LIMITED STANDSTILL AGREEMENT
This
AGREEMENT (the “Agreement”) is made as of the ___ day of February, 2007, by the
signatories hereto (each a “Holder”), in connection with their respective
ownership of shares of China Precision Steel, Inc., a Colorado corporation
(the
“Company”). Terms not otherwise defined herein are defined in the Stock Purchase
Agreement among the Company and the Investors named therein; dated as of
February ___, 2007 (the “Stock Purchase Agreement”).
NOW
THEREFORE, for good and valuable consideration, the sufficiency and receipt
of
which consideration are hereby acknowledged, Holder agrees as
follows:
1. General.
(a) Holder
is
a director or executive officer of the Company and the beneficial owner of
the
amount of shares of the Common Stock, $0.001 par value, of the Company (“Common
Stock”) and rights to purchase Common Stock as designated on the signature page
hereto (collectively, the “Shares”).
(b) Holder
acknowledges that the Company has entered into or will enter into an agreement
with each Investor (a “Stock Purchase Agreement”) for the sale to the Investors
of an aggregate of up to $20,000,000 principal amount of Common Stock (the
“Offering”). Holder understands that, as a condition to Closing, the Investors
have required, and the Company has agreed to obtain, an agreement from the
Holder to refrain from selling any securities of the Company in accordance
with
the terms and conditions set forth herein.
2. Share
Restriction.
(a) Holder
hereby agrees that during the period commencing on the effective date of the
Registration Statement filed pursuant to Section 8 of the Stock Purchase
Agreement and ending on the date that is twelve (12) months thereafter (the
“Restriction Period”), the Holder will not offer, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
sell short, grant any option, right or warrant to purchase, lend or otherwise
transfer or dispose of any Shares or enter into any swap or other arrangement
that transfers any economic consequences of ownership of Shares other than
as
may be required in the ordinary course of the Company’s business; provided,
however, that 20% of the Holder’s Shares shall be released from and no longer
subject to the foregoing restrictions after ninety (90) calendar days following
the effective date of such Registration Statement, and further, provided, that
such 20% may, at Holder’s option, be registered for resale under the Securities
Act of 1933, as amended, on the Registration Statement to be filed pursuant
to
Section 8 of the Stock Purchase Agreement. The foregoing sentence shall not
apply with respect to an offer made to all shareholders of the Company in
connection with any merger, consolidation or similar transaction involving
the
Company. Holder further agrees that the Company is authorized to and the Company
agrees to place “stop orders” on its books to prevent any transfer of Shares
held by Holder in violation of this Agreement.
(b) Any
subsequent issuance to and/or acquisition of Common Stock or the right to
acquire Common Stock by Holder will be subject to the provisions of this
Agreement; provided, however, that the Restriction Period shall not be extended
hereby with respect thereto.
(c) Notwithstanding
the foregoing restrictions on transfer, the Holder may, at any time and from
time to time during the Restriction Period, transfer the Common Stock (i) as
bona fide gifts or transfers by will or intestacy, (ii) to any trust for the
direct or indirect benefit of the undersigned or the immediate family of the
Holder, provided that any such transfer shall not involve a disposition for
value, (iii) to a partnership which is the general partner of a partnership
of
which the Holder is a general partner, provided, that, in the case of any gift
or transfer described in clauses (i), (ii) or (iii), each donee or transferee
agrees in writing to be bound by the terms and conditions contained herein
in
the same manner as such terms and conditions apply to the undersigned. For
purposes hereof, “immediate family” means any relationship by blood, marriage or
adoption, not more remote than first cousin.
3. Miscellaneous.
(a) At
any
time, and from time to time, after the signing of this Agreement Holder will
execute such additional instruments and take such action as may be reasonably
requested by the Investors to carry out the intent and purposes of this
Agreement. The Company agrees not to take any action or allow any act to be
taken which would be inconsistent with this Agreement.
(b) This
Agreement shall be governed, construed and enforced in accordance with the
laws
of the State of New York without regard to conflicts of laws principles that
would result in the application of the substantive laws of another jurisdiction,
except to the extent that the securities laws of the state in which Holder
resides and federal securities laws may apply. Any proceeding brought to enforce
this Agreement may be brought exclusively in courts sitting in New York County,
New York.
(c) This
Agreement contains the entire agreement of the Holder with respect to the
subject matter hereof. This Agreement shall be binding upon Holder, its legal
representatives, successors, heirs and assigns.
(d) This
Agreement may be signed in counterpart and delivered by facsimile or electronic
transmission and such facsimile or electronic transmission signed and delivered
shall be enforceable.
IN
WITNESS WHEREOF, and intending to be legally bound hereby, Holder has executed
this Agreement as of the day and year first above written.
| HOLDER: | ||
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(Signature of Holder)
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| |
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(Print
name of Holder)
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Number
of shares of Common Stock
Beneficially
Owned
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Number
of options, warrants or other rights
to
acquire Common Stock
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COMPANY:
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| CHINA PRECISION STEEL, INC. | ||
| |
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| By: | ||
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Name: Leada Tak Xxx Xx |
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| Title: Chief Financial Officer | ||
