      in all material respects with the requirements of the Exchange Act and the
      rules
      and regulations of the SEC promulgated thereunder applicable to the SEC
      Documents, and none of the SEC Documents, at the time they were filed with
      the
      SEC, contained any untrue statement of a material fact or omitted to state
      a
      material fact required to be stated therein or necessary in order to make the
      statements therein, in light of the circumstances under which they were made,
      misleading. None of the statements made in any such SEC Documents is, or has
      been, required to be amended or updated under applicable law (except for such
      statements as have been amended or updated in subsequent filings prior to the
      date hereof). As of their respective dates, the financial statements of the
      Company included in the SEC Documents complied as to form in all material
      respects with applicable accounting requirements and the published rules and
      regulations of the SEC with respect thereto. Such financial statements have
      been
      prepared in accordance with United States GAAP, consistently applied, during
      the
      periods involved (except (i) as may be otherwise indicated in such financial
      statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may not include footnotes or may be condensed
      or
      summary statements) and fairly present in all material respects the consolidated
      financial position of the Company and its Subsidiaries as of the dates thereof
      and the consolidated results of their operations and cash flows for the periods
      then ended (subject, in the case of unaudited statements, to normal year-end
      audit adjustments). Except as set forth in the financial statements of the
      Company included in the SEC Documents, the Company has no liabilities,
      contingent or otherwise, other than (i) liabilities incurred in the ordinary
      course of business subsequent to December 31, 2004 and (ii) obligations under
      contracts and commitments incurred in the ordinary course of business and not
      required under GAAP to be reflected in such financial statements, which,
      individually or in the aggregate, are not material to the financial condition
      or
      operating results of the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.10 Changes.
      To the
      Knowledge of the Company after due inquiry, since December 31, 2004, there
      has
      not been:

     

    (i) any
      change in the assets, liabilities, financial condition or results of operations
      of the Company or any of its Subsidiaries,
      other
      than changes in the ordinary course of business, or such changes that would
      not
      reasonably be expected to have a Material Adverse Effect on the Company;

     

    (ii) any
      resignation or termination of any senior officer of the Company; or

     

    (iii) any
      other
      event or condition of any character that, either individually or cumulatively,
      has had or is expected to have a Material Adverse Effect on the
      Company.

     

    3.11 Litigation.
      There is
      no action, suit, proceeding or investigation pending or, to the Company’s best
      knowledge after due inquiry, currently threatened against or affecting the
      Company, or any of its respective assets or properties, that will have a
      Material Adverse Effect on the operation of the Company.

     

    3.12 Compliance
      with Laws. The
      Company
      is, and
      at all times have been, in full compliance with any laws or regulations that
      are
      applicable to it or to the conduct or operation of its business or the ownership
      or use of any of its assets, except for such non-compliance that, in the
      aggregate, would not result in any Material Adverse Effect.

     

    3.13 Taxes. All
      material Tax Returns required to have been filed through and including the
      date
      hereof by the Company and its Subsidiaries have been filed, and each such Tax
      Return is true, correct and complete in all material respects and reflects
      the
      liability for Taxes in all material respects. All Taxes shown on such Tax
      Returns as due have been paid of the filing entity or entities for the relevant
      period. To the Knowledge of the Company, there is no audit currently pending
      against the Company or any of its Subsidiaries in respect of any Taxes. There
      are no material Liens on any of the assets of the Company or any of its
      Subsidiaries that arose in connection with any failure (or alleged failure)
      to
      pay any Tax, other than Liens for Taxes not yet due and payable. Each of the
      Company and its Subsidiaries has withheld and paid all material Taxes required
      to have been withheld and paid in connection with amounts paid or owing to
      any
      third party.

     

    3.14 Disclosure.
      No event
      or circumstance has occurred or exists, nor is the Company in possession of
      any
      information, with respect to the Company or any of its Subsidiaries or its
      or
      their business, properties, prospects, operations or financial conditions,
      which
      has not been publicly announced or disclosed but under applicable law, rule
      or
      regulation, requires public disclosure or announcement by the Company (assuming
      for this purpose that the Company's reports filed under the Exchange Act are
      being incorporated into an effective registration statement filed by the Company
      under the Securities Act).

     

    3.15 No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would require
      registration under the Securities Act of the issuance of the Shares to the
      Investor. The issuance of the Shares to the Investor will not be integrated
      with
      any other issuance of the Company's securities (past, current or future) for
      purposes of any stockholder approval provisions applicable to the Company or
      its
      securities.

     

    3.16  Title
      to Property.
      The
      Company and its Subsidiaries have good and marketable title in fee simple to
      all
      real property and good and marketable title to all personal property owned
      by
      them which is material to the business of the Company and its Subsidiaries,
      in
      each case free and clear of all liens, encumbrances and defects, except such
      as
      are described in Schedule 4.20 or such as would not have a Material Adverse
      Effect. Any real property and facilities held under lease by the Company and
      its
      Subsidiaries are held by them under valid, subsisting and enforceable leases
      with such exceptions as would not have a Material Adverse
      Effect.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.17.
       Insurance.
      The
      Company and each of its Subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its Subsidiaries are engaged. Neither the Company
      nor
      any such Subsidiary has any reason to believe that it will not be able to renew
      its existing insurance coverage as and when such coverage expires or to obtain
      similar coverage from similar insurers as may be necessary to continue its
      business at a cost that would not have a Material Adverse Effect.

     

    3.18  Not Investment
      Company.
      The
      Company is not, and upon the issuance and sale of the Securities as contemplated
      by this Agreement will not be, an “investment company” required to be registered
      under the Investment Company Act of 1940 (an “Investment
      Company”).
      The
      Company is not controlled by an Investment Company.

     

    3.19  No
      Conflicts. The
      execution and delivery of this Agreement by the Company do not, and the
      consummation of the transactions contemplated hereby (in each case, with or
      without the giving of notice or lapse of time, or both) will not, (i) violate
      the provisions of any of the organizational documents of the Company or any
      of
      its Subsidiaries, (ii) assuming compliance with the matters referred to in
      Section 3.7, violate or conflict with any Law, Authorization or Order applicable
      to the Company or any of its Subsidiaries or (iii) result in the creation of
      any
      Liens upon any of the assets owned or used by the Company or any of its
      Subsidiaries, except in the case of clauses (i) and (ii) above, where such
      violation, default or conflict would not reasonably be excepted to have a
      Material Adverse Effect. Section 3.29 of the Disclosure Schedule sets forth
      a
      list of all material agreements of the Company or any of its Subsidiaries
      requiring the waiver, authorization, consent or approval, license, exemption,
      notice, filing or registration of any Person to any of the transactions
      contemplated hereby. 

     

    4. Representations
      and Warranties of the Investors. The
      Investor hereby represents and warrants to the Company that:

     

    4.1 Authorization.
      The
      Investor has full power and authority to enter into this Agreement, and this
      Agreement, when executed and delivered by the Investor, will constitute the
      Investor’s valid and legally binding obligation, enforceable in accordance with
      its terms except (i) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, and other laws of general application affecting
      enforcement of creditors' rights generally; and (ii) as limited by laws relating
      to the availability of specific performance, injunctive relief, or other
      equitable remedies. 

    4.2 Investment
      Intent. The
      Investor is acquiring the Shares hereunder for its own account and with no
      present intention of distributing or selling such Shares and further
      acknowledges that it is legally obligated not to transfer such Shares in
      violation of the Securities Act or any applicable state securities law, and
      no
      one other than the Investor has any beneficial interest in the Shares. The
      Investor understands that the offer and sale by the Issuer of the Shares being
      acquired by the Investor hereunder has not been registered under the Securities
      Act by reason of their contemplated issuance in transactions exempt from the
      registration and prospectus delivery requirements of the Securities Act pursuant
      to Section 4(2) thereof, and that the reliance of the Issuer on such exemption
      from registration is predicated in part on these representations and warranties
      of the Investor. The Investor acknowledges that pursuant to Section 2.2 of
      this
      Agreement a restrictive legend consistent with the foregoing has been or will
      be
      placed on the certificates for the Shares.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.3 Investor
      Status.
      The
      Investor is either an “accredited investor” as such term is defined in Rule
      501(a) of Regulation D under the Securities Act, or Investor
      is not a “U.S. person” as such term is defined in Rule 902(k)(1) of Regulation S
      under the Securities Act  and
      is
      not acquiring Common Shares for the account or benefit of any U.S. person.
      The
      Investor has such knowledge and experience in financial and business matters
      that it is capable of evaluating the merits and risks of the investment to
      be
      made by it hereunder. The Investor has consulted with its own legal, tax and
      business advisors regarding this transaction. The
      Common Shares to be purchased by the Investor will be acquired for investment
      purposes for the Investor’s own account, not as a nominee or agent, and not with
      a view to the resale or distribution of any part thereof, and the Investor
      has
      no present intention of selling, granting any participation in, or otherwise
      distributing the same. By executing this Agreement, the Investor further
      represents that it does not have any contract, undertaking, agreement or
      arrangement with any person to sell, transfer or grant participations to such
      person or to any third person, with respect to any of the
      securities.

     

    4.4 Investment
      Experience.
      The
      Investor is able to bear the economic risk of its investment and has such
      knowledge and experience in financial or business matters that it is capable
      of
      evaluating the merits and risks of the investment in the Company.

     

    4.5 Disclosure
      of Information.
      The
      Investor has been furnished with access to all public information and filings
      relating to the business, finances and operations of the Company which have
      been
      requested by the Investor
      including without limitation, the documents listed on Exhibit
      C,
      which
      have been received by Investor as part of an informational packet of materials
      from the Issuer (the “Disclosure
      Documents”).
      The
      Investor has been afforded the opportunity to ask questions of representatives
      of the Company and have received answers to such questions, as the Investor
      deems necessary in connection with its decision to subscribe for the Shares.
      Notwithstanding the foregoing, each party
      acknowledges and agrees that the foregoing shall not in any way limit,
      reduce or affect the representations and warranties provided by the Company
      in this Agreement.

     

    4.6 Compliance
      with Laws. The
      Investor has complied or will comply with all applicable laws of its
      jurisdiction in connection with the subscription of the securities pursuant
      to
      this Agreement and otherwise in connection with this Agreement, including (i)
      the legal requirements within its jurisdiction for the purchase of the Shares;
      (ii) any foreign exchange restrictions applicable to such purchase; (iii) any
      governmental or other consents that may need to be obtained; and (iv) the income
      tax and other consequences, if any, that may be relevant to the purchase,
      holding, redemption, sale or transfer of the Shares. The Investor’s subscription
      and payment for, and its beneficial ownership of, the Shares will not cause
      Investor to violate any applicable security or other law of the Investor’s
      jurisdiction.

    4.7 Independent
      Decision.
      The
      Investor is not relying on the Company or on any legal or other opinion in
      the
      materials reviewed by the Investor with respect to the financial or tax
      considerations of the Investor relating to its investment in the Company. The
      Investor has relied solely on the representations and warranties, covenants
      and
      agreements of the Company in this Agreement and on its examination and
      independent investigation in making its decision to acquire the
      Shares.

    

    4.8 Commissions.
      The
      Investor has not incurred any obligation for any finder's or broker's or agent's
      fees or commissions in connection with the transactions contemplated hereby
      for
      which the Company may be responsible.

     

    5. Covenants
      of the Company; Conditions of the Investor’s Obligations at Closing.

     

    5.1 Covenants.
      During
      the time period from the effective date of this Agreement until the earlier
      to
      occur of (a) the Closing or (b) the termination of this Agreement in accordance
      with Section 2.3, the Company covenants and agrees as follows:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    A Advice
      of Changes. The
      Company will promptly advise Investor in writing of any (a) event that would
      render any representation or warranty of the Company or any of its Subsidiaries
      contained in this Agreement, if made on or as of the date of such event or
      the
      Closing Date, to be untrue or inaccurate, (b) any breach of any covenant or
      obligation of the Company or any of its Subsidiaries pursuant to this
      Agreement.

     

    B No
      Integration.
      The
      Company shall not make any offers or sales of any security (other than the
      Shares) under circumstances that would require registration of the Shares being
      offered or sold hereunder under the Securities Act or cause the offering of
      Shares to be integrated with any other offering of securities by the Company
      for
      the purpose of any stockholder approval provision applicable to the Company
      or
      its securities.

     

    C Disclosure
      of Material Information.
      In the
      event that the Company comes into possession of any material non-public
      information, the Company shall make full and complete public disclosure in
      accordance with all applicable securities laws (including all common law
      formulations thereof).

     

    D Satisfaction
      of Conditions Precedent.
      The
      Company will use its diligent efforts to satisfy or cause to be satisfied all
      of
      the conditions precedent which are set forth in Article 6, and the Company
      will
      use its diligent efforts to cause the transactions contemplated by this
      Agreement to be consummated in accordance with the terms of this Agreement.
      

     

    5.2
      Conditions.
      The
      obligations of the Investor under Section 2.1 of this Agreement, unless
      otherwise waived in writing by the Investor, are subject to the fulfillment
      on
      or before the Closing of each of the following conditions: 

     

    (i) Performance.
      The
      Company shall have performed and complied with all agreements, obligations
      and
      conditions contained in this Agreement that are required to be performed or
      complied with by it on or before the Closing.

     

    (ii) Qualifications.
      The
      Company shall have obtained all authorizations, approvals, waivers or permits
      of
      any competent Governmental Authority or regulatory body for the consummation
      of
      all of the transactions contemplated by this Agreement that are required in
      connection with the lawful issuance and sale of the Shares pursuant to this
      Agreement, and all such authorizations, approvals, waivers and permits shall
      be
      effective as of the Closing.

     

    (iii) Due
      Diligence.
      The
      Investor shall have completed and be satisfied, in its sole discretion, with
      the
      results of all business, legal and financial due diligence, and any items
      requiring correction identified by the Investor shall have been corrected to
      the
      Investor’s reasonable satisfaction. 

     

    (iv) Proceedings
      and Documents.
      All
      corporate and other proceedings in connection with the transactions contemplated
      at the Closing and all documents incident thereto shall be reasonably
      satisfactory in form and substance to the Investor, and the Investor shall
      have
      received (i) all such counterpart original or other copies of such documents
      as
      it may reasonably request; and (ii) a certificate executed by a director of
      the
      Company on behalf of the Company, certifying the validity of all such
      counterpart original or other copies of such documents as such Investor may
      reasonably request.

     

    (v) No
      Litigation.
      No
      action, suit, proceeding, claim, arbitration or investigation shall have been
      threatened or instituted prior to the Closing against the Company or any of
      its
      subsidiaries seeking to enjoin, challenge the validity of, or assert any
      liability against any of them on account of, any transactions contemplated
      by
      this Agreement.

     

    (vi) No
      Material Adverse Change.
      There
      shall not have occurred prior to the Closing any event or transaction reasonably
      likely to have a Material Adverse Effect.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (vii)  Accuracy
      of the Company's Representations and Warranties.
      The
      representations and warranties of the Company and its Subsidiaries set forth
      in
      Article 3 (a) that are qualified as to materiality will be true and correct
      and
      (b) that are not qualified as to materiality shall be true and correct in all
      material respects, in each case as of the date when made and as of the Closing
      with the same force and effect as if they had been made on the Closing Date
      (except for any such representations or warranties that, by their terms, speak
      only as of a specific date or dates, in which case such representations and
      warranties that are qualified as to materiality shall be true and correct,
      and
      such representations and warranties that are not qualified as to materiality
      shall be true and correct in all material respects, on and as of such specified
      date or dates), and at the Closing the Investor will have received a certificate
      to such effect executed by an officer of the Company.  

     

    (viii) Covenants.
      The
      Company will have performed and complied in all material respects with all
      of
      its covenants contained in Article 5 on or before the Closing (to the extent
      that such covenants require performance by the Company on or before the
      Closing), and at the Closing the Investor will have received a certificate
      to
      such effect signed by an officer of the Company.

     

    (ix)  Requisite
      Approvals. This
      Agreement will have been duly and validly approved and adopted by Company’s
      Board of Directors in accordance with applicable law and the Company’s
      Certificate of Incorporation and Bylaws, each as amended. 

     

    (x)
        Other
      Agreements. The
      Registration Rights Agreement and Warrant Agreement have been duly executed
      and
      delivered by the Company.

     

    6. Post-Closing
      Covenants.

     

    6.1 Put
      Right.  

     

    (a)
      If
      the Investor wishes for the Company to repurchase the Shares, the Investor
      shall
      deliver to the Company, sixty days (60) prior to the Repurchase Date (as defined
      below), a written notice to the Company and the Lock Box Agent (as defined
      below) that the Investor wishes for the Shares to be repurchased. Thereafter,
      on
      the Repurchase Date, the Company shall repurchase all Shares purchased by the
      Investor (including any Shares acquired through stock splits of such Shares
      or
      stock dividends on such Shares or otherwise by reference to such Shares)
at
      a
      price of $1.95 per Share (with such price being appropriately adjusted to
      reflect any subdivision
      of the Shares into a greater number of shares (by stock split, reclassification
      or otherwise), or any combination or consolidation by reclassification or
      otherwise, into a lesser number of shares)
      (the
“Repurchase Price”). Such repurchase is referred to as the “Repurchase”.
The
      Repurchase shall not cover any Shares sold by the Investor prior to the
      Repurchase Date, either directly or indirectly through any forward sale or
      derivative arrangement. The Repurchase Date shall be the date 18 months after
      the date hereof (or, in the event such date is a holiday or weekend day in
      New
      York City, the previous day which is neither a holiday or a weekend day). The
      Company shall cause the Lock-Box Agent to pay Investor the Repurchase Price
      for
      the Shares on the Repurchase Date by wire transfer in immediately available
      funds to the account designated in Exhibit
      D
      of this
      Agreement or to such other account specified by the Investor.

     

    The
      Company shall take all action necessary for it to have a legal source under
      applicable law to make the Repurchase.

     

    (b)
      Lock-Box. Upon receipt of proceeds from assuming any debt obligations or the
      issuance and/or sale of any debt or debt securities of the Company after the
      Closing, the Company shall (i) enter into a lock-box agreement with a lock-box
      agent (the “Lock-Box
      Agent”)
      and
      the other investors who purchased Common Shares of the Company in connection
      with the Offering, in substantially the form attached hereto as Exhibit
      E
      with
      such changes as may be required by the Lock-Box Agent or such other reasonable
      changes as mutually agreed to by the parties provided that such changes are
      in
      accordance with the terms of this Agreement (the “Lock
      Box Agreement”)
      and
      (ii) deposit or cause to be deposited into an account (the “Lock
      Box”)
      a
      sufficient amount to complete the Repurchase (as defined herein) from any
      amounts it receives from assuming any debt obligations or the issuance and/or
      sale of any debt or debt securities (the “Lock
      Box Amount”)
      to be
      held for payment of the Company’s obligations under this Section 6.1. The
      parties rights and obligations with respect to the Lock-Box shall be set forth
      in the Lock-Box Agreement between the parties attached hereto as Exhibit
      E.
      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)
      Prohibition on Additional Put Rights. The Company shall not grant to any other
      person any right to require the Company to purchase any equity security of
      the
      Company, any Company subsidiary or any other entity from such person without
      the
      prior consent of the Company.

     

    6.2 Use
      of Proceeds.
      After
      retaining an amount to be specified by the Company and the Investors for general
      corporate purposes in the Company’s overseas bank account, the Company shall use
      the balance of the proceeds from the Offering (the “Net
      Proceeds”)
      to
      purchase a 51% equity interest in the alloy road joint venture with Baotou
      Steel
      (the “Alloy
      Rod JV”).

     

    7.  Confidentiality.
      Each
      of
      the parties agrees that it will keep confidential and will not disclose, divulge
      or use for any purpose any confidential information obtained from the other
      party pursuant to the terms of this Agreement, unless such confidential
      information (i) is known or becomes known to the public in general (other than
      as a result of a breach of this Section 7 by such party), (ii) is or has been
      independently developed or conceived by either the Company or the Investor
      without use of the confidential information of such other party or (iii) is
      or
      has been made known or disclosed to such party by a third party without a breach
      of any obligation of confidentiality such third party may have to the Company
      or
      the Investor, as applicable; provided,
      however,
      that
      the either the Company or the Investor may disclose confidential information
      (a)
      to its attorneys, accountants, consultants, and other professionals to the
      extent necessary to obtain their services in connection with the transactions
      contemplated by this Agreement, (b) to any prospective investor of any Shares
      from the Investor as long as such prospective investor agrees to be bound by
      the
      provisions of this Section 7, (c) to any affiliate, partner, member, stockholder
      or wholly-owned subsidiary of such party in the ordinary course of business,
      or
      (d) as may otherwise be required by law, provided that such party takes
      reasonable steps to minimize the extent of any such required disclosure. The
      Company acknowledges the Investor may review the business plans and related
      proprietary information of many enterprises, including enterprises which may
      have products or services which compete directly or indirectly with those of
      the
      Company. Nothing in this Agreement shall preclude or in any way restrict the
      Investor from investing or participating in any particular enterprise whether
      or
      not such enterprise has products or services which compete with those of the
      Company. 

    

    The
      Company will treat this Agreement, and the transactions contemplated hereby,
      and
      the Investor’s relationship as a stockholder of the Company as confidential, and
      will not issue disclose or otherwise provide any information regarding the
      Investor without the prior written consent of the Investor.

    

    7.1 Standstill
      Agreement.
       For
      a
      period of twelve (12) months from the Closing Date (the “Lock-Up
      Period”),
      the
      Investor will not, without the prior written consent of the Company, directly
      or
      indirectly, offer, sell, contract to sell, pledge or otherwise dispose of,
      enter
      into any transaction which is designed to, or might reasonably be expected
      to,
      result in the disposition (whether by actual disposition or effective economic
      disposition due to cash settlement or otherwise) by the Investor or any
      affiliate of the Investor, file (or participate in the filing of) a registration
      statement with the SEC or any comparable registration document with foreign
      governmental entities, in respect of, make any demand for or exercise any right
      with respect to registration of, or establish or increase a put equivalent
      position or liquidate or decrease a call equivalent position within the meaning
      of Section 16 of the Exchange Act, and the rules and regulations of the SEC
      promulgated thereunder or any comparable law, rule or regulation outside of
      the
      United States with respect to, any of the Shares purchased hereunder, or
      publicly announce an intention to effect any such transaction. Notwithstanding
      the foregoing, this section shall not restrict: (i) the Investor’s exercise of
      the Put Rights; (ii) the Investor’s acquisition of Common Stock of the Company
      through open market purchases or otherwise; (iii) transfers of Shares or any
      interest therein by the Investor by gift or charitable contribution; (iv)
      distributions of Shares or any interest therein to its partners or other equity
      owners; or (v) the Investor entering into a binding contract, the giving of
      instructions or the adoption of a written plan by the Investor with respect
      to
      the disposition of Shares, in each case meeting the requirements of Rule 10b5-1
      promulgated under the Securities Exchange Act of 1934, as amended, provided
      that
      such contract, instructions or plan does not permit any such dispositions prior
      to the expiration of the Lock-Up Period.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.2 Legally
      Compelled Disclosure.
      In
      the
      event that any party is requested or becomes legally compelled (including
      without limitation, pursuant to securities laws and regulations) to disclose
      Confidential Information in contravention of the provisions of this Section
      7,
      such party (the “Disclosing
      Party”)
      shall
      provide the other parties hereto with prompt written notice of that fact and
      shall consult with the other parties hereto regarding such disclosure. The
      Disclosing Party shall, to the extent possible and with the cooperation and
      reasonable efforts of the other parties, seek a protective order, confidential
      treatment or other appropriate remedy. In such event, the Disclosing Party
      shall
      furnish only that portion of the information which is legally required and
      shall
      exercise reasonable efforts to obtain reliable assurance that confidential
      treatment will be accorded such information.

     

    8. Miscellaneous.

     

    8.1 Survival
      of Warranties.
      The
      warranties, representations and covenants contained in or made pursuant to
      this
      Agreement shall survive the execution and delivery of this Agreement and the
      Closing, and shall in no way be affected by any investigation of the subject
      matter thereof made by or on behalf of any of the Investors or the
      Company.

     

    8.2 Indemnity.
      The
      Company agrees to indemnify and hold harmless the Investor and its successors
      and assigns (each, an “Indemnitee”),
      as
      the case may be, against any and all claims, demands, suits, actions, causes
      of
      actions, losses, costs, damages, liabilities and expenses including, without
      limitation, reasonable attorneys’ fees, other professionals’ and experts’
reasonable fees and court or arbitration costs (hereinafter collectively
      referred to as “damages”) directly or indirectly incurred, resulting or and
      arising out of any inaccuracy, misrepresentation, breach of, or default in,
      any
      of the representations, warranties or covenants given or made by the Company
      in
      this Agreement.

     

    8.3 Indemnification
      Procedures.
      Each
      Person entitled to indemnification under this Section (an "Indemnified
      Party")
      shall
      give notice as promptly as reasonably practicable to each party required to
      provide indemnification under this Section (an "Indemnifying
      Party")
      of any
      action commenced against or by it in respect of which indemnity may be sought
      hereunder, but failure to so notify an Indemnifying Party shall not relieve
      such
      Indemnifying Party from any liability that it may have otherwise than on account
      of this indemnity agreement so long as such failure shall not have materially
      prejudiced the position of the Indemnifying Party. 

     

    8.4
      Limits of Settlement. The
      Indemnifying Party shall not be liable for any settlement of any proceeding
      effected without its written consent (which shall not be unreasonably withheld
      or delayed by such Indemnifying Party), but if settled with such consent or
      if
      there be final judgment for the plaintiff, the Indemnifying Party shall
      indemnify the Indemnified Party from and against any damages.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8.5 Notices.
      Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given upon personal delivery
      to the party to be notified, on the first day after the date sent by express
      courier, or on the 10th
      day
      after the date mailed, by registered or certified mail, postage prepaid and
      addressed to the party to be notified at the address indicated for such party
      on
      the signature page hereof, or at such other address as such party may designate
      by ten (10) days' advance written notice to the other parties, or on the first
      business day following the date of transmission by facsimile. 

     

    For
      notices to the Company, the contact information is:

     

    John
      Chen

    Chief
      Financial Officer

    General
      Steel Holdings Inc.

    10th
      Flr., Block A Haitong Building

    No.3
      Nanlishi Ave.

    Xicheng
      District, Beijing 100037

    The
      People’s Republic of China

    Fax:
      86-10-68047011

     

    8.6 Governing
      Law.
      This
      Agreement shall be governed by and construed under the laws of the State of
      New
      York, without regard to principles of conflicts of law thereunder.

     

    8.7 [Intentionally
      Omitted]

     

    8.8 Expenses.
      All
      costs and expenses incurred by the Company and the Investor with respect to
      the
      negotiation, execution, delivery and performance of this Agreement and the
      transactions contemplated hereby and thereby shall be born by the party
      incurring them. 

     

    8.9 Amendments
      and Waivers.
      Any term
      of this Agreement may be amended and the observance of any term of this
      Agreement may be waived (either generally or in a particular instance and either
      retroactively or prospectively), only with the written consent of the Company
      and the Investor. Any amendment or waiver effected in accordance with this
      paragraph shall be binding upon each holder of any securities purchased under
      this Agreement at the time outstanding (including securities into which such
      securities are convertible), each future holder of all such securities, and
      the
      Company.

     

    8.10 Successors
      and Assigns.
      Except
      as otherwise provided herein, the terms and conditions of this Agreement shall
      inure to the benefit of and be binding upon the respective successors and
      assigns of the parties hereto whose rights or obligations hereunder are affected
      by such terms and conditions. This Agreement, and the rights and obligations
      herein may be assigned by the Investor to any affiliate of the Investor, but
      not
      to any other person without the prior written consent of the Company. Nothing
      in
      this Agreement, express or implied, is intended to confer upon any party other
      than the parties hereto or their respective successors and assigns any rights,
      remedies, obligations, or liabilities under or by reason of this Agreement,
      except as expressly provided in this Agreement.

     

    8.11 Severability. If
      one or
      more provisions of this Agreement are held to be unenforceable under applicable
      law, such provision shall be excluded from this Agreement and the balance of
      the
      Agreement shall be interpreted as if such provision were so excluded and shall
      be enforceable in accordance with its terms.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8.12 Entire
      Agreement.
      This
      Agreement and the documents referred to herein, together with all schedules
      and
      exhibits hereto and thereto, constitute the entire agreement among the parties
      and no party shall be liable or bound to any other party in any manner by any
      warranties, representations, or covenants except as specifically set forth
      herein or therein; provided,
      however,
      that
      nothing in this Agreement shall be deemed to terminate or supersede the
      provisions of any confidentiality and nondisclosure agreements executed by
      the
      parties hereto prior to the date of this Agreement, all of which agreements
      shall continue in full force and effect until terminated in accordance with
      their respective terms.

     

    8.13 Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

     

    8.14 Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Subscription Agreement to be duly executed
      and
      delivered as of the date set forth below.

    

    
      	NAME
              OF
              INVESTOR:  	ADDRESS
              FOR
              NOTICES
              (Please Print):
	 	 
	
              ______________________________

            	
              _______________________________________

            
	
               

            	
              _______________________________________

            
	
              SIGNATURE:

            	
              _______________________________________

            
	
               

            	
              Attention:_______________________________

            
	
              By:___________________________

            	
              Telecopy:_______________________________

            
	
                   Name:

            	 
	
                   Title:

            	
              Tax
                Identification #:_______________________

            
	 	 
	
              Exact
                Name to appear on Stock Certificate:

            	
              _______________________________________

            
	 	 
	
              Number
                of Shares Subscribed For:

            	
              ______________________

            
	 	 
	
              Purchase
                Price (see Section 2.1):  $______________________Unassociated Document

    REGISTRATION
      RIGHTS AGREEMENT

    

    THIS
      REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
      is
      entered into as of September 1, 2005 among General Steel Holdings Inc., a Nevada
      corporation (the “Company”),
      and
      each of the shareholders of the Company listed on the signature pages of this
      Agreement (each, a “Shareholder” and collectively, the
“Shareholders”).

    

    RECITALS

    

    A. The
      Shareholders and the Company are parties to a certain Subscription Agreement
      dated on or about the date hereof (the “Purchase
      Agreement”)
      pursuant to which the Company may issue up to an aggregate of 3,333,333 shares
      of its common stock, par value $0.001 per share (“Common
      Stock”)
      to the
      Shareholders.

    

    B. In
      connection with the execution of the Purchase Agreement, each of the
      Shareholders and the Company entered into a Warrant Agreement (individually,
      a
“Warrant
      Agreement”
and
      collectively, the “Warrant
      Agreements”)
      pursuant to which the Shareholders may acquire shares of Common
      Stock.

    

    C. In
      consideration of the substantial direct and indirect benefits which the Company
      will realize from the consummation of the transactions contemplated by the
      Purchase Agreement and the Warrant Agreements, the Company desires to enter
      into
      this Agreement to grant the following registration rights to the Shareholders
      pursuant to the terms and conditions hereof.

    

    AGREEMENT

    

    In
      consideration of the mutual covenants and agreements set forth herein, and
      for
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

    

    1. DEFINITIONS.
      For
      purposes of this Agreement, the following terms shall have the meanings
      specified below:

    

    “Business
      Day”
shall
      mean any day that is not a Saturday, Sunday or other day on which banks in
      the
      State of Delaware are authorized or required to close.

    

    “Commission”
shall
      mean the Securities and Exchange Commission or any other Federal agency at
      the
      time administering the 1933 Act.

    

    “Demanding
      Holders”
shall
      mean MatlinPatterson or the holders of a majority of the Registrable
      Securities.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    “Demand
      Registration”
shall
      have the meaning specified in Section 2.1(a).

    

    “Indemnified
      Party”
shall
      have the meaning specified in Section 4.3.

    

    “Indemnifying
      Party”
shall
      have the meaning specified in Section 4.3.

    

    “MatlinPatterson”
shall
      mean MatlinPatterson Global Opportunities Partners II L.P., MatlinPatterson
      Global Opportunities Partners (Caymans) II L.P., or any affiliate thereof that
      is a holder of Shares.

    

    “Maximum
      Numbers of Shares”
shall
      have the meaning specified in Section 2.1(d).

    

    “1933
      Act”
shall
      mean the Securities Act of 1933, as amended, and the rules and regulations
      of
      the Commission thereunder, all as the same shall be in effect at the
      time.

    

    “1934
      Act”
shall
      mean the Securities Exchange Act of 1934, as amended, and the rules and
      regulations of the Commission thereunder, all as the same shall be in effect
      at
      the time.

    

    “Person”
means
      an individual, a partnership, a corporation, a limited liability company, an
      association, a joint stock company, a trust, a joint venture, an unincorporated
      organization, a governmental entity or any department, agency or political
      subdivision thereof or any other legal entity.

    

    “Piggy-Back
      Registration”
shall
      have the meaning specified in Section 2.2(a).

    

    “Register”,
      “registered”
and
      “registration”
shall
      mean a registration effected by preparing and filing a registration statement
      or
      similar document in compliance with the 1933 Act, and the applicable rules
      and
      regulations thereunder, and such registration statement becoming
      effective.

    

    “Registrable
      Securities”
shall
      mean, collectively, the Shares and any securities issued or issuable upon any
      stock dividend, stock split, recapitalization, merger, combination,
      consolidation or similar event with respect to the Shares. As to any particular
      Registrable Securities, such securities shall cease to be Registrable Securities
      when (i) a registration statement covering such securities shall have
      become effective under the 1933 Act and such securities shall have been sold
      pursuant to such registration statement, (ii) such securities shall have
      been distributed to the public pursuant to Rule 144 (or any successor
      provisions) under the 1933 Act, or (iii) such securities shall have ceased
      to be outstanding.

    “Shares”
shall
      mean all Common Stock issuable pursuant to the Warrant Agreements, the shares
      of
      Common Stock issued to the Shareholders pursuant to the Purchase Agreement
      and
      any other shares of Common Stock or preferred stock held by the Shareholders
      at
      any time.

    

    “Shareholder
      Indemnified Party”
shall
      have the meaning specified in Section
      4.1.

    

    
      
        
        

      

      
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    “Underwriter”
shall
      mean a securities dealer who purchases any Registrable Securities as principal
      in an underwritten offering and not as part of such dealer’s
      market-making activities.

    

    Capitalized
      terms not otherwise defined herein shall have the meaning given to them in
      the
      Purchase Agreement.

    

    2. REGISTRATION
      RIGHTS.

    

    2.1 Demand
      Registration.

    

    (a) Request
      for Registration.
      At any
      time and from time to time on or after the date of this Agreement, the Demanding
      Holders may make a written request for registration under the 1933 Act of all
      or
      part of their Registrable Securities (a “Demand
      Registration”).
      Such
      request for a Demand Registration must specify the number of shares of
      Registrable Securities proposed to be sold and must also specify the intended
      method of disposition thereof (provided, however, that the Demanding Holders
      may
      change the intended method of disposition upon notice to the Company up until
      the effectiveness of the registration statement relating thereto). Upon any
      such
      request, the Demanding Holders shall be entitled to have their Registrable
      Securities included in the Demand Registration, subject to Section 2.1(d)
      and the
      proviso set forth in Section
      3.1(a).
      Within
      10 days following receipt of any such request, the Company will provide written
      notice of such registration request to all holders of Registrable Securities
      and
      will, subject to the provisions of Section 2.1(d) and the proviso set forth
      in
      Section 3.1(a), include in such registration all Registrable Securities with
      respect to which the Company has received written requests for inclusion therein
      within 15 days after distribution to the applicable holder of the Company’s
      notice. The Company shall not be obligated to effect more than two Demand
      Registrations with respect to the Registrable Securities under this Section 2.1(a).

    

    (b) Effective
      Registration.
      A
      registration will not count as a Demand Registration until it has become
      effective and the Company has complied with its obligations under this Agreement
      with respect thereto; provided, however, that, after it has been declared
      effective, if the offering of Registrable Securities pursuant to a Demand
      Registration is interfered with by any stop order, injunction or other order
      or
      requirement of the Commission or any other governmental agency or court, such
      Demand Registration will be deemed not to have become effective during the
      period of such interference.

    

    (c) Underwritten
      Offering.
      If the
      Demanding Holders so elect, the offering of such Registrable Securities pursuant
      to such Demand Registration shall be in the form of an underwritten offering.
      The Demanding Holders shall select one or more firms of investment bankers
      to
      act as the managing Underwriter or Underwriters in connection with such offering
      and shall select any additional managers to be used in connection with the
      offering. 

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (d) Reduction
      of Offering.
      If the
      managing Underwriter or Underwriters for a Demand Registration that is to be
      an
      underwritten offering advises the Company and the Demanding Holders, in writing,
      that the dollar amount or number of shares of Registrable Securities which
      the
      Demanding Holders and other holders of Registrable Securities desire to sell
      pursuant to Section
      2.1(a)
      together
      with all other shares of Common Stock which the Company desires to sell or
      which
      other shareholders of the Company desire to sell, exceeds the maximum dollar
      amount or number that can be sold in such offering without adversely affecting
      the proposed offering price, the timing, the distribution method or the
      probability of success of such offering (the “Maximum
      Number of Shares”),
      then
      the Company shall include in such registration: (i) first, the Registrable
      Securities as to which Demand Registration has been requested by the Demanding
      Holders and other holders of Registrable Securities (pro rata in accordance
      with
      the number of shares of Registrable Securities held by each Demanding Holder
      and
      the other holders of Registrable Securities requesting to be included in the
      registration, regardless of the number of shares of Registrable Securities
      which
      such Demanding Holder or other holders of Registrable Securities has requested
      be included in such registration) that can be sold without exceeding the Maximum
      Number of Shares, (ii) second, the shares of Common Stock that the Company
      desires to sell that can be sold without exceeding the Maximum Number of Shares
      and (iii) third, to the extent the Maximum Number of Shares has not been reached
      under the foregoing clauses (i) and (ii), the shares of Common Stock that other
      shareholders desire to sell that can be sold without exceeding the Maximum
      Number of Shares.

    

    (e) Withdrawal.
      The
      Demanding Holders may withdraw a Demand Request at any time and under any
      circumstances. The first withdrawal shall not be counted as a Demand
      Registration. Notwithstanding any such withdrawal, the Company shall pay all
      expenses incurred by the holders of Registrable Securities in connection with
      such Demand Registration as provided in Section 3.3.

    

    2.2 Piggy-Back
      Registration.

    

    (a) Piggy-Back
      Rights.
      If at
      any time the Company proposes to file a registration statement under the 1933
      Act with respect to an offering of equity securities, or securities convertible
      or exchangeable into equity securities, by the Company for its own account
      or by
      shareholders of the Company for their account (or by the Company and by
      shareholders of the Company) other than a registration statement (i) on
      Form S-4 or S-8 (or any substitute or successor form that may be adopted by
      the Commission), or (ii) filed in connection with any employee stock option
      or other benefit plan, then the Company shall (x) give written notice of such
      proposed filing to the holders of Registrable Securities as soon as practicable
      but in no event less than 30 days before the anticipated filing date, which
      notice shall describe the amount and type of securities to be included in such
      offering, the intended method(s) of distribution, and the name of the proposed
      managing Underwriter or Underwriters, if any, of the offering; and (y) offer
      to
      the holders of Registrable Securities in such notice the opportunity to register
      such number of shares of Registrable Securities as such holders may request
      in
      writing within 15 days following receipt of such notice (a “Piggy-Back
      Registration”).
      The
      Company shall cause such Registrable Securities to be included in such
      registration and shall use its best efforts to cause the managing Underwriter
      or
      Underwriters of a proposed underwritten offering to permit the Registrable
      Securities requested to be included in a Piggy-Back Registration to be included
      on the same terms and conditions as any similar securities of the Company and
      to
      permit the sale or other disposition of such Registrable Securities in
      accordance with the intended method of distribution thereof.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (b) Reduction
      of Offering.
      If the
      managing Underwriter or Underwriters for a Piggy-Back Registration that is
      to be
      an underwritten offering of shares for the Company’s
      account
      advises the Company and the holders of Registrable Securities in writing that
      the dollar amount or number of shares of Common Stock or other securities which
      the Company desires to sell, taken together with the Registrable Securities
      as
      to which registration has been requested hereunder or which other shareholders
      of the Company desire to sell, exceeds the Maximum Number of Shares, then the
      Company shall include in such registration: (i) first, the shares of Common
      Stock or other securities that the Company desires to sell that can be sold
      without exceeding the Maximum Number of Shares, (ii) second, to the extent
      the
      Maximum Number of Shares has not been reached under the foregoing clause (i),
      the Registrable Securities as to which registration has been requested hereunder
      (pro rata in accordance with the number of shares of Registrable Securities
      held
      by such Persons, regardless of the number of shares of Registrable Securities
      which such Person has actually requested be included in such registration)
      that
      can be sold without exceeding the Maximum Number of Shares and (iii) third,
      to
      the extent the Maximum Number of Shares has not been reached under the foregoing
      clauses (i) and (ii), the shares of Common Stock or other securities that other
      shareholders desire to sell that can be sold without exceeding the Maximum
      Number of Shares.

    

    (c) Withdrawal.
      Any
      holder of Registrable Securities may elect to withdraw such holder’s
      request
      for inclusion of Registrable Securities in any Piggy-Back Registration by giving
      written notice to the Company of such request to withdraw prior to the
      effectiveness of the registration statement. The Company may also elect to
      withdraw a registration statement at any time prior to the effectiveness of
      the
      registration statement. Notwithstanding any such withdrawal, the Company shall
      pay all expenses incurred by the holders of Registrable Securities in connection
      with such Piggy-Back Registration as provided in Section 3.3.

    

    2.3 Shelf
      Registration.
      Any
      holder of Registrable Securities may at any time request in writing that the
      Company register the resale of any or all of such Registrable Securities on
      Form
      S-3 (or any similar short-form registration which may be available at such
      time)
      for an offering to be made on a continuous basis. Upon receipt of such written
      request, the Company will promptly give written notice of the proposed
      registration to all other holders of Registrable Securities, and, as soon as
      practicable thereafter, effect the registration of all or such portion of such
      holder’s
      or
      holders’
      Registrable Securities as are specified in such request, together with all
      or
      such portion of the Registrable Securities of any other holder or holders
      joining in such request as are specified in a written request given within
      15
      days after receipt of such written notice from the Company; provided, however,
      that the Company shall not be obligated to effect any such registration pursuant
      to this Section
      2.3
      if (i)
      Form S-3 is not available for such offering; (ii) the holders propose to effect
      an underwritten offering, (iii) the holders propose to sell Registrable
      Securities at an anticipated aggregate price to the public (net of any
      underwriters’
      discounts or commissions) of less than $500,000, or (iv) the Company shall
      furnish to the holders a certificate signed by the Chief Executive Officer
      of
      the Company stating that in the good faith judgment of the Board, it would
      be
      materially detrimental to the Company and its shareholders for such Form S-3
      registration to be effected at such time, in which event the Company shall
      have
      the right to defer the filing of the Form S-3 registration statement for a
      period of not more than 60 days after receipt of the request of the holder
      or
      holders under this Section
      2.3,
      provided, however, that in the event the Company elects to exercise such right
      with respect to any registration, it shall not have the right to exercise such
      right again prior to the date which is ten months after the date on which the
      registration statement relating to such deferred registration is declared
      effective. The Company shall use its best efforts to maintain each registration
      statement under this Section
      2.3
      effective until the Registrable Securities covered thereby have been sold.
      Registrations effected pursuant to this Section
      2.3
      shall
      not be counted as Demand Registrations effected pursuant to Section
      2.1.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    3. REGISTRATION
      PROCEDURES.

    

    3.1 Filings;
      Information.
      If and
      whenever the Company is required to effect the registration of any Registrable
      Securities under the 1933 Act pursuant to Section 2,
      the
      Company shall use its best efforts to effect the registration and the sale
      of
      such Registrable Securities in accordance with the intended method of
      disposition thereof as expeditiously as practicable, and in connection with
      any
      such request:

    

    (a) Filing
      Registration Statement.
      The
      Company shall, as expeditiously as possible, prepare and file, within 60 days
      after receipt of a request for a Demand Registration pursuant to Sections 2.1
      or
      registration pursuant to Section
      2.3,
      with
      the Commission a registration statement on any form for which the Company then
      qualifies or which counsel for the Company shall deem appropriate and which
      form
      shall be available for the sale of the Registrable Securities to be registered
      thereunder in accordance with the intended method of distribution thereof,
      and
      shall use its best efforts to cause such registration statement to become and
      remain effective for the period required by Section
      3.1(c);
      provided, however, that with respect to Demand Registrations, the Company shall
      have the right to defer such registration for up to 60 days if the Company
      shall
      furnish to the holders a certificate signed by the Chief Executive Officer
      of
      the Company stating that, in the good faith judgment of the Board, it would
      be
      materially detrimental to the Company and its shareholders for such registration
      statement to be effected at such time; provided further, that in the event
      the
      Company elects to exercise such right with respect to any such registration,
      it
      shall not have the right to exercise such right again prior to the date which
      is
      12 months after the date on which the registration statement relating to such
      deferred registration is declared effective.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (b) Copies.
      The
      Company shall, prior to filing a registration statement or prospectus or any
      amendment or supplement thereto, furnish without charge to the holders of
      Registrable Securities included in such registration, and such
      holders’
      legal
      counsel, copies of such registration statement as proposed to be filed, each
      amendment and supplement to such registration statement (in each case including
      all exhibits thereto and documents incorporated by reference therein), the
      prospectus included in such registration statement (including each preliminary
      prospectus), and such other documents as the holders of Registrable Securities
      included in such registration or legal counsel for any such holder may request
      in order to facilitate the disposition of the Registrable Securities owned
      by
      such holders.

    

    (c) Amendments
      and Supplements.
      The
      Company shall prepare and file with the Commission such amendments, including
      post-effective amendments, and supplements to such registration statement and
      the prospectus used in connection therewith as may be necessary to keep such
      registration statement continuously effective and in compliance with the
      provisions of the 1933 Act until all Registrable Securities and other securities
      covered by such registration statement have been disposed of in accordance
      with
      the intended methods of disposition set forth in such registration statement
      or
      such securities have been withdrawn.

    

    (d) Notification.
      After
      the filing of the registration statement, the Company shall promptly, and in
      no
      event more than two Business Days, notify the holders of Registrable Securities
      included in such registration statement, and confirm such advice in writing,
      (i) when such registration statement becomes effective, (ii) when any
      post-effective amendment to such registration statement becomes effective,
      (iii) of any stop order issued or threatened by the Commission (and the
      Company shall take all actions required to prevent the entry of such stop order
      or to remove it if entered) and (iv) of any request by the Commission for
      any amendment or supplement to such registration statement or any prospectus
      relating thereto or for additional information or of the occurrence of an event
      requiring the preparation of a supplement or amendment to such prospectus so
      that, as thereafter delivered to the purchasers of the securities covered by
      such registration statement, such prospectus will not contain an untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary to make the statements therein not misleading and
      promptly make available to the holders of Registrable Securities included in
      such registration statement any such supplement or amendment; except that before
      filing with the Commission a registration statement or prospectus or any
      amendment or supplement thereto, including documents incorporated by reference,
      the Company shall furnish to the holders of Registrable Securities included
      in
      such registration statement and to the legal counsel for any such holders,
      copies of all such documents proposed to be filed sufficiently in advance of
      filing to provide such holders and legal counsel with a reasonable opportunity
      to review such documents and comment thereon, and the Company shall not file
      any
      registration statement or prospectus or amendment or supplement thereto,
      including documents incorporated by reference to which such holders or legal
      counsel, shall object on a timely basis in light of the requirements of the
      1933
      Act or any other applicable laws and regulations.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (e) State
      Securities Laws Compliance.
      The
      Company shall use its best efforts to (i) register or qualify the
      Registrable Securities covered by the registration statement under such
      securities or blue sky laws of such jurisdictions in the United States as the
      holders of Registrable Securities included in such registration statement (in
      light of their intended plan of distribution) may request and (ii) cause
      such Registrable Securities covered by the registration statement to be
      registered with or approved by such other governmental agencies or authorities
      in the United States as may be necessary by virtue of the business and
      operations of the Company and do any and all other acts and things that may
      be
      necessary or advisable to enable the holders of Registrable Securities included
      in such registration statement to consummate the disposition of such Registrable
      Securities in such jurisdictions; provided, however, that the Company shall
      not
      be required to qualify generally to do business in any jurisdiction where it
      would not otherwise be required to qualify but for this paragraph (e), or
      subject itself to taxation in any such jurisdiction.

    

    (f) Agreements
      for Disposition.
      The
      Company shall enter into customary agreements (including, if applicable, an
      underwriting agreement in customary form) and take such other actions as are
      reasonably required in order to expedite or facilitate the disposition of such
      Registrable Securities. The representations, warranties and covenants of the
      Company in any underwriting agreement which are made to or for the benefit
      of
      any Underwriters shall also be made to and for the benefit of the holders of
      Registrable Securities included in such registration statement. No holder of
      Registrable Securities included in such registration statement shall be required
      to make any representations or warranties in the underwriting agreement except,
      if applicable, with respect to such holder’s
      organization, good standing, authority, title to Registrable Securities, lack
      of
      conflict of such sale with such holder’s
      material agreements and organizational documents, and with respect to written
      information relating to such holder that such holder has furnished in writing
      expressly for inclusion in such registration statement.

    

    (g) Cooperation.
      The
      Chief Executive Officer, the President of the Company, the Chief Financial
      Officer of the Company, any Senior Vice President of the Company and any other
      members of the management of the Company shall cooperate fully in any offering
      of Registrable Securities hereunder, which cooperation shall include, without
      limitation, the preparation of the registration statement with respect to such
      offering and all other offering materials and related documents, and
      participation in meetings with Underwriters, attorneys, accountants and
      potential investors.

    

    (h) Records.
      The
      Company shall make available for inspection by the holders of Registrable
      Securities included in such registration statement, any Underwriter
      participating in any disposition pursuant to such registration statement and
      any
      attorney, accountant or other professional retained by any holder of Registrable
      Securities included in such registration statement or any Underwriter, all
      financial and other records, pertinent corporate documents and properties of
      the
      Company, as shall be necessary to enable them to exercise their due diligence
      responsibility, and cause the Company’s
      officers, directors and employees to supply all information requested by any
      of
      them in connection with such registration statement.

    

    
      
        
        

      

      
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    (i) Opinions
      and Comfort Letters.
      The
      Company shall furnish to each holder of Registrable Securities included in
      any
      registration statement a signed counterpart, addressed to such holder, of
      (i) any opinion of counsel to the Company delivered to any Underwriter and
      (ii) any comfort letter from the Company’s
      independent public accountants delivered to any Underwriter. In the event no
      legal opinion is delivered to any Underwriter, the Company shall furnish to
      each
      holder of Registrable Securities included in such registration statement, at
      any
      time that such holder elects to use a prospectus, an opinion of counsel to
      the
      Company to the effect that the registration statement containing such prospectus
      has been declared effective and that no stop order is in effect. 

    

    (j) Earnings
      Statement.
      The
      Company shall comply with all applicable rules and regulations of the Commission
      and the 1933 Act, and make available to its shareholders, as soon as
      practicable, an earnings statement covering a period of 12 months, beginning
      within three months after the effective date of the registration statement,
      which earnings statement shall satisfy the provisions of
      Section 11(a) of the 1933 Act and Rule 158
      thereunder.

    

    (k) Listing.
      The
      Company shall use its best efforts to cause all Registrable Securities included
      in any registration to be listed on such exchanges or otherwise designated
      for
      trading in the same manner as similar securities issued by the Company are
      then
      listed or designated or, if no such similar securities are then listed or
      designated, in a manner satisfactory to the holders of a majority of the
      Registrable Securities included in such registration.

    

    3.2 Obligation
      to Suspend Distribution.
      Upon
      receipt of any notice from the Company of the happening of any event of the
      kind
      described in Section 3.1(d)(iv),
      each
      holder of Registrable Securities included in any registration shall immediately
      discontinue disposition of such Registrable Securities pursuant to the
      registration statement covering such Registrable Securities until such holder
      receives the supplemented or amended prospectus contemplated by Section 3.1(d)(iv),
      and, if
      so directed by the Company, each such holder will deliver to the Company all
      copies, other than permanent file copies then in such holder’s
      possession, of the most recent prospectus covering such Registrable Securities
      at the time of receipt of such notice. 

    

    3.3 Registration
      Expenses.
      The
      Company shall pay all expenses incurred in connection with any Demand
      Registration pursuant to Section 2.1.,
      any
      Piggy-Back Registration pursuant to Section 2.2,
      any
      registrations requested pursuant to Section
      2.3
      and all
      expenses incurred in performing or complying with the Company’s
      obligations under this Section 3,
      whether
      or not the registration statement becomes effective, in each case including,
      but
      not limited to: (i) all registration and filing fees; (ii) fees and
      expenses of compliance with securities or blue sky laws (including fees and
      disbursements of counsel in connection with blue sky qualifications of the
      Registrable Securities); (iii) printing expenses; (iv) the
      Company’s
      internal expenses (including, without limitation, all salaries and expenses
      of
      its officers and employees); (v) the fees and expenses incurred in
      connection with the listing of the Registrable Securities as required by
Section
      3.1(k);
      (vi) National Association of Securities Dealers, Inc. fees and any listing
      or other fees for any securities exchanges, Nasdaq or otherwise for designation
      with respect to the securities; (vii) fees and disbursements of counsel for
      the Company and fees and expenses for independent certified public accountants
      retained by the Company (including the expenses or costs associated with the
      delivery of any opinions or comfort letters requested pursuant to Section 3.1(i));
      (viii) the fees and expenses of any special experts retained by the Company
      in connection with such registration; (ix) one-half of the cost for selling
      stockholder errors and omissions insurance for the benefit of the holders of
      Registrable Securities included in such registration which the holders of a
      majority of such Registrable Securities may elect to purchase (with the other
      one-half of such cost to be paid by the holders of Registrable Securities
      included in such registration, pro rata in accordance with the number of shares
      included in such registration); and (x) all fees and expenses incurred by
      the holders of Registrable Securities included in such registration statement
      in
      connection with its participation in such registration, including, without
      limitation, the fees and expenses of such holders’
      legal
      counsel, accountants and other experts. The Company shall have no obligation
      to
      pay any underwriting fees, discounts or selling commissions attributable to
      the
      Registrable Securities being sold by holders of Registrable Securities, which
      expenses shall be borne by such holders.

    

    
      
        
        

      

      
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    3.4 Information.
      The
      holders of Registrable Securities shall provide such information as reasonably
      requested by the Company in connection with the preparation of any registration
      statement, including amendments and supplements thereto, in order to effect
      the
      registration of any Registrable Securities under the 1933 Act pursuant to
Section 2.

    

    4. INDEMNIFICATION
      AND CONTRIBUTION.

    

    4.1 Indemnification
      by the Company.
      The
      Company agrees to indemnify and hold harmless (i) each Shareholder and each
      other holder of Registrable Securities, and (ii) the respective officers,
      employees, affiliates, directors, partners, members and agents of each of the
      Shareholders or any holder of Registrable Securities, and each Person, if any,
      who controls each of the Shareholders or any holder of Registrable Securities
      within the meaning of Section 15
      of the
      1933 Act or Section 20
      of the
      1934 Act (each, a Shareholder
      Indemnified Party@),
      from
      and against any loss, claim, damage or liability and any action in respect
      thereof to which any Shareholder Indemnified Party may become subject under
      the
      1933 Act or the 1934 Act or any other statute or common law, insofar as such
      loss, claim, damage, liability or action arises out of, or is based upon,
      (a) any untrue statement or alleged untrue statement of a material fact
      made in connection with the sale of Registrable Securities or shares of Common
      Stock, whether or not such statement is contained or incorporated by reference
      in any registration statement or prospectus relating to the Registrable
      Securities (as amended or supplemented if the Company shall have furnished
      any
      amendments or supplements thereto) or any preliminary prospectus, (b) any
      omission or alleged omission to state a material fact required to be stated
      in
      any registration statement or prospectus or necessary to make the statements
      therein not misleading, or (c) any violation by the Company of any Federal,
      state or common law, rule or regulation applicable to the Company and relating
      to action required of or inaction by the Company in connection with such
      registration. The Company also shall promptly, but in no event more than ten
      Business Days after request for payment, pay directly or reimburse each
      Shareholder Indemnified Party for any legal and other expenses incurred by
      such
      Shareholder Indemnified Party in investigating or defending or preparing to
      defend against any such loss, claim, damage, liability or action. The Company
      also shall indemnify any Underwriter of the Registrable Securities, their
      officers, affiliates, directors, partners, members and agents and each Person
      who controls such Underwriters on substantially the same basis as that of the
      indemnification provided above in this Section 4.1.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    The
      indemnity agreement contained in this Section 4.1
      shall
      not apply to amounts paid in settlement of any such loss, claim, damage or
      liability or any action in respect thereof if such settlement is effected
      without the consent of the Company (which consent shall not be unreasonably
      withheld), nor shall the Company be liable to any holder of Registrable
      Securities included in any registration for any loss, claim, damage, liability
      or any action in respect thereof to the extent that it arises solely from or
      is
      based solely upon and is in conformity with information related to such holder
      furnished in writing by such holder expressly for use in connection with such
      registration, nor shall the Company be liable to any holder of Registrable
      Securities included in any registration for any loss, claim, damage or liability
      or any action in respect thereof to the extent it arises solely from or is
      based
      solely upon (i) any untrue statement or alleged untrue statement of a
      material fact contained in any registration statement or prospectus relating
      to
      the Registrable Securities delivered in writing by such holder after the Company
      had provided written notice to such holder that such registration statement
      or
      prospectus contained such untrue statement or alleged untrue statement of a
      material fact, or (ii) any omission or alleged omission to state therein a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading after the Company had provided written notice to such
      holder that such registration statement or prospectus contained such omission
      or
      alleged omission.

    

    4.2 Indemnification
      by Holders of Registrable Securities.
      Each
      holder of Registrable Securities shall indemnify and hold harmless the Company,
      its officers, directors, partners, members and agents and each Person, if any,
      who controls the Company within the meaning of Section 15
      of the
      1933 Act or Section 20
      of the
      1934 Act to the same extent as the foregoing indemnity from the Company to
      such
      holder, but solely with reference to information related to such holder
      furnished in writing by such holder expressly for use in any registration
      statement or prospectus relating to Registrable Securities of such holder
      included in any registration, or any amendment or supplement thereto, or any
      preliminary prospectus. Each holder of Registrable Securities included in any
      registration hereunder shall also indemnify and hold harmless any Underwriter
      of
      such holder’s
      Registrable Securities, their officers, directors, partners, members and agents
      and each Person who controls such Underwriters on substantially the same basis
      as that of the indemnification of the Company provided in this Section 4.2;
      provided,
      however,
      that in
      no event shall any indemnity obligation under this Section 4.2
      exceed
      the dollar amount of the net proceeds (after payment of any underwriting fees,
      discounts or commissions) actually received by such holder from the sale of
      Registrable Securities which gave rise to such indemnification obligation under
      such registration statement or prospectus.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    4.3 Conduct
      of Indemnification Proceedings.
      Promptly after receipt by any Person of any notice of any loss, claim, damage
      or
      liability or any action in respect of which indemnity may be sought pursuant
      to
Section 4.1
      or
4.2,
      such
      Person (the “Indemnified
      Party”)
      shall,
      if a claim in respect thereof is to be made against any other Person for
      indemnification hereunder, notify such other Person (the “Indemnifying
      Party”)
      in
      writing of the loss, claim damage, liability or action; provided,
      however,
      that
      the failure by the Indemnified Party to notify the Indemnifying Party shall
      not
      relieve the Indemnifying Party from any liability which the Indemnifying Party
      may have to such Indemnified Party hereunder, except to the extent the
      Indemnifying Party is actually prejudiced by such failure. If the Indemnified
      Party is seeking indemnification with respect to any claim or action brought
      against the Indemnified Party, then the Indemnifying Party shall be entitled
      to
      participate in such claim or action, and, to the extent that it wishes, jointly
      with all other Indemnifying Parties, to assume the defense thereof with counsel
      satisfactory to the Indemnified Party. After notice from the Indemnifying Party
      to the Indemnified Party of its election to assume the defense of such claim
      or
      action, the Indemnifying Party shall not be liable to the Indemnified Party
      for
      any legal or other expenses subsequently incurred by the Indemnified Party
      in
      connection with the defense thereof other than reasonable costs of
      investigation; provided,
      however,
      that in
      any action in which both the Indemnified Party and the Indemnifying Party are
      named as defendants, the Indemnified Party shall have the right to employ
      separate counsel (but no more than one such separate counsel) to represent
      the
      Indemnified Party and its controlling Persons who may be subject to liability
      arising out of any claim in respect of which indemnity may be sought by the
      Indemnified Party against the Indemnifying Party, with the fees and expenses
      of
      such counsel to be paid by such Indemnifying Party if, based upon the written
      opinion of counsel of such Indemnified Party, representation of both parties
      by
      the same counsel would be inappropriate due to actual or potential differing
      interests between them. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, consent to entry of judgment or effect any
      settlement of any claim or pending or threatened proceeding in respect of which
      the Indemnified Party is or could have been a party and indemnity could have
      been sought hereunder by such Indemnified Party, unless such judgment or
      settlement includes an unconditional release of such Indemnified Party from
      all
      liability arising out of such claim or proceeding.

    

    4.4 Contribution.
      If the
      indemnification provided for in the foregoing Sections 4.1,
      4.2
      and
4.3
      is
      unavailable to any Indemnified Party in respect of any loss, claim, damage,
      liability or action referred to herein, then each such Indemnifying Party,
      in
      lieu of indemnifying such Indemnified Party, shall contribute to the amount
      paid
      or payable by such Indemnified Party as a result of such loss, claim, damage,
      liability or action in such proportion as is appropriate to reflect the relative
      fault of the Indemnified Parties and the Indemnifying Parties in connection
      with
      the actions or omissions which resulted in such loss, claim, damage, liability
      or action, as well as any other relevant equitable considerations. The relative
      fault of any Indemnified Party and any Indemnifying Party shall be determined
      by
      reference to, among other things, whether the untrue or alleged untrue statement
      of a material fact or the omission or alleged omission to state a material
      fact
      relates to information supplied by such Indemnified Party or such Indemnifying
      Party and the parties’
      relative
      intent, knowledge, access to information and opportunity to correct or prevent
      such statement or omission.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 4.4
      were
      determined by pro rata allocation or by any other method of allocation which
      does not take account of the equitable considerations referred to in the
      immediately preceding paragraph. The amount paid or payable by an Indemnified
      Party as a result of any loss, claim, damage, liability or action referred
      to in
      the immediately preceding paragraph shall be deemed to include, subject to
      the
      limitations set forth above, any legal or other expenses incurred by such
      Indemnified Party in connection with investigating or defending any such action
      or claim. Notwithstanding the provisions of this Section 4.4,
      no
      holder of Registrable Securities shall be required to contribute any amount
      in
      excess of the dollar amount of the net proceeds (after payment of any
      underwriting fees, discounts or commissions) actually received by such holder
      from the sale of Registrable Securities which gave rise to such contribution
      obligation. No Person guilty of fraudulent misrepresentation (within the meaning
      of Section 11(f) of
      the 1933 Act) shall be entitled to contribution from any Person who was not
      guilty of such fraudulent misrepresentation.

    

    5. UNDERWRITING
      AND DISTRIBUTION.

    

    5.1 Rule 144.
      The
      Company covenants that it shall file any reports required to be filed by it
      under the 1933 Act and the 1934 Act and shall take such further action as the
      holders of Registrable Securities may reasonably request, all to the extent
      required from time to time to enable such holders to sell Registrable Securities
      without registration under the 1933 Act within the limitation of the exemptions
      provided by Rule 144 or Rule 144A under the 1933 Act, as such Rules
      may be amended from time to time, or any similar Rule or regulation
      hereafter adopted by the Commission. 

    

    5.2 Restrictions
      on Sale by the Company and Others.
      The
      Company agrees (i) not to effect any sale or distribution of any securities
      similar to those being registered in accordance with Section 2.1,
      or any
      securities convertible into or exchangeable or exercisable for such securities,
      during the 90 days prior to, and during the 120-day period beginning on, the
      effective date of any Demand Registration (except as part of such Demand
      Registration to the extent permitted by Section
      2.1(d));
      and
      (ii) that any agreement entered into after the date hereof pursuant to
      which the Company issues or agrees to issue any privately placed securities
      shall contain a provision under which holders of such securities agree not
      to
      effect any sale or distribution of any such securities during the periods
      described in (i) above, in each case including a sale pursuant to
      Rule 144 or 144A under the 1933 Act (except as part of any such
      registration, if permitted); provided,
      however,
      that
      the provisions of this Section 5.2
      shall
      not prevent the conversion or exchange of any securities pursuant to their
      terms
      into or for other securities and shall not prevent the issuance of securities
      by
      the Company under any employee benefit, stock option or stock subscription
      plans.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    6. MISCELLANEOUS.

    

    6.1 Other
      Registration Rights.
      The
      Company represents and warrants that other than pursuant to this Agreement
      no
      Person has any right to require the Company to register any shares of the
      Company’s
      capital
      stock for sale or to include shares of the Company’s
      capital
      stock in any registration filed by the Company for the sale of shares of capital
      stock for its own account or for the account of any other Person. From and
      after
      the date of this Agreement, the Company shall not, without the prior written
      consent of MatlinPatterson, enter into any agreement granting any piggy-back
      registration right (i.e., the right to require the Company to register the
      sale
      of any shares of the Company’s
      capital
      stock in any registration filed by the Company for the sale of shares of capital
      stock for its own account or for the account of any other Person) which is
      inconsistent with, equal to or superior to any registration rights granted
      hereunder.

    

    6.2 Successors
      and Assigns.
      The
      rights and obligations of the Shareholders under this Agreement shall be freely
      assignable in whole or in part. Each such assignee, by accepting such assignment
      of the rights of the assignor hereunder shall be deemed to have agreed to and
      be
      bound by the obligations of the assignor hereunder. The rights and obligations
      of the Company hereunder may not be assigned.

    

    6.3 Notices.
      All
      notices, requests, demands and other communications which are required or may
      be
      given under this Agreement shall be in writing and shall be deemed to have
      been
      duly given if transmitted by telecopier with receipt acknowledged, or upon
      delivery, if delivered personally or by recognized commercial courier with
      receipt acknowledged, or upon the expiration of 72 hours after mailing, if
      mailed by registered or certified mail, return receipt requested, postage
      prepaid, addressed as follows:

    

    

    If
      to any
      other Shareholder:

    

    At
      such
      address set forth on the signature page hereto.

    

    If
      to any
      assignee of any Shareholder:

    

    At
      such
      assignee’s
      address
      as shown on the books of the Company.

    

    If
      to the
      Company, to:

    

    General
      Steel Holdings Inc.

    10th
      Flr., Block A Haitong Building

    No.3
      Nanlishi Ave.

    Xicheng
      District, Beijing 100037

    The
      People’s Republic of China

    Attention:
      John Chen

    Chief
      Financial Officer

    

    Fax:
      86-10-68047011

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    or
      at
      such other address or addresses as any Shareholder, such assignee or the
      Company, as the case may be, may specify by written notice given in accordance
      with this Section.

    

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

     

    6.5 Counterpart.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be an
      original, but all of which together shall constitute one
      instrument.

    

    6.6 Descriptive
      Headings, Construction and Interpretation.
      The
      descriptive headings in this Agreement are for convenience of reference only
      and
      do not constitute a part of this Agreement and are not to be considered in
      construing or interpreting this Agreement. All section, preamble, recital and
      party references are to this Agreement unless otherwise stated. No party, nor
      its counsel, shall be deemed the drafter of this Agreement for purposes of
      construing the provisions of this Agreement, and all provisions of this
      Agreement shall be construed in accordance with their fair meaning, and not
      strictly for or against any party. 

    

    6.7 Waivers
      and Amendments.
      The
      provisions of this Agreement may not be amended, modified, waived or
      supplemented, unless the Company has obtained the written consent of the
      MatlinPatterson. Each holder of any Registrable Securities at the time or
      thereafter shall be bound by any consent authorized by this Section, whether
      or
      not such holder consented or whether or not such Registrable Securities have
      been marked to indicate such consent.

    

    6.8 Remedies.
      In the
      event that the Company fails to observe or perform any covenant or agreement
      to
      be observed or performed under this Agreement, any Shareholder or any other
      holder of Registrable Securities may proceed to protect and enforce its rights
      by suit in equity or action at law, whether for specific performance of any
      term
      contained in this Agreement or for an injunction against the breach of any
      such
      term or in aid of the exercise of any power granted in this Agreement or to
      enforce any other legal or equitable right, or to take any one or more of such
      actions. The Company agrees to pay all fees, costs, and expenses, including
      without limitation, fees and expenses of attorneys, accountants and other
      experts, and all fees, costs and expenses of appeals, incurred by any
      Shareholder or any other holder of Registrable Securities in connection with
      the
      enforcement of this Agreement or the collection or any sums due hereunder,
      whether or not suit is commenced. None of the rights, powers or remedies
      conferred under this Agreement shall be mutually exclusive, and each such right,
      power or remedy shall be cumulative and in addition to any other right, power
      or
      remedy whether conferred by this Agreement or now or hereafter available at
      law,
      in equity, by statute or otherwise.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    6.9 Governing
      Law.
      In all
      respects, including all matters of construction, validity and performance,
      this
      Agreement and the rights and obligations arising hereunder shall be governed
      by,
      and construed and enforced in accordance with, the laws of the State of New
      York
      applicable to contracts made and performed in such state, without regard to
      principles thereof regarding conflicts of laws.

    

    6.10 Entire
      Agreement.
      This
      Agreement (including the Purchase Agreement and Warrant Agreements and Exhibits
      and Schedules hereto and thereto) constitutes the entire agreement among the
      parties and supersedes all other prior agreements and understandings, both
      written and oral, among the parties with respect to the subject matter
      hereof.

     

    IN
      WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
      to
      be executed and delivered by their duly authorized representatives as of the
      date first above written.

    

    

    General
      Steel Holdings Inc.

    

    By:_____________________

    Name:     
      Zuo
      Sheng Yu            

    Title: Chief
      Executive Officer     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    Shareholders:

    

    

    
      	
              Name
                of Shareholder:

            	
              Address
                for Notices (Please Print):

            
	 	 
	
              ______________________________

            	
              _______________________________________

            
	 	
              _______________________________________

            
	 	
              _______________________________________

            
	 	
              Attention:_______________________________

            
	 	
              Telecopy:_______________________________

            
	 	 
	
              By:___________________________

            	 
	
                   Name:

            	 
	
                   Title:

            	 

    

    

    
      
        
        

      

      
        17

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