CHINA PRECISION STEEL, INC. EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “ Agreement ”) is entered into as of January 1, 2007 (the “ Effective Date ”), by and between CHINA PRECISION STEEL, INC., a Delaware corporation (along with its successors and assigns, the “ Company ”), and WO HING LI   (“ Executive ”).

WHEREAS, the Company desires to continue to employ Executive, and Executive desires to continue his employment with the Company, on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the Company and Executive agree as follows:

1.            Employment .

(a)            Term .  Subject to the terms hereof, Executive’s employment hereunder shall commence as of the Effective Date and continue until terminated by Executive or by the Company pursuant to Section 3 of the Agreement (such period, the “ Employment Period ”).

(b)            Position and Duties .  During the Employment Period, Executive will serve as the Company’s Chief Executive Officer and President, and Executive shall report directly to the Company’s Board of Directors   (the “ Board ”) and any committees thereof.  Executive will have the responsibilities, duties and authority commensurate with the position of Chief Executive Officer and President, and Executive will perform such other services of an executive nature as may be prescribed from time to time by the Board.  During the Employment Period, Executive shall devote his full business time and efforts to the performance of his duties hereunder.  For the duration of the Employment Period, Executive agrees not to actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior written approval of the Board, which approval will not be unreasonably withheld; provided, however, that Executive may, without the approval of the Board, serve in any capacity with any civic, educational or charitable organization, subject to Executive’s obligations under this Agreement.

During the Employment Period, upon and subject to proper election and appointment by the shareholders of the Company, Executive will serve as a member of the Company’s Board until such time as Executive resigns or is properly removed as a member of the Board in accordance with the Company’s Articles of Incorporation and/or By-laws.  Compensation, if any, fees and/or benefits paid to Executive for service as a member of the Board and any committee thereof shall be established by the Compensation Committee of the Board (the “ Compensation Committee ”) from time to time.

2.            Compensation .

(a)            Base Salary .  During the Employment Period, the Company will pay Executive a base salary at the annual rate of One Hundred and Forty Thousand Dollars ($140,000), which amount will be reviewed annually and subject to adjustment in the good faith discretion of the Board (or the Compensation Committee), including without limitation, discretionary cost of living adjustments (as adjusted from time to time, the “ Base Salary ”).  The Base Salary will be payable in substantially equal installments in accordance with the Company’s payroll practices as in effect from time to time.

(b)            Annual Bonus .  During the Employment Period, based on Executive’s performance relative to fixed targets set by the Compensation Committee in its sole discretion, and subject to the overall performance of the Company, Executive will be eligible to receive annual incentive bonuses, in the form of cash or equity securities of the Company as may be determined by the Compensation Committee from time to time.

(c)            Vacation .  During the Employment Period, Executive will be entitled to three weeks paid vacation in each calendar year (to be taken at such times and in such number of days as Executive and the Company shall mutually agree), in accordance with the Company’s policies for its senior executives as in effect from time to time.  Any accrued unused vacation may be carried over from one year to the following year, provided that no more than five weeks vacation may be carried over at any time.

(d)            Benefits .  During the Employment Period, Executive (and his eligible dependents) will be entitled to participate in the same manner as the Company’s other senior executives in any employee benefit plans which the Company provides or may establish for the benefit of its senior executives generally; provided that the Company reserves the right to terminate or amend any of its employee benefit plans and programs at any time.

(e)            Reimbursement of Expenses .  During the Employment Period, the Company will reimburse Executive for all out-of-pocket business expenses that are incurred by him in furtherance of the Company’s business in accordance with the Company’s policies with respect thereto as in effect from time to time.

3.            Termination . Executive’s employment hereunder will terminate upon the first to occur of the following:

(a)           Executive’s death;

(c)           Termination by the Company for Cause (as defined below);

(d)           Termination by the Company without Cause; or

For purposes of this Agreement, the following terms shall have the following meanings:

“ Cause ” means: (i) Executive’s conviction of, or plea of nolo contendere to, a felony, or a crime involving dishonesty, disloyalty or moral turpitude;   (ii) Executive’s willful disloyalty or deliberate dishonesty; (iii) the commission by Executive of an act of fraud or embezzlement against the Company; (iv) Executive’s failure to use his good faith efforts to perform in all material respects such duties as are contemplated by this Agreement, or to follow any lawful direction of the Board or any committee thereof; (v) Executive’s gross negligence in the performance of his duties hereunder; or (vi) a material breach by Executive of any provision of this Agreement or of any Company policy, which breach is not cured within thirty (30) days after delivery to Executive by the Company of written notice of such breach.  Any determination of “Cause” shall be made in good faith by a majority vote of the Board in its sole discretion.

“ Disability ” means Executive’s mental, physical or other disability, the condition of which renders him incapable of performing his obligations under this Agreement for a period of ninety (90) consecutive days or an aggregate of one hundred and twenty (120) days (whether or not consecutive) in any 12-month period.  Any determination of “Disability” shall be made in good faith by a majority vote of the Board in its sole discretion.

“ Good Reason ” means, without Executive’s consent: (i) a material diminution in Executive’s Base Salary; (ii) a material diminution in Executive’s responsibilities, duties or authority as the Chief Executive Officer and President of the Company, which causes Executive’s position with the Company to have less responsibility or authority than Executive’s position immediately prior to such change, provided that any such change is not in connection with the termination of Executive’s employment with the Company; or (iii) a material breach by the Company of the terms or conditions of this Agreement; provided however, if any of the conditions described in subsections (i)-(iii) above occur, Executive is required to provide written notice of such condition to the Board within sixty (60) days of the initial occurrence of the condition, and, following such written notice,  the Company shall then have thirty (30) days to remedy such condition, before the existence of any such condition (which is not otherwise remedied by the Company) shall constitute “ Good Reason .”

4.            Termination Procedures; Effect of Termination .

(a)            Notice of Termination . Any termination of Executive’s employment by the Company or Executive (other than termination on account of Executive’s death) shall be communicated by written notice (a “ Notice of Termination ”) to the other party hereto in accordance with Section 7(a) below, which notice shall indicate the specific termination provision in Section 3 of this Agreement relied upon and, if termination is by the Company for Cause or by Executive for Good Reason, the specific reasons therefore.

(b)            Date of Termination .  As used herein, “ Date of Termination ” shall mean: (i) if Executive’s employment is terminated as a result of Executive’s death, the date of Executive’s death; (ii) if Executive’s employment is terminated by reason of Executive’s Disability, on the date Notice of Termination is given or such later date specified in the Notice of Termination as the effective date of termination; (iii) if Executive’s employment is terminated by the Company for Cause, on the date Notice of Termination is given or such later date specified in the Notice of Termination as the effective date of termination; (iv) if Executive’s employment is terminated by the Company without Cause, such date which is specified in the Notice of Termination as the effective date of termination; and (v) if Executive’s employment is terminated by Executive, with or without Good Reason, such date which is specified in the Notice of Termination as the effective date of termination, which date shall be at least thirty (30) days, but not more than one hundred and eighty (180) days, following the date the Notice of Termination is given, unless the Company demands an earlier termination date in its sole discretion (which demand will not be deemed to be a termination “without Cause” for purposes of this Agreement).

(c)            Compensation Upon Termination .

(i)           At any time that Executive’s employment is terminated, the Company will pay the Accrued Obligations (as defined below) to Executive (or to his estate or legal representative, if applicable) on or promptly following the Date of Termination, in accordance with applicable law.  For purposes of this Agreement, “ Accrued Obligations ” means (A) the portion of Executive’s Base Salary as has accrued up through the Date of Termination which Executive has not yet been paid, (B) an amount equal to the value of Executive’s accrued unused vacation days, and (C) the amount of expenses incurred by Executive on behalf of the Company prior to the Date of Termination and not yet reimbursed as of such date.

(ii)           In addition to the Accrued Obligations, if Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason (and other than due to Executive’s death or Disability), then in exchange for Executive’s timely execution and delivery to the Company of the Release required by Section 4(d) below, the Company will pay to Executive a severance payment equal to six (6) months of his then current Base Salary, payable in six equal installments over the six-month period immediately following the Date of Termination in accordance with the Company’s regular payroll schedule.

(iii)           If within twelve (12) months following a Change of Control (as defined below), Executive's employment terminates without Cause or by Executive for Good Reason (and other than due to Executive’s death or Disability) (each, a “ Covered Termination ”), the vesting and exercisability of fifty percent (50%) of Executive's stock options that are unvested at the time of the Covered Termination shall accelerate and immediately become vested and exercisable as of such date, and such options shall be exercisable for a period of twelve (12) months following such date, but in no case beyond the relevant expiration dates of such options.  For purposes of this Agreement, a “ Change of Control ” shall be deemed to have occurred if (A) a tender offer shall be made and consummated for the ownership of more than 50% of the outstanding voting securities of the Company, (B) the Company shall be merged or consolidated with another corporation or entity and as a result of such merger or consolidation less than 50% of the outstanding voting securities of the surviving or resulting corporation or entity shall be owned in the aggregate by former shareholders of the Company, as the same shall have existing immediately prior to such merger or consolidation, (C) the Company shall sell, lease, or otherwise dispose of, all or substantially all of its assets to another corporation or entity which is not a wholly-owned subsidiary, or (D) a person, within the meaning of Section 3(a)(9) or Section 13(d)(3) (as in effect on the date hereof) of the Securities Exchange Act of 1934 shall acquire more than 50% of the outstanding voting securities of the Company (whether directly, indirectly, beneficially, or of record).

Notwithstanding any other provision with respect to the timing of payments under this Section 4(c) , if, at the time of Executive’s termination, Executive is deemed to be a “specified employee”  (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and any successor statute, regulations and guidance thereto (“ Section 409A ”) of the Company, then only to the extent necessary to comply with the requirements of Section 409A, any payments to which Executive may become entitled under this Section 4(c) which are subject to Section 409A (and not otherwise exempt from its application) will be withheld until the first business day of the seventh month following the Date of Termination, at which time Executive shall be paid an aggregate amount of any withheld payments otherwise due under this Section 4(c) , as applicable.

(d)            Release . Executive agrees, if his employment is terminated under circumstances entitling him to any payments under Section 4(c) of this Agreement, that in consideration for such payments as described in Section 4(c) , Executive will execute and promptly deliver to the Company, a general release (the “ Release ”) in form and substance acceptable to the Company,