Document:

EXECUTION
      COPY

    

    REGISTRATION
      RIGHTS AGREEMENT

     

    REGISTRATION
      RIGHTS AGREEMENT
      (this
      "Agreement"),
      dated
      as of March 13, 2008, by and among Wo Hing Li (the "Seller")
      and
      the undersigned buyers (each, a "Buyer",
      and
      collectively, the "Buyers").

    

    WHEREAS:

     

    A. In
      connection with the Securities Purchase Agreement by and among the Seller and
      the Buyers of even date herewith (the "Securities
      Purchase Agreement"),
      the
      Seller has agreed, upon the terms and subject to the conditions set forth in
      the
      Securities Purchase Agreement, to sell to each Buyer shares (the "Common
      Shares")
      of the
      common stock, par value $0.001 per share (the "Common
      Stock")
      of
      China Precision Steel, Inc., a Delaware corporation, with headquarters located
      at 87 Wing Lok Street, 8th
      Floor,
      Teda Building, Sheung Wan, Hong Kong, PRC (the "Company").

     

    B. In
      accordance with the terms of the Securities Purchase Agreement, the Seller
      has
      represented that he has certain registration rights in connection with the
      Common Shares to have such shares registered for re-sale under the Securities
      Act of 1933, as amended, and the rules and regulations thereunder, or any
      similar successor statute (collectively, the "1933
      Act"),
      and
      applicable state securities laws.

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and each of the Buyers hereby agree as
      follows:

     

    1. Definitions.
      

     

    Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings set forth in the Securities Purchase Agreement. As used in this
      Agreement, the following terms shall have the following meanings:

     

    a. "Additional
      Effective Date"
      means
      the date the Additional Registration Statement is declared effective by the
      SEC.

     

    b. "Additional
      Effectiveness Deadline"
      means
      the date which is ninety (90) calendar days after the earlier of the Additional
      Filing Date and the Additional Filing Deadline.

     

    c. "Additional
      Filing Date"
      means
      the date on which the Additional Registration Statement is filed with the
      SEC.

     

    d. "Additional
      Filing Deadline"
      means
      if Cutback Shares are required to be included in any Additional Registration
      Statement, the later of (i) the date sixty (60) days after the date
      substantially all of the Registrable Securities registered
      under the immediately preceding Registration Statement are sold
      and (ii)
      the date six (6) months from the Initial Effective Date or the most recent
      Additional Effective Date, as applicable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    e. "Additional
      Registrable Securities"
      means,
      (i) any Cutback Shares not previously included on a Registration Statement
      and
      (ii) any capital stock of the Company issued or issuable with respect to the
      Common Shares or Cutback Shares as a result of any stock split, stock dividend,
      recapitalization, exchange or similar event or otherwise.

     

    f. "Additional
      Registration Statement"
      means a
      registration statement or registration statements of the Company filed under
      the
      1933 Act covering any Additional Registrable Securities.

     

    g. "Additional
      Required Registration Amount"
      means
      any Cutback Shares not previously included on a Registration Statement, all
      subject to adjustment as provided in Section 2(f).

     

    h. "Business
      Day"
      means
      any day other than Saturday, Sunday or any other day on which commercial banks
      in the City of New York are authorized or required by law to remain
      closed.

     

    i. "Closing
      Date"
      shall
      have the meaning set forth in the Securities Purchase Agreement.

     

    j. "Cutback
      Shares"
      means
      any of the Initial Required Registration Amount (without regard to clause (II)
      in the definition thereof) of Registrable Securities not included in all
      Registration Statements previously declared effective hereunder as a result
      of a
      limitation on the maximum number of shares of Common Stock of the Company
      permitted to be registered by the staff of the SEC pursuant to Rule 415.

     

    k. "Effective
      Date"
      means
      the Initial Effective Date and the Additional Effective Date, as
      applicable.

     

    l. "Effectiveness
      Deadline"
      means
      the Initial Effectiveness Deadline and the Additional Effectiveness Deadline,
      as
      applicable.

     

    m. "Filing
      Deadline"
      means
      the Initial Filing Deadline and the Additional Filing Deadline, as
      applicable.

     

    n. "Initial
      Effective Date"
      means
      the date that the Initial Registration Statement has been declared effective
      by
      the SEC.

     

    o. "Initial
      Effectiveness Deadline"
      means
      the
      date one-hundred and twenty (120) calendar days after the Closing
      Date. 

     

    p. "Initial
      Filing Deadline"
      means
      the date which is thirty (30) calendar days after the Closing Date.

     

    q. "Initial
      Registrable Securities"
      for the
      Initial Registration Statement means (i) the Common Shares and (ii) any capital
      stock of the Company issued or issuable, with respect to the Common Shares
      as a
      result of any stock split, stock dividend, recapitalization, exchange or similar
      event or otherwise.

     

    
      
         

      

      
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    r. "Initial
      Registration Statement" means a registration statement or registration
      statements of the Company filed under the 1933 Act covering the Initial
      Registrable Securities.

     

    s. "Initial
      Required Registration Amount"
      means
      (I)
the
      number of Common Shares issued and issuable pursuant to the Securities Purchase
      Agreement or
      (II)
      such other amount as may be required by the staff of the SEC pursuant to Rule
      415 with any cutback applied pro rata to all Registrable Securities, except
      to
      the extent prohibited by the SEC. 

     

    t. "Investor"
      means a
      Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights
      under this Agreement and who agrees to become bound by the provisions of this
      Agreement in accordance with Section 9 and any transferee or assignee thereof
      to
      whom a transferee or assignee assigns its rights under this Agreement and who
      agrees to become bound by the provisions of this Agreement in accordance with
      Section 9.

     

    u. "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    v. "register,"
      "registered,"
      and
      "registration"
      refer
      to a registration effected by preparing and filing one or more Registration
      Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
      declaration or ordering of effectiveness of such Registration Statement(s)
      by
      the SEC.

     

    w. "Registrable
      Securities"
      means
      the Initial Registrable Securities and the Additional Registrable
      Securities.

     

    x. "Registration
      Statement"
      means
      the Initial Registration Statement and the Additional Registration Statement,
      as
      applicable.

     

    y. "Required
      Holders"
      means
      the holders of at least a majority of the Registrable Securities.

     

    z. "Required
      Registration Amount"
      means
      either the Initial Required Registration Amount or the Additional Required
      Registration Amount, as applicable.

     

    aa. "Rule
      415"
      means
      Rule 415 promulgated under the 1933 Act or any successor rule providing for
      offering securities on a continuous or delayed basis.

     

    bb. "SEC"
      means
      the United States Securities and Exchange Commission.

    
      
         

      

      
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    2. Registration.

     

    a. Initial
      Mandatory Registration.
      The
      Seller shall cause the Company to prepare, and, as soon as practicable, but
      in
      no event later than the Initial Filing Deadline, file with the SEC the Initial
      Registration Statement on Form S-3 covering the resale of all of the Initial
      Registrable Securities. In the event that Form S-3 is unavailable for such
      a
      registration, the Seller shall cause the Company to use such other form as
      is
      available for such a registration on another appropriate form reasonably
      acceptable to the Required Holders, subject to the provisions of Section 2(e).
      The Initial Registration Statement prepared pursuant hereto shall register
      for
      resale at least the number of shares of Common Stock equal to the Initial
      Required Registration Amount determined as of the date the Initial Registration
      Statement is initially filed with the SEC. The Initial Registration Statement
      shall contain (except if otherwise directed by the Required Holders) the
      "Selling
      Stockholders"
      and
      "Plan
      of Distribution"
      sections in substantially the form attached hereto as Exhibit
      B.
      The
      Seller shall cause the Company to use its best efforts to have the Initial
      Registration Statement declared effective by the SEC as soon as practicable,
      but
      in no event later than the Initial Effectiveness Deadline. By 9:30 a.m. New
      York
      time on the third Business Day following the Initial Effective Date, the Seller
      shall cause the Company to file with the SEC in accordance with Rule 424 under
      the 1933 Act the final prospectus to be used in connection with sales pursuant
      to such Initial Registration Statement.

     

    b. Additional
      Mandatory Registrations.
      The
      Seller shall cause the Company to prepare, and, as soon as practicable but
      in no
      event later than the Additional Filing Deadline, file with the SEC an Additional
      Registration Statement on Form S-3 covering the resale of all of the Additional
      Registrable Securities not previously registered on an Additional Registration
      Statement hereunder. To the extent the staff of the SEC does not permit the
      Additional Required Registration Amount to be registered on an Additional
      Registration Statement, the Seller shall cause the Company to file Additional
      Registration Statements successively trying to register on each such Additional
      Registration Statement the maximum number of remaining Additional Registrable
      Securities until the Additional Required Registration Amount has been registered
      with the SEC. In the event that Form S-3 is unavailable for such a registration,
      the Seller shall cause the Company to use such other form as is available for
      such a registration on another appropriate form reasonably acceptable to the
      Required Holders, subject to the provisions of Section 2(e). Each Additional
      Registration Statement prepared pursuant hereto shall register for resale at
      least that number of shares of Common Stock equal to the Additional Required
      Registration Amount determined as of the date such Additional Registration
      Statement is initially filed with the SEC. Each Additional Registration
      Statement shall contain (except if otherwise directed by the Required Holders)
      the "Selling
      Stockholders"
      and
      "Plan
      of Distribution"
      sections in substantially the form attached hereto as Exhibit
      B.
      The
      Seller shall cause the Company to use its best efforts to have each Additional
      Registration Statement declared effective by the SEC as soon as practicable,
      but
      in no event later than the Additional Effectiveness Deadline. By 9:30 a.m.
      New
      York time on the third Business Day following the Additional Effective
      Date,
      the
      Seller shall cause the Company to file with the SEC in accordance with Rule
      424
      under the 1933 Act the final prospectus to be used in connection with sales
      pursuant to such Additional Registration Statement.

     

    c. Allocation
      of Registrable Securities.
      The
      initial number of Registrable Securities included in any Registration Statement
      and any increase in the number of Registrable Securities included therein shall
      be allocated pro rata among the Investors based on the number of Registrable
      Securities held by each Investor at the time the Registration Statement covering
      such initial number of Registrable Securities or increase thereof is declared
      effective by the SEC. In the event that an Investor sells or otherwise transfers
      any of such Investor's Registrable Securities, each transferee shall be
      allocated a pro rata portion of the then remaining number of Registrable
      Securities included in such Registration Statement for such transferor. Any
      shares of Common Stock included in a Registration Statement and which remain
      allocated to any Person which ceases to hold any Registrable Securities covered
      by such Registration Statement shall be allocated to the remaining Investors,
      pro rata based on the number of Registrable Securities then held by such
      Investors which are covered by such Registration Statement. In no event shall
      any securities other than Registrable Securities be included on any Registration
      Statement without the prior written consent of the Required
      Holders.

     

    
      
         

      

      
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    d. Legal
      Counsel.
      Subject
      to Section 5 hereof, the Required Holders shall have the right to select one
      legal counsel to review and oversee any registration pursuant to this Section
      2
      ("Legal
      Counsel"),
      which
      shall be Schulte Roth & Zabel LLP or such other counsel as thereafter
      designated by the Required Holders. The Seller shall cause the Company to
      reasonably cooperate with Legal Counsel in performing the Seller's obligations
      under this Agreement.

     

    e. Ineligibility
      for Form S-3.
      In the
      event that Form S-3 is not available for the registration of the resale of
      Registrable Securities hereunder, the Seller shall cause the Company to (i)
      register the resale of the Registrable Securities on another appropriate form
      reasonably acceptable to the Required Holders and (ii) undertake to register
      the
      Registrable Securities on Form S-3 as soon as such form is available, provided
      that the Seller shall cause the Company to maintain the effectiveness of the
      Registration Statement then in effect until such time as a Registration
      Statement on Form S-3 covering the Registrable Securities has been declared
      effective by the SEC.

     

    f. Sufficient
      Number of Shares Registered.
      In the
      event the number of shares available under a Registration Statement filed
      pursuant to Section 2(a) or Section 2(b) is insufficient to cover all of the
      Registrable Securities required to be covered by such Registration Statement
      or
      an Investor's allocated portion of the Registrable Securities pursuant to
      Section 2(c), the Seller shall cause the Company to amend the applicable
      Registration Statement, or file a new Registration Statement (on the short
      form
      available therefor, if applicable), or both, so as to cover at least the
      Required Registration Amount as of the Trading Day immediately preceding the
      date of the filing of such amendment or new Registration Statement, in each
      case, as soon as practicable, but in any event not later than thirty (30) days
      after the necessity therefor arises. The Seller shall cause the Company to
      use
      its best efforts to cause such amendment and/or new Registration Statement
      to
      become effective as soon as practicable following the filing thereof. For
      purposes of the foregoing provision, the number of shares available under a
      Registration Statement shall be deemed "insufficient to cover all of the
      Registrable Securities" if at any time the number of shares of Common Stock
      available for resale under the Registration Statement is less than the product
      determined by multiplying (i) the Required Registration Amount as of such time
      by (ii) 0.90.

     

    
      
         

      

      
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    g. Effect
      of Failure to File and Obtain and Maintain Effectiveness of Registration
      Statement.
      If (i)
      a Registration Statement covering all of the Registrable Securities required
      to
      be covered thereby and required to be filed by the Company pursuant to this
      Agreement is (A) not filed with the SEC on or before the respective Filing
      Deadline (a "Filing
      Failure")
      or (B)
      not declared effective by the SEC on or before the respective Effectiveness
      Deadline (an "Effectiveness
      Failure");
      (ii)
      on any day after the Effective Date sales of all of the Registrable Securities
      required to be included on such Registration Statement cannot be made (other
      than during an Allowable Grace Period (as defined in Section 3(r)) pursuant
      to
      such Registration Statement or otherwise (including, without limitation, because
      of a failure to keep such Registration Statement effective, to disclose such
      information as is necessary for sales to be made pursuant to such Registration
      Statement, to register a sufficient number of shares of Common Stock or to
      maintain the listing of the Common Stock) (a "Maintenance
      Failure");
      or
      (iii) the Seller shall fail to cause the Company to comply with Section 8 below
      (a "Public
      Information Failure");
      then,
      as partial relief for the damages to any holder by reason of any such delay
      in
      or reduction of its ability to sell the underlying shares of Common Stock (which
      remedy shall not be exclusive of any other remedies available at law or in
      equity), the Seller shall pay to each holder of Registrable Securities relating
      to such Registration Statement an amount in cash equal to one and one-half
      a
      percent (1.5%) of the aggregate Purchase Price (as such term is defined in
      the
      Securities Purchase Agreement) of such Investor's Registrable Securities
      (whether or not included in such Registration Statement) paid to the Seller
      at
      the time of such failure, on each of the following dates: (i) the day of a
      Filing Failure; (ii) the day of an Effectiveness Failure; (iii) the initial
      day
      of a Maintenance Failure; (iv) the initial day of a Public Information Failure;
      (v) on every thirtieth day after the day of a Filing Failure and thereafter
      (pro
      rated for periods totaling less than thirty days) until such Filing Failure
      is
      cured; (vi) on every thirtieth day after the day of an Effectiveness Failure
      and
      thereafter (pro rated for periods totaling less than thirty days) until such
      Effectiveness Failure is cured; (vii) on every thirtieth day after the initial
      day of a Maintenance Failure and thereafter (pro rated for periods totaling
      less
      than thirty days) until such Maintenance Failure is cured; and (viii) on every
      thirtieth day after the initial day of a Public Information Failure and
      thereafter (pro rated for periods totaling less than thirty days) until such
      Public Information Failure is cured. The payments to which a holder shall be
      entitled pursuant to this Section 2(g) are referred to herein as "Registration
      Delay Payments."
      Registration Delay Payments shall be paid on the earlier of (I) the dates set
      forth above and (II) the third Business Day after the event or failure giving
      rise to the Registration Delay Payments is cured. In the event the Seller fails
      to make Registration Delay Payments in a timely manner, such Registration Delay
      Payments shall bear interest at the rate of one percent (1.0%) per month
      (prorated for partial months) until paid in full. 

     

    h. Assignment
      of Registration Rights.
      The
      Seller hereby transfers and assigns any and all registration rights in and
      to
      the Common Shares to the Buyers. The Seller shall use his best efforts as a
      party to any registration rights agreement or understanding and as the holder
      of
      such shares to enforce such registration rights to the benefit of the Buyers.
      Without limiting the foregoing, the Seller shall also take such actions as
      are
      necessary or appropriate to cause the Company to take the actions set forth
      in
      this Agreement with respect to registration of the Common Shares; provided,
      that
      the Seller shall take such actions only his capacity as a party to any
      registration rights agreement with respect to the Common Shares and as a
      shareholder of the Company, but not as an officer or director of the Company.
      The Buyers acknowledge and agree that the Seller shall not be obligated to
      take
      any action with respect hereto in his capacity as Chief Executive Officer and/or
      director of the Company. The parties further acknowledge and agree that the
      Seller shall be entitled to abstain from any vote of directors of the Company
      regarding the matters set forth herein.

     

    
      
         

      

      
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    3. Related
      Obligations.

     

    At
      such
      time as the Seller is obligated to cause the Company to file a Registration
      Statement with the SEC pursuant to Section 2(a), 2(b), 2(e) or 2(f), the Seller
      shall cause the Company to use its best efforts to effect the registration
      of
      the Registrable Securities in accordance with the intended method of disposition
      thereof and, pursuant thereto, the Seller shall cause the Company to have the
      following obligations:

     

    a. The
      Seller shall cause the Company to promptly prepare and file with the SEC a
      Registration Statement with respect to the Registrable Securities and use its
      reasonable best efforts to cause such Registration Statement relating to the
      Registrable Securities to become effective as soon as practicable after such
      filing (but in no event later than the Effectiveness Deadline). The Seller
      shall
      cause the Company to keep each Registration Statement effective pursuant to
      Rule
      415 at all times until the earlier of (i) the date as of which the Investors
      may
      sell all of the Registrable Securities covered by such Registration Statement
      without restriction pursuant to Rule 144 and without the requirement to be
      in
      compliance with Rule 144(c)(1) (or any successor thereto) promulgated under
      the
      1933 Act or (ii) the date on which the Investors shall have sold all of the
      Registrable Securities covered by such Registration Statement (the "Registration
      Period").
      The
      Seller shall cause the Company to ensure that each Registration Statement
      (including any amendments or supplements thereto and prospectuses contained
      therein) shall not contain any untrue statement of a material fact or omit
      to
      state a material fact required to be stated therein, or necessary to make the
      statements therein (in the case of prospectuses, in the light of the
      circumstances in which they were made) not misleading. The term "best efforts"
      shall mean, among other things, that the Seller shall cause the Company to
      submit to the SEC, within two (2) Business Days after the later of the date
      that
      (i) the Company learns that no review of a particular Registration Statement
      will be made by the staff of the SEC or that the staff has no further comments
      on a particular Registration Statement, as the case may be, and (ii) the
      approval of Legal Counsel pursuant to Section 3(c) (which approval is
      immediately sought), a request for acceleration of effectiveness of such
      Registration Statement to a time and date not later than two (2) Business Days
      after the submission of such request. The Seller shall cause the Company to
      respond in writing to comments made by the SEC in respect of a Registration
      Statement as soon as practicable, but in no event later than fifteen (15) days
      after the receipt of comments by or notice from the SEC that an amendment is
      required in order for a Registration Statement to be declared
      effective.

     

    b. The
      Seller shall cause the Company to prepare and file with the SEC such amendments
      (including post-effective amendments) and supplements to a Registration
      Statement and the prospectus used in connection with such Registration
      Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
      under the 1933 Act, as may be necessary to keep such Registration Statement
      effective at all times during the Registration Period, and, during such period,
      comply with the provisions of the 1933 Act with respect to the disposition
      of
      all Registrable Securities of the Company covered by such Registration Statement
      until such time as all of such Registrable Securities shall have been disposed
      of in accordance with the intended methods of disposition by the seller or
      sellers thereof as set forth in such Registration Statement. In the case of
      amendments and supplements to a Registration Statement which are required to
      be
      filed pursuant to this Agreement (including pursuant to this Section 3(b))
      by
      reason of the Company filing a report on Form 10-Q, Form 10-QSB, Form 10-K,
      Form
      10-KSB or any analogous report under the Securities Exchange Act of 1934, as
      amended (the "1934
      Act"),
      the
      Seller shall cause the Company to have incorporated such report by reference
      into such Registration Statement, if applicable, or shall file such amendments
      or supplements with the SEC on the same day on which the 1934 Act report is
      filed which created the requirement for the Company to amend or supplement
      such
      Registration Statement.

     

    
      
         

      

      
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    c. The
      Seller shall cause the Company to (A) permit Legal Counsel to review and comment
      upon (i) a Registration Statement at least five (5) Business Days prior to
      its
      filing with the SEC and (ii) all amendments and supplements to all Registration
      Statements (except for Annual Reports on Form 10-K or Form 10-KSB, Quarterly
      Reports on Form 10-Q or Form 10-QSB, Current Reports on Form 8-K, and any
      similar or successor reports) within a reasonable number of days prior to their
      filing with the SEC, and (B) not file any Registration Statement or amendment
      or
      supplement thereto in a form to which Legal Counsel reasonably objects. The
      Seller shall cause the Company to not submit a request for acceleration of
      the
      effectiveness of a Registration Statement or any amendment or supplement thereto
      without the prior approval of Legal Counsel, which consent shall not be
      unreasonably withheld. The Seller shall cause the Company to furnish to Legal
      Counsel, without charge, (i) copies of any correspondence from the SEC or the
      staff of the SEC to the Company or its representatives relating to any
      Registration Statement, (ii) promptly after the same is prepared and filed
      with
      the SEC, one copy of any Registration Statement and any amendment(s) thereto,
      including financial statements and schedules, all documents incorporated therein
      by reference, if requested by an Investor, and all exhibits and (iii) upon
      the
      effectiveness of any Registration Statement, one copy of the prospectus included
      in such Registration Statement and all amendments and supplements thereto.
      The
      Seller shall cause the Company to reasonably cooperate with Legal Counsel in
      performing obligations the Seller is required to cause the Company to perform
      pursuant to this Section 3. 

     

    d. The
      Seller shall cause the Company to furnish to each Investor whose Registrable
      Securities are included in any Registration Statement, without charge, (i)
      promptly after the same is prepared and filed with the SEC, at least one copy
      of
      such Registration Statement and any amendment(s) thereto, including financial
      statements and schedules, all documents incorporated therein by reference,
      if
      requested by an Investor, all exhibits and each preliminary prospectus, (ii)
      upon the effectiveness of any Registration Statement, ten (10) copies of the
      prospectus included in such Registration Statement and all amendments and
      supplements thereto (or such other number of copies as such Investor may
      reasonably request) and (iii) such other documents, including copies of any
      preliminary or final prospectus, as such Investor may reasonably request from
      time to time in order to facilitate the disposition of the Registrable
      Securities owned by such Investor.

     

    
      
         

      

      
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    e. The
      Seller shall cause the Company to use its reasonable best efforts to (i)
      register and qualify, unless an exemption from registration and qualification
      applies, the resale by Investors of the Registrable Securities covered by a
      Registration Statement under such other securities or "blue sky" laws of all
      applicable jurisdictions in the United States, (ii) prepare and file in those
      jurisdictions, such amendments (including post-effective amendments) and
      supplements to such registrations and qualifications as may be necessary to
      maintain the effectiveness thereof during the Registration Period, (iii) take
      such other actions as may be necessary to maintain such registrations and
      qualifications in effect at all times during the Registration Period, and (iv)
      take all other actions reasonably necessary or advisable to qualify the
      Registrable Securities for sale in such jurisdictions; provided, however, that
      the Company shall not be required in connection therewith or as a condition
      thereto to (x) qualify to do business in any jurisdiction where it would not
      otherwise be required to qualify but for this Section 3(e), (y) subject itself
      to general taxation in any such jurisdiction, or (z) file a general consent
      to
      service of process in any such jurisdiction. The Seller shall cause the Company
      to promptly notify Legal Counsel and each Investor who holds Registrable
      Securities of the receipt by the Company of any notification with respect to
      the
      suspension of the registration or qualification of any of the Registrable
      Securities for sale under the securities or "blue sky" laws of any jurisdiction
      in the United States or its receipt of actual notice of the initiation or
      threatening of any proceeding for such purpose.

     

    f. The
      Seller shall cause the Company to notify Legal Counsel and each Investor in
      writing of the happening of any event, as promptly as practicable after becoming
      aware of such event, as a result of which the prospectus included in a
      Registration Statement, as then in effect, includes an untrue statement of
      a
      material fact or omission to state a material fact required to be stated therein
      or necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading (provided that in no event shall
      such
      notice contain any material, nonpublic information), and, subject to Section
      3(r), promptly prepare a supplement or amendment to such Registration Statement
      to correct such untrue statement or omission and deliver ten (10) copies of
      such
      supplement or amendment to Legal Counsel and each Investor (or such other number
      of copies as Legal Counsel or such Investor may reasonably request). The Seller
      shall cause the Company to also promptly notify Legal Counsel and each Investor
      in writing (i) when a prospectus or any prospectus supplement or post-effective
      amendment has been filed, and when a Registration Statement or any
      post-effective amendment has become effective (notification of such
      effectiveness shall be delivered to Legal Counsel and each Investor by facsimile
      or e-mail on the same day of such effectiveness and by overnight mail), (ii)
      of
      any request by the SEC for amendments or supplements to a Registration Statement
      or related prospectus or related information, and (iii) of the Company's
      reasonable determination that a post-effective amendment to a Registration
      Statement would be appropriate. 

     

    g. The
      Seller shall cause the Company to use its reasonable best efforts to prevent
      the
      issuance of any stop order or other suspension of effectiveness of a
      Registration Statement, or the suspension of the qualification of any of the
      Registrable Securities for sale in any jurisdiction and, if such an order or
      suspension is issued, to obtain the withdrawal of such order or suspension
      at
      the earliest possible moment and to notify Legal Counsel and each Investor
      who
      holds Registrable Securities being sold of the issuance of such order and the
      resolution thereof or its receipt of actual notice of the initiation or threat
      of any proceeding for such purpose.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    h. If
      any
      Investor is required under applicable securities laws to be described in the
      Registration Statement as an underwriter or
      an
      Investor believes that it could reasonably be deemed to be an underwriter of
      Registrable Securities,
      at the
      reasonable request of such Investor, the Seller shall cause the Company to
      furnish to such Investor, on the date of the effectiveness of the Registration
      Statement and thereafter from time to time on such dates as an Investor may
      reasonably request (i) a letter, dated such date, from the Company's independent
      certified public accountants in form and substance as is customarily given
      by
      independent certified public accountants to underwriters in an underwritten
      public offering, addressed to the Investors, and (ii) an opinion, dated as
      of
      such date, of counsel representing the Company for purposes of such Registration
      Statement, in form, scope and substance as is customarily given in an
      underwritten public offering, addressed to the Investors.

     

    i. If
      any
      Investor is required under applicable securities laws to be described in the
      Registration Statement as an underwriter or an Investor believes that it could
      reasonably be deemed to be an underwriter of Registrable Securities, the Seller
      shall cause the Company to make available for inspection by (i) such Investor,
      (ii) Legal Counsel and (iii) one firm of accountants or other agents retained
      by
      the Investors (collectively, the "Inspectors"),
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the "Records"),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company's
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree
      to
      hold in strict confidence and shall not make any disclosure (except to an
      Investor) or use of any Record or other information which the Company determines
      in good faith to be confidential, and of which determination the Inspectors
      are
      so notified, unless (a) the disclosure of such Records is necessary to avoid
      or
      correct a misstatement or omission in any Registration Statement or is otherwise
      required under the 1933 Act, (b) the release of such Records is ordered pursuant
      to a final, non-appealable subpoena or order from a court or government body
      of
      competent jurisdiction, or (c) the information in such Records has been made
      generally available to the public other than by disclosure in violation of
      this
      Agreement. Each Investor agrees that it shall, upon learning that disclosure
      of
      such Records is sought in or by a court or governmental body of competent
      jurisdiction or through other means, give prompt notice to the Company and
      allow
      the Company, at its expense, to undertake appropriate action to prevent
      disclosure of, or to obtain a protective order for, the Records deemed
      confidential. Nothing herein (or in any other confidentiality agreement between
      the Company and any Investor) shall be deemed to limit the Investors' ability
      to
      sell Registrable Securities in a manner which is otherwise consistent with
      applicable laws and regulations.

     

    j. The
      Seller shall and shall cause the Company to hold in confidence and not make
      any
      disclosure of information concerning an Investor provided to the Company unless
      (i) disclosure of such information is necessary to comply with federal or state
      securities laws, (ii) the disclosure of such information is necessary to avoid
      or correct a misstatement or omission in any Registration Statement, (iii)
      the
      release of such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      agreement. The Seller agrees that he shall cause the Company to, upon learning
      that disclosure of such information concerning an Investor is sought in or
      by a
      court or governmental body of competent jurisdiction or through other means,
      give prompt written notice to such Investor and allow such Investor, at the
      Investor's expense, to undertake appropriate action to prevent disclosure of,
      or
      to obtain a protective order for, such information.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    k. The
      Seller shall cause the Company to use its best efforts either to (i) cause
      all
      of the Registrable Securities covered by a Registration Statement to be listed
      on each securities exchange on which securities of the same class or series
      issued by the Company are then listed, if any, if the listing of such
      Registrable Securities is then permitted under the rules of such exchange or
      (ii) secure the inclusion for quotation of all of the Registrable Securities
      on
      The NASDAQ Global Select Market or (iii) if, despite the Company's best efforts,
      the Company is unsuccessful in satisfying the preceding clauses (i) and (ii),
      to
      secure the inclusion for quotation on The NASDAQ Global Market, the New York
      Stock Exchange, The NASDAQ Capital Market or the American Stock Exchange for
      such Registrable Securities and, without limiting the generality of the
      foregoing, to use its best efforts to arrange for at least two market makers
      to
      register with the Financial
      Industry Regulatory Authority, Inc.
      ("FINRA")
      as
      such with respect to such Registrable Securities. The Seller shall, or shall
      cause the Company to, pay all fees and expenses in connection with satisfying
      its obligation under this Section 3(k).

     

    l. The
      Seller shall cause the Company to cooperate with the Investors who hold
      Registrable Securities being offered and, to the extent applicable, facilitate
      the timely preparation and delivery of certificates (not bearing any restrictive
      legend) representing the Registrable Securities to be offered pursuant to a
      Registration Statement and enable such certificates to be in such denominations
      or amounts, as the case may be, as the Investors may reasonably request and
      registered in such names as the Investors may request.

     

    m. If
      requested by an Investor, the Seller shall cause the Company to as soon as
      practicable (i) incorporate in a prospectus supplement or post-effective
      amendment such information as an Investor reasonably requests to be included
      therein relating to the sale and distribution of Registrable Securities,
      including, without limitation, information with respect to the number of
      Registrable Securities being offered or sold, the purchase price being paid
      therefor and any other terms of the offering of the Registrable Securities
      to be
      sold in such offering; (ii) make all required filings of such prospectus
      supplement or post-effective amendment after being notified of the matters
      to be
      incorporated in such prospectus supplement or post-effective amendment; and
      (iii) supplement or make amendments to any Registration Statement if reasonably
      requested by an Investor holding any Registrable Securities.

     

    n. The
      Seller shall cause the Company to use its reasonable best efforts to cause
      the
      Registrable Securities covered by a Registration Statement to be registered
      with
      or approved by such other governmental agencies or authorities as may be
      necessary to consummate the disposition of such Registrable
      Securities.

     

    o. The
      Seller shall cause the Company to make generally available to its security
      holders as soon as practical, but not later than ninety (90) days after the
      close of the period covered thereby, an earnings statement (in form complying
      with, and in the manner provided by, the provisions of Rule 158 under the 1933
      Act) covering a twelve-month period beginning not later than the first day
      of
      the Company's fiscal quarter next following the applicable Effective Date of
      a
      Registration Statement.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    p. The
      Seller shall cause the Company to otherwise use its best efforts to comply
      with
      all applicable rules and regulations of the SEC in connection with any
      registration hereunder.

     

    q. Within
      two (2) Business Days after a Registration Statement which covers Registrable
      Securities is ordered effective by the SEC, the Seller shall cause the Company
      to deliver, and shall cause legal counsel for the Company to deliver, to the
      transfer agent for such Registrable Securities (with copies to the Investors
      whose Registrable Securities are included in such Registration Statement)
      confirmation that such Registration Statement has been declared effective by
      the
      SEC in the form attached hereto as Exhibit
      A.

     

    r. Notwithstanding
      anything to the contrary herein, at any time after the Effective Date, the
      Company may delay the disclosure of material, non-public information concerning
      the Company the disclosure of which at the time is not, in the good faith
      opinion of the Board of Directors of the Company and its counsel, in the best
      interest of the Company and, in the opinion of counsel to the Company, otherwise
      required (a "Grace
      Period");
      provided, that the Seller shall (i) notify the Investors in writing of the
      existence of material, non-public information giving rise to a Grace Period
      (provided that in each notice the Seller shall not, and shall cause the Company
      not to, disclose the content of such material, non-public information to the
      Investors) and the date on which the Grace Period will begin, and
      (ii) notify the Investors in writing of the date on which the Grace Period
      ends; and, provided further, that no Grace Period shall exceed five (5)
      consecutive days and during any three hundred sixty five (365) day period such
      Grace Periods shall not exceed an aggregate of twenty (20) days and the first
      day of any Grace Period must be at least five (5) Trading Days after the last
      day of any prior Grace Period (each, an "Allowable
      Grace Period").
      For
      purposes of determining the length of a Grace Period above, the Grace Period
      shall begin on and include the date the Investors receive the notice referred
      to
      in clause (i) and shall end on and include the later of the date the Investors
      receive the notice referred to in clause (ii) and the date referred to in such
      notice. The provisions of Section 3(g) hereof shall not be applicable during
      the
      period of any Allowable Grace Period. Upon expiration of the Grace Period,
      the
      Seller shall again be bound by the first sentence of Section 3(f) with respect
      to the information giving rise thereto unless such material, non-public
      information is no longer applicable. Notwithstanding anything to the contrary,
      the Seller shall cause the Company to cause its transfer agent to deliver
      unlegended shares of Common Stock to a transferee of an Investor in accordance
      with the terms of the Securities Purchase Agreement in connection with any
      sale
      of Registrable Securities with respect to which an Investor has entered into
      a
      contract for sale, prior to the Investor's receipt of the notice of a Grace
      Period and for which the Investor has not yet settled. 

     

    s. The
      Seller shall cause the Company not to, and shall cause the Company's
      Subsidiaries and affiliates not to, identify any Buyer as an underwriter in
      any
      public disclosure or filing with the SEC or any Principal Market (as
      defined in the Securities Purchase Agreement) or
      Eligible Market and any Buyer being deemed an underwriter by the SEC shall
      not
      relieve the Seller of any obligations it has under this Agreement or any other
      Transaction Document (as
      defined in the Securities Purchase Agreement); provided,
      however,
      that
      the foregoing shall not prohibit the Company from including the disclosure
      found
      in the "Plan of Distribution" section attached hereto as Exhibit
      B
      in the
      Registration Statement.
      

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    4. Obligations
      of the Investors.

     

    a. At
      least
      five (5) Business Days prior to the first anticipated filing date of a
      Registration Statement, the Seller shall cause the Company to notify each
      Investor in writing of the information the Company requires from each such
      Investor if such Investor elects to have any of such Investor's Registrable
      Securities included in such Registration Statement. It shall be a condition
      precedent to the obligations of the Seller to cause the Company to complete
      the
      registration pursuant to this Agreement with respect to the Registrable
      Securities of a particular Investor that such Investor shall furnish to the
      Company such information regarding itself, the Registrable Securities held
      by it
      and the intended method of disposition of the Registrable Securities held by
      it,
      as shall be reasonably required to effect and maintain the effectiveness of
      the
      registration of such Registrable Securities and shall execute such documents
      in
      connection with such registration as the Company may reasonably request.

     

    b. Each
      Investor, by such Investor's acceptance of the Registrable Securities, agrees
      to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of any Registration Statement hereunder, unless
      such Investor has notified the Company in writing of such Investor's election
      to
      exclude all of such Investor's Registrable Securities from such Registration
      Statement.

     

    c. Each
      Investor agrees that, upon receipt of any notice from the Company or Seller
      of
      the happening of any event of the kind described in Section 3(g) or the first
      sentence of 3(f), such Investor will immediately discontinue disposition of
      Registrable Securities pursuant to any Registration Statement(s) covering such
      Registrable Securities until such Investor's receipt of the copies of the
      supplemented or amended prospectus contemplated by Section 3(g) or the first
      sentence of 3(f) or receipt of notice that no supplement or amendment is
      required. Notwithstanding anything to the contrary, the Seller shall cause
      the
      Company to cause its transfer agent to deliver unlegended shares of Common
      Stock
      to a transferee of an Investor in accordance with the terms of the Securities
      Purchase Agreement in connection with any sale of Registrable Securities with
      respect to which an Investor has entered into a contract for sale prior to
      the
      Investor's receipt of a notice from the Company of the happening of any event
      of
      the kind described in Section 3(g) or the first sentence of 3(f) and for which
      the Investor has not yet settled.

     

    d. Each
      Investor covenants and agrees that it will comply with the prospectus delivery
      requirements of the 1933 Act as applicable to it or an exemption therefrom
      in
      connection with sales of Registrable
      Securities pursuant to the Registration Statement.

     

    5. Expenses
      of Registration.

     

    All
      reasonable expenses, other than underwriting discounts and commissions, incurred
      in connection with registrations, filings or qualifications pursuant to Sections
      2 and 3, including, without limitation, all registration, listing and
      qualifications fees, printers and accounting fees, and fees and disbursements
      of
      counsel for the Company shall be paid by the Seller, if not paid by the Company.
      The Seller shall also reimburse the Investors for the fees and disbursements
      of
      Legal Counsel in connection with registration, filing or qualification pursuant
      to Sections 2 and 3 of this Agreement which amount shall be limited to $7,500
      for
      each
      such registration, filing or qualification.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    6. Indemnification.

     

    In
      the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

     

    a. To
      the
      fullest extent permitted by law, the Seller will, and hereby does, indemnify,
      hold harmless and defend each Investor, the directors, officers, members,
      partners, employees, agents, representatives of, and each Person, if any, who
      controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
      an "Indemnified
      Person"),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys' fees, amounts paid in settlement or
      expenses, joint or several, (collectively, "Claims")
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto ("Indemnified
      Damages"),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other "blue sky" laws of any jurisdiction
      in
      which Registrable Securities are offered ("Blue
      Sky Filing"),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading, (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      preliminary prospectus if used prior to the effective date of such Registration
      Statement, or contained in the final prospectus (as amended or supplemented,
      if
      the Company files any amendment thereof or supplement thereto with the SEC)
      or
      the omission or alleged omission to state therein any material fact necessary
      to
      make the statements made therein, in light of the circumstances under which
      the
      statements therein were made, not misleading, (iii) any violation or alleged
      violation by the Company of the 1933 Act, the 1934 Act, any other law,
      including, without limitation, any state securities law, or any rule or
      regulation thereunder relating to the offer or sale of the Registrable
      Securities pursuant to a Registration Statement or (iv) any violation of this
      Agreement (the matters in the foregoing clauses (i) through (iv) being,
      collectively, "Violations").
      Subject to Section 6(c), the Seller shall reimburse the Indemnified Persons,
      promptly as such expenses are incurred and are due and payable, for any legal
      fees or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
      out of or based upon a Violation which occurs in reliance upon and in conformity
      with information furnished in writing to the Company by such Indemnified Person
      for such Indemnified Person expressly for use in connection with the preparation
      of the Registration Statement or any such amendment thereof or supplement
      thereto, if such prospectus was timely made available by the Company pursuant
      to
      Section 3(d); and (ii) shall not apply to amounts paid in settlement of any
      Claim if such settlement is effected without the prior written consent of the
      Seller, which consent shall not be unreasonably withheld or delayed. Such
      indemnity shall remain in full force and effect regardless of any investigation
      made by or on behalf of the Indemnified Person and shall survive the transfer
      of
      the Registrable Securities by the Investors pursuant to Section 9.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    b. In
      connection with any Registration Statement in which an Investor is
      participating, each such Investor agrees to severally and not jointly indemnify,
      hold harmless and defend, to the same extent and in the same manner as is set
      forth in Section 6(a), the Seller and the Company, each of its directors, each
      of its officers who signs the Registration Statement and each Person, if any,
      who controls the Company within the meaning of the 1933 Act or the 1934 Act
      (each, an "Indemnified
      Party"),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
      or
      Indemnified Damages arise out of or are based upon any Violation, in each case
      to the extent, and only to the extent, that such Violation occurs in reliance
      upon and in conformity with written information furnished to the Company by
      such
      Investor expressly for use in connection with such Registration Statement;
      and,
      subject to Section 6(c), such Investor shall reimburse the Indemnified Party,
      promptly as such expenses are incurred and are due and payable, for any legal
      or
      other expenses reasonably incurred by an Indemnified Party in connection with
      investigating or defending any such Claim; provided, however, that the indemnity
      agreement contained in this Section 6(b) and the agreement with respect to
      contribution contained in Section 7 shall not apply to amounts paid in
      settlement of any Claim if such settlement is effected without the prior written
      consent of such Investor, which consent shall not be unreasonably withheld
      or
      delayed; provided, further, however, that the Investor shall be liable under
      this Section 6(b) for only that amount of a Claim or Indemnified Damages as
      does
      not exceed the net proceeds to such Investor as a result of the sale of
      Registrable Securities pursuant to such Registration Statement. Such indemnity
      shall remain in full force and effect regardless of any investigation made
      by or
      on behalf of such Indemnified Party and shall survive the transfer of the
      Registrable Securities by the Investors pursuant to Section 9. 

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    c. Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses of
      not
      more than one counsel for all such Indemnified Person or Indemnified Party
      to be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the indemnifying party, the representation by such counsel of the
      Indemnified Person or Indemnified Party and the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      Indemnified Person or Indemnified Party and any other party represented by
      such
      counsel in such proceeding. In the case of an Indemnified Person, legal counsel
      referred to in the immediately preceding sentence shall be selected by the
      Investors holding at least a majority in
      interest of the Registrable Securities included in the Registration Statement
      to
      which the Claim relates. The Indemnified Party or Indemnified Person shall
      cooperate reasonably with the indemnifying party in connection with any
      negotiation or defense of any such action or Claim by the indemnifying party
      and
      shall furnish to the indemnifying party all information reasonably available
      to
      the Indemnified Party or Indemnified Person which relates to such action or
      Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
      Person fully apprised at all times as to the status of the defense or any
      settlement negotiations with respect thereto. No indemnifying party shall be
      liable for any settlement of any action, claim or proceeding effected without
      its prior written consent, provided, however, that the indemnifying party shall
      not unreasonably withhold, delay or condition its consent. No indemnifying
      party
      shall, without the prior written consent of the Indemnified Party or Indemnified
      Person, consent to entry of any judgment or enter into any settlement or other
      compromise which does not include as an unconditional term thereof the giving
      by
      the claimant or plaintiff to such Indemnified Party or Indemnified Person of
      a
      release from all liability in respect to such Claim or litigation, and such
      settlement shall not include any admission as to fault on the part of the
      Indemnified Party. Following indemnification as provided for hereunder, the
      indemnifying party shall be subrogated to all rights of the Indemnified Party
      or
      Indemnified Person with respect to all third parties, firms or corporations
      relating to the matter for which indemnification has been made. The failure
      to
      deliver written notice to the indemnifying party within a reasonable time of
      the
      commencement of any such action shall not relieve such indemnifying party of
      any
      liability to the Indemnified Person or Indemnified Party under this Section
      6,
      except to the extent that the indemnifying party is prejudiced in its ability
      to
      defend such action.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    d. The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

     

    e. The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of
      action or similar right of the Indemnified Party or Indemnified Person against
      the indemnifying party or others, and (ii) any liabilities the indemnifying
      party may be subject to pursuant to the law.

     

    7. Contribution.

     

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no Person involved
      in the sale of Registrable Securities which Person is guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in
      connection with such sale shall be entitled to contribution from any Person
      involved in such sale of Registrable Securities who was not guilty of fraudulent
      misrepresentation; and (ii) contribution by any seller of Registrable Securities
      shall be limited in amount to the amount of net proceeds received by such seller
      from the sale of such Registrable Securities pursuant to such Registration
      Statement.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    8. Reports
      Under the 1934 Act.
      

     

    Until
      the
      later of (i) the date twelve (12) months after the date the last of the Common
      Shares are issued to the Investors pursuant to the Securities Purchase Agreement
      and (ii) the date on which the Investors may sell all of the Registrable
      Securities without restriction pursuant to Rule 144 and without the requirement
      to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated
      under the 1933 Act without the Company's compliance with subsections (a) through
      (c) below, with a view to making available to the Investors the benefits of
      Rule
      144 promulgated under the 1933 Act or any other similar rule or regulation
      of
      the SEC that may at any time permit the Investors to sell securities of the
      Company to the public without registration ("Rule
      144"),
      the
      Seller shall cause the Company to:

     

    a. make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144; 

     

    b. file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the 1933 Act and the 1934 Act so long as the Company remains
      subject to such requirements and the filing of such reports and other documents
      is required for the applicable provisions of Rule 144; and

     

    c. furnish
      to each Investor so long as such Investor owns Registrable Securities, promptly
      upon request, (i) a written statement by the Company, if true, that it has
      complied with the reporting requirements of Rule 144, the 1933 Act and the
      1934
      Act, (ii) a copy of the most recent annual or quarterly report of the Company
      and such other reports and documents so filed by the Company, and (iii) such
      other information as may be reasonably requested to permit the Investors to
      sell
      such securities pursuant to Rule 144 without registration.

     

    9. Assignment
      of Registration Rights.
      

     

    The
      rights under this Agreement shall be automatically assignable by the Investors
      to any transferee of all or any portion of such Investor's Registrable
      Securities if: (i) the Investor agrees in writing with the transferee or
      assignee to assign such rights, and a copy of such agreement is furnished to
      the
      Seller within a reasonable time after such assignment; (ii) the Seller is,
      within a reasonable time after such transfer or assignment, furnished with
      written notice of (a) the name and address of such transferee or assignee,
      and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned; (iii) immediately following such transfer or assignment
      the further disposition of such securities by the transferee or assignee is
      restricted under the 1933 Act or applicable state securities laws; (iv) at
      or
      before the time the Seller receives the written notice contemplated by clause
      (ii) of this sentence the transferee or assignee agrees in writing with the
      Seller to be bound by all of the provisions contained herein; and (v) such
      transfer shall have been made in accordance with the applicable requirements
      of
      the Securities Purchase Agreement.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    10. Amendment
      of Registration Rights.

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Seller and the Required
      Holders. Any amendment or waiver effected in accordance with this Section 10
      shall be binding upon each Investor and the Seller. No such amendment shall
      be
      effective to the extent that it applies to less than all of the holders of
      the
      Registrable Securities. No consideration shall be offered or paid to any Person
      to amend or consent to a waiver or modification of any provision of this
      Agreement unless the same consideration also is offered to all of the parties
      to
      this Agreement.

     

    11. Miscellaneous.

     

    a. A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities. If the Company receives
      conflicting instructions, notices or elections from two or more Persons with
      respect to the same Registrable Securities, the Seller shall cause the Company
      to act upon the basis of instructions, notice or election received from such
      record owner of such Registrable Securities.

     

    b. Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one Business Day after deposit with a nationally recognized overnight
      delivery service, in each case properly addressed to the party to receive the
      same. The addresses and facsimile numbers for such communications shall
      be:

     

                    If
      to the Seller:

    

    Wo
      Hing
      Li

    c/o
      China
      Precision Steel, Inc.

    8th
      Floor,
      Teda Building

    87
      Wing
      Lok Street

    Sheung
      Wan

    Hong
      Kong, The People's Republic of China 

    Telephone:
       +852-2543-8223

    Facsimile:
       +021-59940382

    

    with
      a
      copy to (for information purposes only) to:

                            

    Guzov
      Ofsink, LLC

    600
      Madison Avenue, 14th Floor

    New
      York,
      New York 10022

    Attention:
      Darren L. Ofsink, Esq.

    Telephone:
      (212) 371-8008

    Facsimile:
      (212) 688-7273

    Attention:
      Darren L. Ofsink, Esq.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    If
      to the
      Transfer Agent:

     

    Corporate
      Stock Transfer

    3300
      Cherry Creek Drive South, Suite 430

    Denver,
      Colorado 80209

    Telephone:
      (303) 282-4800

    Facsimile:
      (303) 282-5800

    Attention:
      Carylyn
      Bell

    

    If
      to
      Legal Counsel:

    

    Schulte 
      Roth
& Zabel LLP

    919
      Third
      Avenue

    New
      York,
      New York 10022

    Telephone:
      (212) 756-2000

    Facsimile:
      (212) 593-5955

    Attention:
      Eleazer N. Klein, Esq.

    

    If
      to a
      Buyer, to its address and facsimile number set forth on the Schedule of Buyers
      attached hereto, with copies to such Buyer's representatives as set forth on
      the
      Schedule of Buyers, or to such other address and/or facsimile number and/or
      to
      the attention of such other Person as the recipient party has specified by
      written notice given to each other party five (5) days prior to the
      effectiveness of such change. Written confirmation of receipt (A) given by
      the
      recipient of such notice, consent, waiver or other communication, (B)
      mechanically or electronically generated by the sender's facsimile machine
      containing the time, date, recipient facsimile number and an image of the first
      page of such transmission or (C) provided by a courier or overnight courier
      service shall be rebuttable evidence of personal service, receipt by facsimile
      or receipt from a nationally recognized overnight delivery service in accordance
      with clause (i), (ii) or (iii) above, respectively.

     

    c. Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    d. All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdictions) that would
      cause the application of the laws of any jurisdictions other than the State
      of
      New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in The City of New York, Borough of
      Manhattan, for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein, and
      hereby irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such suit, action or proceeding is brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      The Seller hereby appoints Guzov Ofsink, LLC, with offices at 600 Madison
      Avenue, 14th Floor, New York, New York 10022, as its agent for service of
      process. EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    e. If
      any
      provision of this Agreement is prohibited by law or otherwise determined to
      be
      invalid or unenforceable by a court of competent jurisdiction, the provision
      that would otherwise be prohibited, invalid or unenforceable shall be deemed
      amended to apply to the broadest extent that it would be valid and enforceable,
      and the invalidity or unenforceability of such provision shall not affect the
      validity of the remaining provisions of this Agreement so long as this Agreement
      as so modified continues to express, without material change, the original
      intentions of the parties as to the subject matter hereof and the prohibited
      nature, invalidity or unenforceability of the provision(s) in question does
      not
      substantially impair the respective expectations or reciprocal obligations
      of
      the parties or the practical realization of the benefits that would otherwise
      be
      conferred upon the parties. The parties will endeavor in good faith negotiations
      to replace the prohibited, invalid or unenforceable provision(s) with a valid
      provision(s), the effect of which comes as close as possible to that of the
      prohibited, invalid or unenforceable provision(s).

     

    f. This
      Agreement, the other Transaction Documents (as defined in the Securities
      Purchase Agreement) and the instruments referenced herein and therein constitute
      the entire agreement among the parties hereto with respect to the subject matter
      hereof and thereof. There are no restrictions, promises, warranties or
      undertakings, other than those set forth or referred to herein and therein.
      This
      Agreement, the other Transaction Documents and the instruments referenced herein
      and therein supersede all prior agreements and understandings among the parties
      hereto with respect to the subject matter hereof and thereof.

     

    g. Subject
      to the requirements of Section 9, this Agreement shall inure to the benefit
      of
      and be binding upon the permitted successors and assigns of each of the parties
      hereto.

     

    h. The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    i. This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

     

    j. Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents as any other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    k. All
      consents and other determinations required to be made by the Investors pursuant
      to this Agreement shall be made, unless otherwise specified in this Agreement,
      by the Required Holders.

     

    l. The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party. 

     

    m. This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

     

    n. The
      obligations of each Investor hereunder are several and not joint with the
      obligations of any other Investor, and no provision of this Agreement is
      intended to confer any obligations on any Investor vis-à-vis any other Investor.
      Nothing contained herein, and no action taken by any Investor pursuant hereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated herein.

     

    *
      * * * *
      *

     

    [Signature
      Page Follows]

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Seller have caused their respective signature page to this
      Registration Rights Agreement to be duly executed as of the date first written
      above.

     

    
      	 	
              Seller:

            
	 	 	 
	 	 	 
	 	 	
              Wo
                Hing Li

            
	 	 	 

    

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Seller have caused their respective signature page to this
      Registration Rights Agreement to be duly executed as of the date first written
      above.

     

    
      	 	
              BUYERS:

            
	 	 
	 	
              HUDSON
                BAY FUND, LP

            
	 	 	 
	 	 	 
	 	
              By:

            	
               

            
	 	 	
              Name:  
                

              Title: 

            

    

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Seller have caused their respective signature page to this
      Registration Rights Agreement to be duly executed as of the date first written
      above.

     

    
      	 	
              BUYERS:

            
	 	 
	 	
              HUDSON
                BAY OVERSEAS FUND, LTD

            
	 	 	 
	 	 	 
	 	
              By:

            	
               

            
	 	 	
              Name:  
                

              Title: 

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Seller have caused their respective signature page to this
      Registration Rights Agreement to be duly executed as of the date first written
      above.

     

    
      	 	
              BUYERS:

            
	 	 
	 	
              ENABLE
                GROWTH PARTNERS LP

            
	 	 	 
	 	 	 
	 	
              By:

            	
               

            
	 	 	
              Name:  
                

              Title: 

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    SCHEDULE
      OF BUYERS

    

    
      	
               

              Buyer
                

            	 	
              Buyer
                Address

              and
                Facsimile Number

            	 	
              Buyer's
                Representative's Address 

              and
                Facsimile Number

            
	
               

              Hudson
                Bay Fund, LP

            	 	
              120
                Broadway, 40th Floor

              New
                York, New York 10271

              Attention:
                Yoav Roth

              Facsimile:
                212-571-1279

              Telephone:
                212-571-1244

              Residence:
                United States

              E-mail:
                investments@hudsonbaycapital.com

            	 	
              Schulte
                Roth & Zabel LLP

              919
                Third Avenue

              New
                York, NY 10022

              Attn:
                Eleazer Klein, Esq. 

              Facsimile:
                (212) 593-5955

              Telephone:
                (212) 756-2000

            
	 	 	 	 	 
	
              Hudson
                Bay Overseas Fund, Ltd.

            	 	
              120
                Broadway, 40th Floor

              New
                York, New York 10271

              Attention:
                Yoav Roth

              Facsimile:
                212-571-1279

              Telephone:
                212-571-1244

              E-mail:
                investments@hudsonbaycapital.com

            	 	
              Schulte
                Roth & Zabel LLP

              919
                Third Avenue

              New
                York, NY 10022

              Attn:
                Eleazer Klein, Esq. 

              Facsimile:
                (212) 593-5955

              Telephone:
                (212) 756-2000

            
	 	 	 	 	 
	
              Enable
                Growth Partners LP

            	 	
              One
                Ferry Building, Suite 255

              San
                Francisco, CA 94111

              Attention:
                Adam Epstein

              Facsimile:
                415-677-1580

              Telephone
                415-677-1579

              Email:
                aepstein@enablecapital.com

            	 	 

    

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

    

    FORM
      OF NOTICE OF EFFECTIVENESS

     

    OF
      REGISTRATION STATEMENT

     

    Corporate
      Stock Transfer

    3300
      Cherry Creek Drive South, Suite 430

    Denver,
      Colorado 80209

    Attention:
      Carylyn Bell

     

    Re:     
      China
      Precision Steel, Inc.

     

    Ladies
      and Gentlemen:

     

     

    [We
      are][I am] counsel to China Precision Steel, Inc., a Delaware corporation (the
      "Company"),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the "Securities
      Purchase Agreement")
      entered into by and among the Wo Hing Li (the "Seller")
      and
      the buyers named therein (collectively, the "Holders")
      pursuant to which the Seller issued to the Holders shares (the "Common
      Shares")
      the
      Company's common stock, par value $0.001 per share (the "Common
      Stock").
      Pursuant to the Securities Purchase Agreement, the Company has entered into
      a
      Registration Rights Agreement with the Holders (the "Registration
      Rights Agreement")
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement), under
      the Securities Act of 1933, as amended (the "1933
      Act").
      In
      connection with the Company's obligations under the Registration Rights
      Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
      on Form S-3 (File No. 333-_____________) (the "Registration
      Statement")
      with
      the Securities and Exchange Commission (the "SEC")
      relating to the Registrable Securities which names each of the Holders as a
      selling stockholder thereunder.

     

    In
      connection with the foregoing, [we][I] advise you that a member of the SEC's
      staff has advised [us][me] by telephone that the SEC has entered an order
      declaring the Registration Statement effective under the 1933 Act at
[ENTER
      TIME OF EFFECTIVENESS]
      on
[ENTER
      DATE OF EFFECTIVENESS]
      and
      [we][I] have no knowledge, after telephonic inquiry of a member of the SEC's
      staff, that any stop order suspending its effectiveness has been issued or
      that
      any proceedings for that purpose are pending before, or threatened by, the
      SEC
      and the Registrable Securities are available for resale under the 1933 Act
      pursuant to the Registration Statement.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    This
      letter shall serve as our standing instruction to you that the shares of Common
      Stock are freely transferable by the Holders pursuant to the Registration
      Statement. You need not require further letters from us to effect any future
      legend-free issuance or reissuance of shares of Common Stock to the Holders.
      

     

    
      	Very
              truly yours,
	 
	[ISSUER'S
              COUNSEL]
	 
	
              By:

            	
               

            

    

    

    CC: [LIST
      NAMES OF HOLDERS]

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    EXHIBIT
      B

    

    SELLING
      STOCKHOLDERS

     

    The
      shares of common stock being offered by the selling stockholders are those
      previously issued to the Selling Stockholders. For additional information
      regarding the issuances of common stock, see "Private Placement of Common
      Shares" above. We are registering the shares of common stock in order to permit
      the selling stockholders to offer the shares for resale from time to time.
      Except for the ownership of the shares of common stock issued pursuant to the
      Securities Purchase Agreement, the selling stockholders have not had any
      material relationship with us within the past three years.

     

    The
      table
      below lists the selling stockholders and other information regarding the
      beneficial ownership of the shares of common stock by each of the selling
      stockholders. The second column lists the number of shares of common stock
      beneficially owned by each selling shareholder, based on its ownership of the
      shares of common stock, as of ________, 2007.

     

    The
      third
      column lists the shares of common stock being offered by this prospectus by
      the
      selling stockholders.

     

    In
      accordance with the terms of a registration rights agreement with the selling
      stockholders, this prospectus generally covers the resale of at least 100%
      of
      the the number of shares of common stock issued pursuant to the Securities
      Purchase Agreement. The fourth column assumes the sale of all of the shares
      offered by the selling stockholders pursuant to this prospectus.

     

    The
      selling stockholders may sell all, some or none of their shares in this
      offering. See "Plan of Distribution."

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
              Name
                of Selling Stockholder

            	 	
              Number
                of Shares of 

              Common
                Stock Owned 

              Prior
                to Offering

            	 	
              Maximum
                Number of Shares 

              of
                Common Stock to be Sold 

              Pursuant
                to this Prospectus

            	 	
              Number
                of Shares of 

              Common
                Stock Owned 

              After
                Offering

            
	
               

              Hudson
                Bay Fund LP (1)

            	 	 	 	 	 	
              0

            
	
               

              Hudson
                Bay Overseas Fund LTD (2)

            	 	 	 	 	 	 
	
               

              Enable
                Growth Partners LP (3)

            	 	 	 	 	 	 

    

     

    (1)
      Sander Gerber, Yoav Roth and John Doscas share voting and investment power
      over
      these securities. Each of Sander Gerber, Yoav Roth and John Doscas disclaim
      beneficial ownership over the securities held by Hudson Bay Fund LP. The selling
      stockholder acquired the securities offered for its own account in the ordinary
      course of business, and at the time it acquired the securities, it had no
      agreements, plans or understandings, directly or indirectly to distribute the
      securities. 

    

    (2)
      Sander Gerber, Yoav Roth and John Doscas share voting and investment power
      over
      these securities. Each of Sander Gerber, Yoav Roth and John Doscas disclaim
      beneficial ownership over the securities held by Hudson Bay Overseas Fund LTD.
      The selling stockholder acquired the securities offered for its own account
      in
      the ordinary course of business, and at the time it acquired the securities,
      it
      had no agreements, plans or understandings, directly or indirectly to distribute
      the securities.

    

    (3)

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    PLAN
      OF DISTRIBUTION

     

    We
      are
      registering the shares of common stock previously issued to the selling
      stockholders to permit the resale of these shares of common stock by the holders
      of the shares from time to time after the date of this prospectus. We will
      not
      receive any of the proceeds from the sale by the selling stockholders of the
      shares of common stock. We will bear all fees and expenses incident to our
      obligation to register the shares of common stock.

     

    The
      selling stockholders may sell all or a portion of the shares of common stock
      beneficially owned by them and offered hereby from time to time directly or
      through one or more underwriters, broker-dealers or agents. If the shares of
      common stock are sold through underwriters or broker-dealers, the selling
      stockholders will be responsible for underwriting discounts or commissions
      or
      agent's commissions. The shares of common stock may be sold in one or more
      transactions at fixed prices, at prevailing market prices at the time of the
      sale, at varying prices determined at the time of sale, or at negotiated prices.
      These sales may be effected in transactions, which may involve crosses or block
      transactions, 

     

    · on
      any
      national securities exchange or quotation service on which the securities may
      be
      listed or quoted at the time of sale;

     

    · in
      the
      over-the-counter market;

     

    · in
      transactions otherwise than on these exchanges or systems or in the
      over-the-counter market;

     

    · through
      the writing of options, whether such options are listed on an options exchange
      or otherwise;

     

    · ordinary
      brokerage transactions and transactions in which the broker-dealer solicits
      purchasers;

     

    · block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but
      may position and resell a portion of the block as principal to facilitate the
      transaction;

     

    · purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

     

    · an
      exchange distribution in accordance with the rules of the applicable
      exchange;

     

    · privately
      negotiated transactions;

     

    · short
      sales;

     

    · sales
      pursuant to Rule 144;

     

    · broker-dealers
      may agree with the selling securityholders to sell a specified number of such
      shares at a stipulated price per share;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    · a
      combination of any such methods of sale; and

     

    · any
      other
      method permitted pursuant to applicable law.

     

    If
      the
      selling stockholders effect such transactions by selling shares of common stock
      to or through underwriters, broker-dealers or agents, such underwriters,
      broker-dealers or agents may receive commissions in the form of discounts,
      concessions or commissions from the selling stockholders or commissions from
      purchasers of the shares of common stock for whom they may act as agent or
      to
      whom they may sell as principal (which discounts, concessions or commissions
      as
      to particular underwriters, broker-dealers or agents may be in excess of those
      customary in the types of transactions involved). In connection with sales
      of
      the shares of common stock or otherwise, the selling stockholders may enter
      into
      hedging transactions with broker-dealers, which may in turn engage in short
      sales of the shares of common stock in the course of hedging in positions they
      assume. The selling stockholders may also sell shares of common stock short
      and
      deliver shares of common stock covered by this prospectus to close out short
      positions and to return borrowed shares in connection with such short sales.
      The
      selling stockholders may also loan or pledge shares of common stock to
      broker-dealers that in turn may sell such shares.

     

    The
      selling stockholders may pledge or grant a security interest in some or all
      of
      the shares of common stock owned by them and, if they default in the performance
      of their secured obligations, the pledgees or secured parties may offer and
      sell
      the shares of common stock from time to time pursuant to this prospectus or
      any
      amendment to this prospectus under Rule 424(b)(3) or other applicable provision
      of the Securities Act of 1933, as amended, amending, if necessary, the list
      of
      selling stockholders to include the pledgee, transferee or other successors
      in
      interest as selling stockholders under this prospectus. The selling stockholders
      also may transfer and donate the shares of common stock in other circumstances
      in which case the transferees, donees, pledgees or other successors in interest
      will be the selling beneficial owners for purposes of this
      prospectus.

     

    The
      selling stockholders and any broker-dealer participating in the distribution
      of
      the shares of common stock may be deemed to be "underwriters" within the meaning
      of the Securities Act, and any commission paid, or any discounts or concessions
      allowed to, any such broker-dealer may be deemed to be underwriting commissions
      or discounts under the Securities Act. At the time a particular offering of
      the
      shares of common stock is made, a prospectus supplement, if required, will
      be
      distributed which will set forth the aggregate amount of shares of common stock
      being offered and the terms of the offering, including the name or names of
      any
      broker-dealers or agents, any discounts, commissions and other terms
      constituting compensation from the selling stockholders and any discounts,
      commissions or concessions allowed or reallowed or paid to
      broker-dealers.

     

    Under
      the
      securities laws of some states, the shares of common stock may be sold in such
      states only through registered or licensed brokers or dealers. In addition,
      in
      some states the shares of common stock may not be sold unless such shares have
      been registered or qualified for sale in such state or an exemption from
      registration or qualification is available and is complied with.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    There
      can
      be no assurance that any selling stockholder will sell any or all of the shares
      of common stock registered pursuant to the registration statement, of which
      this
      prospectus forms a part.

     

    The
      selling stockholders and any other person participating in such distribution
      will be subject to applicable provisions of the Securities Exchange Act of
      1934,
      as amended, and the rules and regulations thereunder, including, without
      limitation, Regulation M of the Exchange Act, which may limit the timing of
      purchases and sales of any of the shares of common stock by the selling
      stockholders and any other participating person. Regulation M may also restrict
      the ability of any person engaged in the distribution of the shares of common
      stock to engage in market-making activities with respect to the shares of common
      stock. All of the foregoing may affect the marketability of the shares of common
      stock and the ability of any person or entity to engage in market-making
      activities with respect to the shares of common stock.

     

    We
      will
      pay all expenses of the registration of the shares of common stock pursuant
      to
      the registration rights agreement, estimated to be
      $[     ] in total, including, without limitation,
      Securities and Exchange Commission filing fees and expenses of compliance with
      state securities or "blue sky" laws; provided, however, that a selling
      stockholder will pay all underwriting discounts and selling commissions, if
      any.
      We will indemnify the selling stockholders against liabilities, including some
      liabilities under the Securities Act, in accordance with the registration rights
      agreements, or the selling stockholders will be entitled to contribution. We
      may
      be indemnified by the selling stockholders against civil liabilities, including
      liabilities under the Securities Act, that may arise from any written
      information furnished to us by the selling stockholder specifically for use
      in
      this prospectus, in accordance with the related registration rights agreement,
      or we may be entitled to contribution.

     

    Once
      sold
      under the registration statement, of which this prospectus forms a part, the
      shares of common stock will be freely tradable in the hands of persons other
      than our affiliates.

     

    
      
         

      

      
        3Unassociated Document

    

      Execution
        Copy

    

    WAIVER

     

    WAIVER,
      dated as of March 14, 2008 (this “Waiver”),
      to
      the Credit Agreement referred to below, among Griffon Corporation (the
“Company”),
      Telephonics Corporation (the “Subsidiary
      Borrower”
and,
      together with the Company, collectively, the “Borrowers”),
      each
      of the Lenders identified under the caption “LENDERS” on the signature pages
      hereto and JPMorgan Chase Bank, N.A. (“JPMCB”),
      as
      administrative agent for the Lenders (in such capacity, the “Administrative
      Agent”).

     

    The
      Borrowers, the Lenders party thereto (individually, a “Lender”
and,
      collectively, the “Lenders”)
      and
      the Administrative Agent are parties to an Amended and Restated Credit Agreement
      dated as of December 20, 2006 (as amended by Amendment No. 1 thereto, dated
      as
      of December 31, 2007, the “Credit Agreement”).
      The
      Borrowers and the Lenders wish to waive certain provisions of the Credit
      Agreement, and accordingly, the parties hereto hereby agree as
      follows:

     

    Section
      1.    Definitions.
      Capitalized terms used in this Waiver and not otherwise defined herein are
      used
      herein as defined in the Credit Agreement.

     

    Section
      2.    Waiver.
      Subject
      to the terms and conditions set forth herein, the Lenders hereby waive, until
      April 30, 2008, any Default or Event of Default which may arise under paragraph
      (d) of Article VIII of the Credit Agreement as a result of a breach by the
      Company of Section 7.11 (a) or Section 7.11(b) of the Credit Agreement for
      the
      period of four consecutive fiscal quarters of the Company ending on March 31,
      2008.

     

    Section
      3.    Terms.
      The waiver granted herein is limited strictly to its terms, shall apply only
      to
      the sections of the Credit Agreement described above and with respect to the
      period specified herein, and shall not extend to or affect any of the Borrowers’
other obligations contained in the Credit Agreement or any other Loan Document
      or to any periods other than the period specified herein. The Lenders shall
      have
      no further obligation to issue any additional waiver.

     

    Section
      4.    Representations
      and Warranties.
      Each
      Borrower represents and warrants (as to itself and each of its Subsidiaries)
      to
      the Administrative Agent and Lenders that (a) the representations and warranties
      of the Borrowers set forth in the Credit Agreement and of each Loan Party in
      each of the other Loan Documents to which it is a party, are true and correct
      in
      all material respects on and as of the date hereof (or, if any such
      representation or warranty is expressly stated to have been made as of a
      specific date, as of such specific date) and (b) after giving effect to this
      Waiver, no Default shall have occurred and be continuing under the Credit
      Agreement.

     

    Section
      5.    Conditions
      Precedent to Effectiveness.
      The
      waiver set forth in Section 2 hereof shall become effective, as of the date
      hereof, upon receipt by the Administrative Agent of one or more counterparts
      of
      this Waiver executed by each Borrower and the Required Lenders.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Section
      6.    Confirmation
      of Security Documents.
      The
      Company, by its execution and delivery of this Waiver, hereby confirms and
      ratifies that all of its obligations under the Pledge Agreement and the grant
      of
      the security interests thereunder shall continue in full force and effect for
      the benefit of the Administrative Agent and the Lenders with respect to the
      Credit Agreement.

     

    Section
      7.    Expenses.
      The Borrowers agree to reimburse the Administrative Agent for out-of-pocket
      expenses in connection with this Waiver, including the reasonable fees, charges
      and disbursements of Simpson Thacher & Bartlett LLP, counsel for the
      Administrative Agent. 

     

    Section
      8.    Counterparts.
      This Waiver may be executed in any number of counterparts, all of which taken
      together shall constitute one and the same agreement and any of the parties
      hereto may execute this Waiver by signing any such counterpart.

     

    Section
      9.    Governing
      Law. This Waiver shall be governed by, and construed in accordance with, the
      law
      of the State of New York.

     

    Section
      10.    Miscellaneous.
      Except
      as expressly set forth herein, this Waiver shall not by implication or otherwise
      limit, impair, constitute a waiver of, or otherwise affect the rights and
      remedies of the Administrative Agent, the Lenders or the Borrowers under the
      Credit Agreement or any other Loan Document, and shall not alter, modify, amend
      or in any way affect any of the terms, conditions, obligations, covenants or
      agreements contained in the Credit Agreement or any other Loan Document, all
      of
      which are ratified and affirmed in all respects and shall continue in full
      force
      and effect. After the date this Waiver becomes effective, any reference to
      the
      Credit Agreement shall mean the Credit Agreement as modified hereby. This Waiver
      shall constitute a “Loan Document” for all purposes of the Credit Agreement and
      the other Loan Documents.

     

    [remainder
      of page intentionally left blank]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      WITNESS
        WHEREOF, the parties hereto have caused this Waiver to be duly executed and
        delivered as of the day
        and year
        first above written.

    

    
      	 	 	 
	 	GRIFFON
              CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/
              Patrick L. Alesia
	 	
              
Name:
              Patrick L. Alesia
	 	Title:
              Chief Financial Officer

    

     

    
      	 	 	 
	 	TELEPHONICS
              CORPORATION 
	 
 	 
 	 
 
	 	By:  	/s/ Donald C. Pastor
	 	
              
Name:
              Donald C. Pastor
	 	Title:
              Ex. V.P. Operations & CFO

    

    
      
        Signature
          Page

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    LENDERS

     

    
      
        	 	 	 
	 	
                JPMORGAN
                  CHASE BANK, N.A., 

                individually
                  and as Administrative Agent 

              
	 
 	 
 	 
 
	 	By:  	/s/ Tara Lynn Moore
	 	
                
Name:
                Tara Lynn Moore
	 	Title:
                Vice President

      

       

      
        	 	 	 
	 	BANK
                OF AMERICA,
                N.A.
	 
 	 
 	 
 
	 	By:  	/s/ Steven J. Melicharek
	 	
                
Name:
                Steven J. Melicharek
	 	Title:Senior
                Vice
                President

      

       

      
        	 	 	 
	 	HSBC
                BANK USA,
                NATIONAL ASSOCIATION
	 
 	 
 	 
 
	 	By:  	/s/ Christopher J. Mendelsohn
	 	
                
Name:
                Christopher J. Mendelsohn
	 	Title:
                First Vice President

      

       

      
        	 	 	 
	 	U.S.
                BANK NATIONAL
                ASSOCIATION
	 
 	 
 	 
 
	 	By:  	/s/ Patrick McGraw
	 	
                
Name:
                Patrick McGraw
	 	Title:
                Vice President

      

       

      
        	 	 	 
	 	MANUFACTURERS
                AND
                TRADERS TRUST COMPANY
	 
 	 
 	 
 
	 	By:  	/s/ Brian Stone 
	 	
                
Name:
                Brian Stone 
	 	Title: 
                Administrative Vice President

      

    

    
      
        Signature
          Page

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	
              CAPITAL
                ONE, N.A.

              Successor by merger to North Fork
                Bank

            
	 
 	 
 	 
 
	 	By:  	/s/ Enrico Panno
	 	
              
                

              

              Name: Enrico Panno

              Title:  Vice
                President

            

    

     

    
      
        Signature
          Page

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