FORM OF SUBSCRIPTION AGREEMENT
FORM
OF SUBSCRIPTION AGREEMENT
This
subscription agreement (this “Subscription
Agreement”)
is
dated November 1, 2007, by and between
_____________________ (“Buyer”)
and
China Precision Steel, Inc., a Colorado corporation (“Seller”),
whereby the parties agree as follows:
1. Subscription.
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a)
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Buyer
agrees to buy and the Seller agrees to sell and issue to Buyer
______________ shares of common stock, $.001 par value per share
(the
“Common
Stock”),
of the Seller (the “Shares”)
for a purchase price per Share of $6.75 (the “Purchase
Price”),
for an aggregate of $___________ (the “Aggregate
Purchase Price”),
together with warrants to purchase ____________ shares of Common
Stock
(the “Warrants”),
at an exercise price of $8.45 per share, subject to the terms and
conditions set forth therein in the form attached hereto as Exhibit
A.
The shares of Common Stock and Warrants to be issued to the Buyer
are
hereinafter referred to as the “Securities”).
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b)
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The
Securities and the shares of Common Stock underlying the Warrants
(the
"Warrant Shares") have been registered on a Form S-3, File No.
333-143454, which registration statement (the “Registration
Statement”)
has been declared effective by the Securities and Exchange Commission,
has
remained effective since such date and is effective on the date
hereof.
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c)
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On
November 6, 2007 (the “Closing
Date”),
subject to receipt by Tri-State Title (the “Escrow
Agent”)
of the Aggregate Purchase Price, Seller shall authorize Corporate
Stock
Transfer, Inc. (the “Transfer
Agent”)
to register the Securities in the name or names as designated by
Buyer and
to deliver such Securities by courier to the address designated
by Buyer
(the “Delivery
Instructions”),
in each case as set forth on the signature page hereto. The Securities
delivered on the Closing Date shall be unlegended and free of any
resale
restrictions. Prior to the Closing Date, the Buyer shall wire the
Aggregate Purchase Price to the Escrow Agent to hold in escrow
pursuant to
the wire instructions set forth on the signature page hereto.
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d)
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Seller
shall be entitled to receive the Aggregate Purchase Price from the
Escrow Agent only after the Escrow Agent has received written confirmation
(which confirmation may be electronic) from Buyer (the “Confirmation”)
that (i) Buyer has received the unlegended Securities from the Seller
in
accordance with the Delivery Instructions and (ii) if such Securities
have
been delivered to Buyer’s prime broker for deposit (the “Deposit”)
with The Depository Trust Company (“DTC”),
that such Securities have been so deposited. Buyer shall use
commercially reasonable efforts to provide
the Confirmation to the Escrow Agent as promptly as practicable,
but in no
event later than three
business
days,
after receipt and, if applicable, the Deposit of the unlegended Securities
(the “Confirmation
Date”).
If (i) by 5:00 pm, New York time, on the Confirmation Date, the
Confirmation has not been received by Seller and Buyer has not
unreasonably objected in writing to Seller as to the form and substance
of
the delivery of the unlegended Securities and (ii) Seller has otherwise
received written notice from the courier service that delivery has
been
effected in accordance with Delivery Instructions, then Seller and
the
Placement Agent shall be entitled to instruct the Escrow Agent to
release
the applicable Aggregate Purchase
Price.
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2. Seller
Representations, Warranties and Covenants.
The
Seller represents and warrants that:
(a)
It
has full right, power and authority to enter into this Subscription Agreement
and to perform all of its obligations hereunder;
(b)
This
Subscription Agreement has been duly authorized and executed by and constitutes
a valid and binding agreement of the Seller enforceable in accordance with
its
terms;
(c)
The
execution and delivery of this Subscription Agreement and the consummation
of
the transactions contemplated hereby do not conflict with or result in a breach
of (i) the Seller’s certificate of incorporation or by-laws, or (ii) any
material agreement to which the Seller is a party or by which any of its
property or assets is bound;
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(d)
Neither Seller nor any person acting on its behalf has provided Buyer or its
respective agents or counsel with any information that the Seller believes
constitutes material, non-public information except insofar as the existence
and
terms of the proposed transactions contemplated hereby may constitute such
information. Seller covenants and agrees that neither it nor any person acting
on its behalf will provide Buyer or its agents or counsel with any information
that Seller believes constitutes material non-public information, unless prior
thereto Buyer shall have executed a written agreement regarding the
confidentiality of such information;
(e)
Seller agrees to maintain the listing of the Common Stock upon each national
securities exchange and automated quotation system, if any, upon which its
shares of Common Stock are listed and shall maintain the effectiveness of the
Registration Statement, until the expiration of the Warrants. The Seller agrees
not to take any action which would be reasonably expected to result in the
delisting or suspension of the Common Stock on each national securities exchange
and automated quotation system, if any, upon which its shares of Common Stock
are listed.
(f)
Seller agrees that, if (i) all or any portion of the Warrants are exercised
at a
time when there is either an effective registration statement covering the
issuance or resale of the Warrant Shares or (ii) the Warrants are exercised
as a
“cashless exercise” (as defined in the Warrant), the shares of Common Stock to
be issued upon exercise of the Warrant shall be unlegended and free of resale
restrictions.
3. Buyer
Representations, Warranties and Acknowledgments.
The
Buyer represents and warrants that: (a) it has full right, power and authority
to enter into this Subscription Agreement and to perform all of its obligations
hereunder; (b) this Subscription Agreement has been duly authorized and executed
by and constitutes a valid and binding agreement of the Buyer enforceable in
accordance with its terms; (c) the execution and delivery of this Subscription
Agreement and the consummation of the transactions contemplated hereby do not
conflict with or result in a breach of (i) the Buyer’s certificate of
incorporation or by-laws, or (ii) any material agreement or any law or
regulation to which the Buyer is a party or by which any of its property or
assets is bound; and (d) prior to the execution hereof, Buyer has received
in
portable document format the Prospectus Supplement, and the Base Prospectus,
dated July 16, 2007, relating to the Securities.
4. Seller
Covenants.
The
Seller undertakes to the Buyer that:
(a)
no
later than 8:30
am,
New York time, on the business day following the execution of this
Subscription Agreement, Seller will issue a press release and file a current
report on Form 8-K with the Securities and Exchange Commission disclosing the
transactions contemplated by this Subscription Agreement and the Placement
Agency Agreement; and
(b)
no
later than one business day following the Closing Date, Seller will issue a
press release and file a current report on Form 8-K with the Securities and
Exchange Commission disclosing the closing of the transactions contemplated
by
this Subscription Agreement and the Placement Agency Agreement.
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5. Conditions
to Closing.
The
obligations of the Buyer hereunder shall be subject to (a) the accuracy of
the
representations and warranties on the part of the Seller set forth herein and
in
the Placement Agency Agreement, dated as of October 31, 2007, between the Seller
and Xxxx Capital Partners, LLC (the “Placement
Agency Agreement”),
in
each case as of the date hereof and as of the Closing Date as though then made,
(b) the timely performance by the Seller of its covenants and other obligations
hereunder and under the Placement Agency Agreement, and (iii) the satisfaction
by the Seller of all additional conditions as set forth in Section 5 of the
Placement Agency Agreement.
6. Third-Party
Beneficiary.
Seller
agrees that the Buyer shall be a third party beneficiary of the representations,
warranties and covenants given by the Seller in the Placement Agency Agreement.
7. Miscellaneous.
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a)
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This
Subscription Agreement constitutes the entire understanding and agreement
between the parties with respect to its subject matter and there
are no
agreements or understandings with respect to the subject matter hereof
which are not contained in this Subscription Agreement. This Subscription
Agreement may be modified only in writing signed by the parties
hereto.
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b)
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This
Subscription Agreement may be executed in any number of counterparts,
all
of which taken together shall constitute one and the same instrument
and
shall become effective when counterparts have been signed by each
party
and delivered to the other parties hereto, it being understood that
all
parties need not sign the same counterpart. Execution may be made
by
delivery by facsimile.
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c)
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The
provisions of this Subscription Agreement are severable and, in the
event
that any court or officials of any regulatory agency of competent
jurisdiction shall determine that any one or more of the provisions
or
part of the provisions contained in this Subscription shall, for
any
reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other
provision or part of a provision of this Subscription Agreement and
this
Subscription Agreement shall be reformed and construed as if such
invalid
or illegal or unenforceable provision, or part of such provision,
had
never been contained herein, so that such provisions would be valid,
legal
and enforceable to the maximum extent possible, so long as such
construction does not materially adversely effect the economic rights
of
either party hereto.
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d)
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All
communications hereunder,
except as may be otherwise specifically provided herein, shall be
in
writing and shall be mailed, hand delivered, sent by a recognized
overnight courier service such as Federal Express, or sent via facsimile
and confirmed by letter, to the party to whom it is addressed at
the
following addresses or such other address as such party may advise
the
other in writing:
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To
the
Seller: as set forth on the signature page hereto.
To
the
Buyer: as
set
forth on the signature page hereto.
All
notices hereunder shall be effective upon receipt by the party to which it
is
addressed.
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e)
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This
Agreement shall be governed by and interpreted in accordance with
the laws
of the State of New York for contracts to be wholly performed in
such
state and without giving effect to the principles thereof regarding
the
conflict of laws. To the extent determined by such court, the prevailing
party shall reimburse the other party for any reasonable legal fees
and
disbursements incurred in enforcement of, or protection of any of
its
rights under this Agreement and the
Warrant.
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*****
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If
the
foregoing correctly sets forth our agreement, please confirm this by signing
and
returning to us the duplicate copy of this letter.
| AGREED AND ACCEPTED: | ||
| SELLER: | ||
| CHINA PRECISION STEEL, INC. | ||
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| By: | ||
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Name: |
||
| Title: | ||
Address
for Notice:
0xx
Xxxxx,
Xxxx Xxxxxxxx
00
Xxxx
Xxx Xxxxxx
Xxxxxx
Xxx, Xxxx Xxxx
Facsimile:
x000-0000-0000
Attention:
Company Secretary
With
a
copy to:
K&L
Gates
Xxx
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000
Facsimile:
1-617-261-3175
Attention:
Xxxxxxx X. Xxxxx/Xxx Xxxx
Wire
Instructions for Escrow Account:
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Bank
Name:
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The
Bank of New York
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Bank
Address:
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0
Xxxx Xxxxxx, Xxx Xxxx, XX 00000
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ABA
Number:
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021
000 018
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Beneficiary:
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Pershing
LLC
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Beneficiary
A/C:
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890
051238 5
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Ultimate
beneficiary:
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Tri-State
Title & Escrow, LLC
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Ultimate
A/C:
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2S7-001214
(S not 5)
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Bank
Reference:
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China
Precision Steel
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| BUYER: | ||
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| By: | ||
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Name: |
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| Title: | ||
Name,
address and tax I.D. for registration of certificate(s):
Name:
_______________________________________
Address:
______________________________________
______________________________________
______________________________________
Tax
ID:
_______________________________________
Facsimile:
Attention:
Delivery
Instructions if Different from Above:
Name:
_______________________________________
Address:
_______________________________________
________________________________________
________________________________________
Attention:
_______________________________________
Contact
Telephone: ________________________________
Facsimile:
________________________________________
Email:
_________________________________________
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EXHIBIT
A
FORM
OF WARRANT
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