EXHIBIT 4.5
SHARE PLEDGE AGREEMENT
This SHARE PLEDGE AGREEMENT, dated as of August 30, 2006 (this
"Agreement"), is executed between HARBIN ELECTRIC, INC., a Nevada corporation
(the "Pledgor") and THE BANK OF NEW YORK, a New York banking corporation, in its
capacity as collateral agent (with its successors in such capacity, the
"Collateral Agent") for the benefit of the Secured Parties (as defined below).
WITNESSETH:
(1) The Pledgor issued its Guaranteed Senior Secured Floating Rate Notes
due 2012 (the "2012 Notes") and its Guaranteed Senior Secured Floating Rate
Notes due 2010 (the "2010 Notes" and together with the 2012 Notes, the "Notes")
pursuant to an indenture, dated as of the date hereof (as amended, restated,
supplemented or otherwise modified and in effect from time to time, the
"Indenture"), among the Pledgor, the Subsidiary Guarantor named therein and The
Bank of New York, a New York banking corporation, as trustee (in such capacity,
the "Trustee"), pursuant to which the Pledgor has guaranteed the payment of all
of the principal of and interest and premium due under the Notes;
(2) The Pledgor owns the issued and outstanding equity interests set forth
on Exhibit A attached hereto and made a part hereof (the "Equity Interests");
(3) The Pledgor is required to execute and deliver this Agreement pursuant
to the Indenture.
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit heretofore, now or hereafter
made to or for the benefit of the Secured Parties pursuant to the Indenture or
any other agreement, instrument or document executed pursuant to or in
connection therewith, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Pledgor and the Collateral
Agent hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, each capitalized term
used herein that is defined in the Indenture shall have the meaning specified
for such term in the Indenture. Unless otherwise defined herein or in the
Indenture, terms used in Article 8 or Article 9 of the Uniform Commercial Code
as in effect from time to time in the State of New York are used herein as
therein defined. In addition as used herein, "Secured Parties" means each of the
Collateral Agent, the Trustee, the holders of any Note (the "Holders") and the
holders of any other Liabilities.
2. Pledge. The Pledgor hereby pledges to the Collateral Agent, for the
benefit of the Secured Parties, and grants to the Collateral Agent for the
benefit of the Secured Parties, a security interest in, the following
(collectively, the "Pledged Collateral"):
(a) All of the right, title and interest of the Pledgor in the
Equity Interests, whether now existing or hereafter arising, and the
certificates representing the shares of such capital stock (such
now-existing shares being identified on Exhibit A attached hereto and made
a part hereof), all options and warrants for the purchase of additional
equity interests now or hereafter held in the name of the Pledgor (all of
said Equity Interests, options and warrants and all capital stock held in
the name of the Pledgor as a result of the exercise of such options or
warrants being hereinafter collectively referred to as the "Pledged
Stock"), herewith delivered to the Collateral Agent, accompanied by stock
powers in the form of Exhibit B attached hereto and made a part hereof
duly executed in blank, and all dividends, distributions, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, or in exchange for, any or all of the
Pledged Stock;
(b) All Additional Equity Interests (as defined below) from time to
time acquired by the Pledgor from the date hereof in any manner, and the
certificates representing such Additional Equity Interests (any such
additional equity interests shall constitute part of the Pledged Stock and
the Collateral Agent is irrevocably authorized to amend Exhibit A from
time to time to reflect such additional equity interests), and all
options, warrants, dividends, distributions, cash, instruments and other
rights and options from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Equity
Interest or Additional Equity Interests; and
(c) All proceeds of the foregoing.
3. Security for Liabilities. The Pledged Collateral secures the full and
prompt payment, performance and observance when due (whether at stated maturity,
by acceleration or otherwise) of (i) the payment of all of the principal of and
interest and premium, if any, on the Notes, (ii) all other Note Obligations, and
(iii) all obligations of the Pledgor under this Agreement (all such obligations
referred to in Clauses (i), (ii) and (iii) now or hereafter existing being
hereinafter collectively referred to as the "Liabilities").
4. Delivery of Pledged Collateral; Registration and Acknowledgments. All
certificates representing or evidencing the Pledged Collateral, if any, shall be
delivered to and held by or on behalf of the Collateral Agent, pursuant hereto
and shall be in suitable form for transfer by delivery and shall be accompanied
by duly executed instruments of transfer, powers, or assignments in blank as
appropriate (such instruments of transfer, powers, or assignments in blank,
being the "Powers"), all in form and substance satisfactory to the Collateral
Agent. After the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right, at any time in its discretion and
without notice to the Pledgor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Pledged Collateral,
subject only to the revocable rights specified in Sections 8 and 9. In addition,
the Collateral Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.
5. Pledged Collateral Adjustments. If, during the term of this Agreement:
(a) Any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of the Pledged Entity
(as defined below), or any option included within the Pledged Collateral
is exercised, or both, or
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(b) Any subscription warrants, shares, or any other rights or
options shall be issued in connection with the Pledged Collateral,
then all new, substituted and additional shares, warrants, shares, rights,
options or other securities, issued by reason of any of the foregoing, shall be
immediately delivered to and held by the Collateral Agent, under the terms of
this Agreement and shall constitute Pledged Collateral hereunder; provided,
however, that nothing contained in this Section 5 shall be deemed to permit any
distribution, issuance of additional shares, warrants, shares, rights or
options, reclassification, readjustment or other change in the capital structure
which is not expressly permitted in the Indenture nor to prohibit any such
distribution, issuance of additional equity interests, warrants, shares, rights
or options, reclassification, readjustment or other change in the capital
structure of such issuer which is expressly permitted in the Indenture.
6. Subsequent Changes Affecting Pledged Collateral. The Pledgor represents
and warrants that it has made its own arrangements for keeping itself informed
of changes or potential changes affecting the Pledged Collateral (including, but
not limited to, rights to convert, rights to subscribe, payment of
distributions, reorganization or other exchanges, offers to purchase and voting
rights), and the Pledgor agrees that none of the Collateral Agent or any of the
Secured Parties shall have any obligation to inform the Pledgor of any such
changes or potential changes or to take any action or omit to take any action
with respect thereto. The Collateral Agent may, after the occurrence and during
the continuance of an Event of Default, without notice and at its option,
transfer or register the Pledged Collateral or any part thereof into its or its
nominee's name with or without any indication that such Pledged Collateral is
subject to the security interest hereunder.
7. Representations and Warranties. The Pledgor represents and warrants as
follows:
(a) The Pledgor is the sole legal and beneficial owner of the Equity
Interests set forth opposite its name on Exhibit A attached hereto and
made a part hereof, free and clear of any Lien except for the Lien created
by this Agreement and Permitted Liens;
(b) All of the Pledged Stock has been duly authorized and validly
issued, is fully paid and non-assessable;
(c) All of the Pledged Stock is presently represented by the
certificates listed on Exhibit A hereto. As of the date hereof, there are
no existing options, warrants, calls or commitments of any character
whatsoever relating to the Pledged Stock;
(d) The Pledgor has full power and authority to enter into this
Agreement;
(e) There are no restrictions upon the voting rights associated
with, or upon the transfer of, any of the Pledged Collateral except
pursuant to the Securities Act;
(f) The Pledgor has the right to vote, pledge, assign and grant a
security interest in or otherwise transfer such Pledged Collateral free of
any Liens, except as set forth in paragraph (e) above;
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(g) No authorization, approval, or other action by, and no notice to
or filing with, any Governmental Authority is required either (i) for the
pledge of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Pledgor or
(ii) for the exercise by the Collateral Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required
in connection with such disposition by laws affecting the offering and
sale of securities generally);
(h) The pledge of the Pledged Collateral pursuant to this Agreement,
together with the delivery of the stock certificates pertaining thereto to
the Collateral Agent, creates a valid and perfected first priority
security interest in the Pledged Collateral, in favor of the Collateral
Agent for the benefit of the Secured Parties, securing the payment and
performance of the Liabilities;
(i) This Agreement has been duly executed and delivered by and on
behalf of the Pledgor and constitutes the legal, valid and binding
obligation of the Pledgor, enforceable against the Pledgor in accordance
with its terms;
(j) There is no action, suit, proceeding, governmental investigation
or arbitration, at law or in equity, or before or by any Governmental
Authority, pending, or to the knowledge of the Pledgor, threatened against
the Pledgor or any of its property which will materially and adversely
affect the ability of the Pledgor to perform its obligations under this
Agreement;
(k) The execution, delivery and performance of this Agreement by the
Pledgor (i) does not violate any indenture, mortgage, or any other
agreement to which the Pledgor is a party or by which any of its
properties or assets may be bound; (ii) complies with all corporate
organization documents of the Pledgor; and (iii) does not violate any
restriction on such transfer or encumbrance of the Pledged Collateral;
(l) The Powers are effective endorsements duly executed by an
appropriate person and give the Collateral Agent the authority they
purport to confer; and
(m) The Pledged Stock constitutes such percent of the issued and
outstanding shares of Equity Interests of the issuer thereof as set forth
in Exhibit A hereto.
8. Voting Rights. During the term of this Agreement, and except as
provided in this Section 8 below, the Pledgor shall have the right to vote the
Pledged Stock on all corporate questions in a manner not inconsistent with the
terms of this Agreement, the Indenture and the other Security Documents;
provided, however, that no vote shall be cast, and no consent shall be given or
action taken, which would have the effect of impairing the position or interest
of any Secured Party in respect of the Pledged Collateral or which would
authorize, effect or consent to (unless and to the extent expressly permitted by
the Indenture) (i) the dissolution or liquidation, in whole or in part, of the
issuer of Pledged Stock (a "Pledged Entity"); (ii) the consolidation or merger
of a Pledged Entity with any other Person; (iii) the sale, disposition or
encumbrance of all or substantially all of the assets of a Pledged Entity,
except for Liens in favor of the Collateral Agent and Permitted Liens; (iv) any
change in the authorized number of shares, the stated capital or the authorized
share capital of a Pledged Entity or the issuance of any additional shares of
its Equity Interests; or (v) the alteration of the voting rights with respect to
the Equity Interests of a Pledged Entity. After the occurrence and during the
continuation of an Event of Default, the Collateral Agent shall, at the
Collateral Agent's option and following written notice from the Collateral Agent
to the Pledgor, exercise all voting rights pertaining to the Pledged Collateral,
including the right to take action by shareholder consent.
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9. Dividends and Other Distributions. (a) So long as no Event of Default
shall have occurred and be continuing:
(i) The Pledgor shall be entitled to receive and retain any and all
dividends and distributions paid in respect of the Pledged Collateral,
notwithstanding such dividends and distributions being subject to the
pledge and assignment thereof pursuant to Section 2; provided, however,
that any and all
(A) dividends and distributions paid or payable other than in
cash with respect to, and instruments and other property received,
receivable or otherwise distributed with respect to, or in exchange
for, any of the Pledged Collateral;
(B) dividends and other distributions paid or payable in cash
with respect to any of the Pledged Collateral on account of a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in surplus; and
(C) cash paid, payable or otherwise distributed with respect
to principal of, or in redemption of, or in exchange for, any of the
Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered to the
Collateral Agent to hold, for the benefit of the Secured Parties, as
Pledged Collateral and shall, if received by the Pledgor, be received in
trust for the Collateral Agent, for the benefit of the Secured Parties;
and
(ii) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to receive the dividends which it is authorized to
receive and retain pursuant to clause (i) above.
(b) After the occurrence and during the continuation of an Event of
Default:
(i) All rights of the Pledgor to receive the dividends and other
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 9(a)(i) hereof shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, for the benefit of the
Secured Parties, which shall thereupon have the sole right to receive and
hold as Pledged Collateral such dividends and other distributions;
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(ii) All dividends and other distributions which are received by the
Pledgor contrary to the provisions of clause (i) of this Section 9(b)
shall be received in trust for the Collateral Agent, for the benefit of
the Secured Parties;
(iii) The Pledgor shall, upon the reasonable request of the
Collateral Agent, at the Pledgor's expense, execute and deliver, and cause
the Pledged Entity and its officers and directors to execute and deliver,
all such instruments and documents, and do or cause to be done all such
other acts and things, as may be required by applicable law or may be
necessary or, in the opinion of the Pledgor or its counsel, advisable to
register the applicable Pledged Collateral under the provisions of the
Securities Act, and to exercise its best efforts to cause the registration
statement relating thereto to become effective and to remain effective for
such period as prospectuses are required by law to be furnished, and to
make all amendments and supplements thereto and to the related prospectus
which, in the opinion of the Collateral Agent, the Pledgor or its counsel,
are necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Commission applicable
thereto;
(iv) The Pledgor shall, at the Pledgor's expense, use its best
efforts to qualify the Pledged Collateral under state securities or "Blue
Sky" laws and to obtain all necessary governmental approvals for the sale
of the Pledged Collateral;
(v) The Pledgor, if applicable, shall, at the Pledgor's expense,
cause the Pledged Entity to make available to the holders of its
securities, as soon as practicable, earning statements which will satisfy
the provisions of Section 11(a) of the Securities Act; and
(vi) The Pledgor shall, at the Pledgor's expense, do or cause to be
done all such other acts and things as may be necessary to make such sale
of the Pledged Collateral or any part thereof valid and binding and in
compliance with applicable law.
The Pledgor will reimburse the Collateral Agent for all expenses incurred by the
Collateral Agent, including, without limitation, reasonable attorneys' and
accountants' fees and expenses in connection with the foregoing. Upon or at any
time after the occurrence and during the continuation of an Event of Default, if
any Secured Party determines that, prior to any public offering of any
securities constituting part of the Pledged Collateral, such securities should
be registered under the Securities Act and/or registered or qualified under any
other federal or state law and such registration and/or qualification is not
practicable, then the Pledgor agrees that it will be commercially reasonable if
a private sale, upon at least ten (10) Business Days' notice to the Pledgor, is
arranged so as to avoid a public offering, even though the sales price
established and/or obtained at such private sale may be substantially less than
prices which could have been obtained for such security on any market or
exchange or in any other public sale.
10. Transfers and other Liens. Other than as permitted under the
Indenture, the Pledgor agrees that it will not (i) sell, transfer or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral
without the prior written consent of the Collateral Agent, or (ii) create or
permit to exist any Lien upon or with respect to any of the Pledged Collateral
(except for the security interest under this Agreement and the Permitted Liens).
The Pledgor further agrees that it will procure, or take reasonable efforts to
procure, that the Pledged Entity and any other direct or indirect subsidiary
thereof shall carry on business only in the ordinary course and will not dispose
of or agree to dispose of a substantial part of its assets or undertaking
without the prior written approval of the Collateral Agent.
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11. Defense of Title. The Pledgor will defend the title to the Pledged
Collateral and the Liens of the Collateral Agent in the Pledged Collateral
against the claim of any Person (other than Permitted Liens) and will maintain
and preserve such Liens, except with respect to Permitted Liens.
12. Additional Equity Interests. The Pledgor will, upon obtaining
ownership of any additional equity interests otherwise required to be pledged to
the Collateral Agent pursuant to any of the Security Documents, which equity
interests are not already Pledged Collateral (the "Additional Equity
Interests"), promptly (and in any event within three (3) Business Days) deliver
to the Collateral Agent an amendment to this Agreement, duly executed by the
Pledgor and in form and substance satisfactory to the Secured Parties, in
respect of any such Additional Equity Interests, pursuant to which the Pledgor
shall pledge to the Collateral Agent all of such Additional Equity Interests.
The Pledgor hereby authorizes the Collateral Agent to attach such amendment to
this Agreement and agrees that all Pledged Stock listed on any such amendment
delivered to the Collateral Agent shall for all purposes hereunder be considered
Pledged Collateral.
13. Remedies.(a) The Collateral Agent shall have, in addition to any
other rights given under this Agreement or by law, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under the
Uniform Commercial Code as in effect in the State of New York (the "UCC"). In
addition, after the occurrence and during the continuation of an Event of
Default, the Collateral Agent shall have such powers of sale and other powers as
may be conferred by applicable law. With respect to the Pledged Collateral or
any part thereof which shall then be in or shall thereafter come into the
possession or custody of the Collateral Agent or which the Collateral Agent
shall otherwise have the ability to transfer under applicable law, the
Collateral Agent may, in its sole discretion, without notice except as specified
below, after the occurrence and during the continuation of an Event of Default,
sell or cause the same to be sold at any exchange, broker's board or at public
or private sale, in one or more sales or lots, at such price as the Collateral
Agent or any Secured Party may deem best, for cash or on credit or for future
delivery, without assumption of any credit risk, and the purchaser of any or all
of the Pledged Collateral so sold shall thereafter own the same, absolutely free
from any claim, encumbrance or right of any kind whatsoever. The Collateral
Agent or any Secured Party may, in its own name, or in the name of a designee or
nominee, buy the Pledged Collateral at any public sale and, if permitted by
applicable law, buy the Pledged Collateral at any private sale. The Pledgor
agrees to pay to the Collateral Agent all reasonable expenses (including,
without limitation, court costs and reasonable attorneys' and paralegals' fees
and expenses) of, or incident to, the enforcement of any of the provisions
hereof. The Collateral Agent agrees to distribute any proceeds of the sale of
the Pledged Collateral in accordance with the Indenture and the Pledgor shall
remain liable for any deficiency following the sale of the Pledged Collateral.
(b) Unless any of the Pledged Collateral threatens to decline speedily in
value or is or becomes of a type sold on a recognized market, the Collateral
Agent will give the Pledgor reasonable notice of the time and place of any
public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Pledged Collateral conducted
in conformity with reasonable commercial practices of banks, commercial finance
companies, insurance companies or other financial institutions disposing of
property similar to the Pledged Collateral shall be deemed to be commercially
reasonable. Notwithstanding any provision to the contrary contained herein, the
Pledgor agrees that any requirements of reasonable notice shall be met if such
notice is received by the Pledgor as provided in Section 29 below at least ten
(10) Business Days before the time of the sale or disposition. Any other
requirement of notice, demand or advertisement for sale is waived, to the extent
permitted by law.
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(c) In view of the fact that federal and state securities laws may impose
certain restrictions on the method by which a sale of the Pledged Collateral may
be effected after an Event of Default, the Pledgor agrees that after the
occurrence and during the continuation of an Event of Default, the Collateral
Agent may, from time to time, attempt to sell all or any part of the Pledged
Collateral by means of a private placement restricting the bidders and
prospective purchasers to those who are qualified and will represent and agree
that they are purchasing for investment only and not for distribution. In so
doing, the Collateral Agent may solicit offers to buy the Pledged Collateral, or
any part of it, from a limited number of investors deemed by the Collateral
Agent, in its reasonable judgment, to be financially responsible parties who
might be interested in purchasing the Pledged Collateral. If the Collateral
Agent solicits such offers from not less than four (4) such investors, then the
acceptance by the Collateral Agent of the highest offer obtained therefrom shall
be deemed to be a commercially reasonable method of disposing of such Pledged
Collateral; provided, however, that this Section does not impose a requirement
that the Collateral Agent solicit offers from four or more investors in order
for the sale to be commercially reasonable.
(d) The Pledgor agrees to the maximum extent permitted by applicable law
that following the occurrence and during the continuance of an Event of Default
it will not at any time plead, claim or take the benefit of any appraisal,
valuation, stay, extension, moratorium or redemption law now or hereafter in
force in order to prevent or delay the enforcement of this Agreement, or the
absolute sale of the whole or any part of the Pledged Collateral or the
possession thereof by any purchaser at any sale hereunder, and the Pledgor
waives the benefit of all such laws to the extent it lawfully may do so. The
Pledgor agrees that it will not interfere with any right, power and remedy of
Collateral Agent provided for in this Agreement or now or hereafter existing at
law or in equity or by statute or otherwise, or the exercise or beginning of the
exercise by Collateral Agent of any one or more of such rights, powers or
remedies. No failure or delay on the part of Collateral Agent to exercise any
such right, power or remedy and no notice or demand which may be given to or
made upon the Pledgor by the Collateral Agent with respect to any such remedies
shall operate as a waiver thereof, or limit or impair the Collateral Agent's
right to take any action or to exercise any power or remedy hereunder, without
notice or demand, or prejudice its rights as against the Pledgor in any respect.
(e) The Pledgor further agrees that a breach of any of the covenants
contained in this Section 13 will cause irreparable injury to the Collateral
Agent, that the Collateral Agent shall have no adequate remedy at law in respect
of such breach and, as a consequence, agrees that each and every covenant
contained in this Section 13 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
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14. Security Interest Absolute. All rights of the Collateral Agent and
security interests hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of:
(i) Any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(ii) Any change in the time, manner or place of payment of, or in
any other term of, all or any part of the Liabilities, or any other
amendment or waiver of or any consent to any departure from the Indenture
or this Agreement;
(iii) Any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any part of the Liabilities;
(iv) the insolvency of the Pledgor; or
(v) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Liabilities or of this Agreement.
15. Collateral Agent Appointed Attorney-in-Fact. The Pledgor hereby
appoints the Collateral Agent its attorney-in-fact, with full authority, in the
name of the Pledgor or otherwise, after the occurrence and during the
continuation of an Event of Default, from time to time in the Collateral Agent's
sole discretion, to take any action and to execute any instrument which the
Collateral Agent or any Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to the Pledgor
representing any dividend or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same and to
arrange for the transfer of all or any part of the Pledged Collateral on the
books of the Pledged Entity to the name of the Collateral Agent or the
Collateral Agent's nominee.
16. Waivers. The Pledgor waives to the fullest extent permitted by
applicable laws presentment and demand for payment of any of the Liabilities,
protest and notice of dishonor or Event of Default with respect to any of the
Liabilities and all other notices to which the Pledgor might otherwise be
entitled except as otherwise expressly provided herein or in the Indenture.
17. Term. This Agreement shall remain in full force and effect until the
final payment in full, in cash, of the Liabilities. Upon the termination of this
Agreement as provided above (other than as a result of the sale of the Pledged
Collateral), the Collateral Agent will release the security interest created
hereunder and, if it then has possession of any Pledged Stock pledged hereunder,
will deliver such Pledged Stock previously delivered to it and the Powers to the
Pledgor.
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18. Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against the
Pledgor or the Pledged Entity for liquidation or reorganization, should the
Pledgor or the Pledged Entity become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or any
significant part of the Pledgor's or the Pledged Entity's assets, and shall
continue to be effective or be reinstated, as the case may be.
19. Definitions. The singular shall include the plural and vice versa and
any gender shall include any other gender as the context may require.
20. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon the Pledgor and its successors and assigns, and shall inure to the
benefit of the Collateral Agent and the Secured Parties, and their respective
successors and assigns. Nothing set forth herein or in any other Security
Document is intended or shall be construed to give any other Person any right,
remedy or claim under, to or in respect of this Agreement, the Indenture or any
Collateral. The Pledgor's successors shall include, without limitation, a
receiver, trustee or debtor-in-possession of or for the Pledgor.
21. Governing Law. This Agreement has been executed and delivered by the
parties hereto in New York, New York. Any dispute between the Collateral Agent
and the Pledgor arising out of or related to the relationship established
between them in connection with this Agreement, and whether arising in contract,
tort, equity, or otherwise, shall be resolved in accordance with the laws of the
State of New York.
22. Consent to Jurisdiction; and Service of Process. THE COLLATERAL AGENT
HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE OR FEDERAL COURTS
LOCATED IN XXX XXXX XXXXXX, XXXX XX XXX XXXX, XXX XXXX. THE PLEDGOR HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX XXXXXX,
XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE PLEDGOR AND THE COLLATERAL AGENT
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT; PROVIDED THAT THE COLLATERAL AGENT AND THE PLEDGOR ACKNOWLEDGE THAT
ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY X XXXXX XXXXXXX XXXXXXX XX
XXX XXXX XXXXXX; AND, PROVIDED, FURTHER, NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE THE COLLATERAL AGENT FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY
OTHER SECURITY FOR THE GUARANTEED OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF COLLATERAL AGENT. THE PLEDGOR EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND THE PLEDGOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE PLEDGOR AT THE ADDRESS SET FORTH
IN THE INDENTURE AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR FIVE (5) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID. The Collateral Agent shall have the right to
proceed against the Pledgor or its personal property in a court in any location
to enable the Collateral Agent to obtain personal jurisdiction over the Pledgor,
to realize on the Pledged Collateral or any other security for the Liabilities
or to enforce a judgment or other court order entered in favor of the Collateral
Agent.
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23. Waiver of Jury Trial. The Pledgor and the Collateral Agent waives any
right to trial by jury in any dispute, whether sounding in contract, tort, or
otherwise, between the Collateral Agent and the Pledgor arising out of or
related to the transactions contemplated by this Agreement or any other
instrument, document or agreement executed or delivered in connection herewith.
Either the Pledgor or the Collateral Agent may file an original counterpart or a
copy of this Agreement with any court as written evidence of the consent of the
parties hereto to the waiver of their right to trial by jury.
24. Advice of Counsel. The Pledgor represents and warrants to the
Collateral Agent that it has discussed this Agreement and, specifically, the
provisions of Sections 21 through 23 hereof, with the Pledgor's lawyers.
25. Severability. If any provision of this Agreement is held to be
prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
26. Further Assurances. The Pledgor agrees that at any time and from time
to time, at the expense of the Pledgor, the Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be required by applicable law or may be necessary or desirable, or that any
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any of the Pledged Collateral, including, without limitation, the
filing of financing statements under Article 9 of the Uniform Commercial Code of
Nevada. The Pledgor hereby further agrees that it shall not make any change to
its name or jurisdiction or the form of its organization without prior written
notice or otherwise permitted under the Indenture.
27. The Collateral Agent's Duty of Care.
(a) The Collateral Agent shall not be liable for any acts, omissions,
errors of judgment or mistakes of fact or law including, without limitation,
acts, omissions, errors or mistakes with respect to the Pledged Collateral,
except for those arising out of or in connection with the Collateral Agent's (i)
gross negligence or willful misconduct, or (ii) failure to use reasonable care
with respect to the safe custody of the Pledged Collateral in the Collateral
Agent's possession. Without limiting the generality of the foregoing, the
Collateral Agent shall be under no obligation to take any steps necessary to
preserve rights in the Pledged Collateral against any other parties but may do
so at its option. All expenses incurred in connection therewith shall be for the
sole account of the Pledgor, and shall constitute part of the Liabilities
secured hereby.
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(b) No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or the
Indenture. The Collateral Agent shall not be liable for any delay or failure to
act as may be required hereunder when such delay or failure is due to any act of
God, interruption or other circumstances beyond its control provided it
exercises such diligence as the circumstances may reasonably require. The
Collateral Agent shall be entitled to rely on any communication, instrument,
paper or other document reasonably believed by it to be genuine and correct and
to have been signed or sent by the proper person. The Collateral Agent may
consult with, and obtain advice from, legal counsel as to the construction of
any of the provisions of this Agreement, and shall incur no liability in acting
in good faith in accordance with the reasonable advice of such counsel.
(c) The Collateral Agent shall not be deemed to have notice of any Event
of Default unless an officer of the Collateral Agent has actual knowledge
thereof or unless written notice of any such Event of Default is received by the
Collateral Agent at the office of the Collateral Agent specified in or pursuant
to Section 12.01 of the Indenture.
(d) The Collateral Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Pledged Collateral shall be to deal
with it in the same manner as the Collateral Agent deals with similar property
for its own account.
(e) In no event shall the Collateral Agent be liable for special, indirect
or consequential loss or damage of any kind whatsoever (including but not
limited to lost profits), even if the Collateral Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
28. Additional Provisions Relating to the Collateral Agent.
(a) Any corporation, bank, trust company or association into which the
Collateral Agent may be merged or converted or with which it may be
consolidated, or any corporation, bank, trust company or association resulting
from any merger, conversion or consolidation to which the Collateral Agent shall
be a party, or any corporation, bank, trust company or association succeeding to
all or substantially all the corporate trust business of the Collateral Agent,
shall be the successor of the Collateral Agent hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.
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Any resignation or removal of the Collateral Agent as Trustee under the
Indenture in accordance with the provisions thereof shall result in a
resignation or removal of the Collateral Agent hereunder. The provisions of
Section 7.08 of the Indenture with respect to replacement of the Trustee shall
be applicable to the replacement of the Collateral Agent.
(b) At any time or times, for the purpose of meeting any legal
requirements of any jurisdiction in which any of the Collateral may at the time
be located, the Collateral Agent shall have the power to appoint any Person or
Persons either to act as co-collateral agent, or co-collateral agents, jointly
with the Collateral Agent of all or any part of the Pledged Collateral or to act
as separate collateral agent or separate collateral agents of all or any part of
the Pledged Collateral and to vest in such Person or Persons, in such capacity,
such title to the Pledged Collateral or any part thereof, and such rights,
powers, duties or obligations as the Collateral Agent may consider necessary or
desirable, subject to the other provisions of this Section 28.
(c) Unless otherwise provided in the instrument appointing such
co-collateral agent or separate collateral agent, every co-collateral agent or
separate collateral agent shall, to the extent permitted by law, be appointed
subject to the following terms namely:
(i) All rights, power, duties and obligations under this Agreement
conferred upon the Collateral Agent in respect of the custody, control or
management of the collateral, shall be exercised solely by the Collateral
Agent;
(ii) All rights, powers, duties and obligations conferred or imposed
upon the collateral agents shall be conferred or imposed upon and
exercised or performed by the Collateral Agent, or by the Collateral Agent
and such co-collateral agent or co-collateral agents, or separate
collateral agent or separate collateral agents jointly, except to the
extent that, under the law of any jurisdiction in which any particular act
or acts are to be performed, the Collateral Agent shall be incompetent or
unqualified to perform such act or acts, in which event such act or acts
shall be performed by such co-collateral agent or co-collateral agents or
separate collateral agent or separate collateral agents;
(iii) Any request in writing by the Collateral Agent to any
co-collateral agent or separate collateral agent to take or to refrain
from taking any action hereunder shall be sufficient warrant for the
taking, or the refraining from taking, of such action by such
co-collateral agent or separate collateral agent;
(iv) Any co-collateral agent or separate collateral agent to the
extent permitted by law may delegate to the Collateral Agent the exercise
of any right, power, duty or obligation, discretionary or otherwise;
(v) The Collateral Agent at any time, by an instrument in writing,
may accept the resignation of, or remove, any co-collateral agent or
separate collateral agent appointed under this Section 28. As successor to
any co-collateral agent or separate collateral agent so resigned or
removed may be appointed in the manner provided in this Section 28.
(vi) No collateral agent hereunder shall be personally liable by
reason of any act or omission of any other collateral agent hereunder;
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(vii) Any demand, request, direction, appointment, removal, notice,
consent, waiver or other action in writing delivered to the Collateral
Agent shall be deemed to have been delivered to each such co-collateral
agent or separate collateral agent; and
(viii) Any Collateral received by any such co-collateral agent or
separate collateral agent hereunder shall forthwith, so far as may be
permitted by law, be turned over to the Collateral Agent to be held
pursuant to the terms hereof.
(d) Upon the acceptance in writing of such appointment by any such
co-collateral agent or separate collateral agent, it or he shall be vested with
the estate, right, title and interest in the Pledged Collateral, or any portion
thereof, and with such rights, powers, duties, trusts or obligations, jointly or
separately with the Collateral Agent, all as shall be specified in the
instrument of appointment, subject to all the terms hereof.
(e) In case any co-collateral agent or separate collateral agent shall
become incapable of acting, resign or be removed, the right, title and interest
in the Pledged Collateral and all rights, powers, duties and obligations of said
co-collateral agent or separate collateral agent shall, so far as permitted by
law, vest in and be exercised by the Collateral Agent unless and until a
successor co-collateral agent or separate collateral agent shall be appointed
pursuant to this Section 28.
29. Notices. Any notice, demand, request or any other communication
required or desired to be served, given or delivered hereunder shall be in
writing and shall be served, given or delivered as provided in Section 12.01 of
the Indenture.
30. Indemnity and Expenses. The Pledgor agrees, upon demand, to indemnify
the Collateral Agent against any and all losses, claims, damages, penalties,
fines, liabilities or expenses, including incidental and out-of-pocket expenses
and reasonable attorneys fees incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Agreement and to
pay to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Pledged Collateral, (iii) the exercise or enforcement of any of the rights
of the Collateral Agent hereunder or (iv) the failure by the Pledgor to perform
or observe any of the provisions hereof.
31. Amendments, Waivers and Consents. None of the terms or provisions of
this Agreement may be waived, altered, modified or amended, and no consent to
any departure by the Pledgor herefrom shall be effective, except by or pursuant
to an instrument in writing which (i) is duly executed by the Pledgor and the
Collateral Agent and (ii) complies with the requirements of Article VIII of the
Indenture. Any such waiver shall be valid only to the extent set forth therein.
A waiver by the Collateral Agent of any right or remedy under this Agreement on
any one occasion shall not be construed as a waiver of any right or remedy which
the Collateral Agent would otherwise have on any future occasion. No failure to
exercise or delay in exercising any right, power or privilege under this
Agreement on the part of the Collateral Agent shall operate as a waiver thereof;
and no single or partial exercise of any right, power or privilege under this
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
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32. Section Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
33. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.
34. Merger. This Agreement and the Indenture embody the entire agreement
and understanding, between the Pledgor and the Collateral Agent or any Holder
and supersedes all prior agreements and understandings, written and oral,
relating to the subject matter hereof.
35. Termination; Release of Collateral. Notwithstanding anything in this
Agreement to the contrary, the Pledgor may, to the extent permitted by Section
4.12 of the Indenture, sell, assign, transfer or otherwise dispose of any
Pledged Collateral. In addition, the Pledged Collateral shall be subject to
release in accordance with Section 10.04 of the Indenture (such Pledged
Collateral and the Pledged Collateral referred to in the immediately preceding
sentence being the "Released Collateral"). The Liens under this Agreement shall
terminate with respect to the Released Collateral upon such sale, transfer,
assignment, disposition or release and upon the written request of the Pledgor,
the Collateral Agent shall execute and deliver, at the cost of the Pledgor, such
instrument or document as may be necessary to release the Liens granted
hereunder; provided, however, that (i) the Collateral Agent shall not be
required to execute any such documents on terms which, in any Secured Party's
opinion, would expose the Collateral Agent or any Holder to liability or create
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Liabilities or any Liens on (or obligations of
the Pledgor in respect of) all interests retained by the Pledgor, including
without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the Pledged Collateral.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have executed
this Agreement as of the date set forth above.
HARBIN ELECTRIC, INC.
By: /s/ Xxxxxx Xxxx
------------------------------------
Name:
Title:
Acknowledged and agreed to as of the date first written above.
THE BANK OF NEW YORK,
a New York banking corporation,
as Collateral Agent
By: /s/ Xxxx Xxx
-----------------------------
Name: Xxxx Xxx
Title: Assistant Treasurer
[SIGNATURE PAGE TO SHARE PLEDGE AGREEMENT]
EXHIBIT A
PLEDGED STOCK
Name of Pledgor Name of Issuer Percentage of Stock Number of Shares
---------------------------- ------------------------------------- -------------------------- ------------------------
Harbin Electric, Inc. Advanced Electric Motors, Inc. 100% 200
EXHIBIT B
STOCK POWER
(EXECUTED IN BLANK)
STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto shares of the Common Stock of Advanced Electric Motors, Inc., a
-----------
Delaware corporation (the "Corporation"), standing in the name of the
undersigned on the books of the Corporation represented by Certificate No. ,
---
and does hereby irrevocably constitute and appoint as
--------------
attorney-in-fact to transfer the shares on the books of the Corporation with
full power of substitution in the premises.
Dated:
------
HARBIN ELECTRIC, INC.
By:
--------------------------
Name:
Title:
ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the foregoing
Share Pledge Agreement, agrees promptly to note on its books the security
interests granted under such Share Pledge Agreement, and waives any rights or
requirement at any time hereafter to receive a copy of such Pledge Agreement in
connection with the registration of any Pledged Collateral in the name of the
Collateral Agent or its nominee or the exercise of voting rights by the
Collateral Agent.
ADVANCED ELECTRIC MOTORS, INC.
By:
------------------------------------------
Name:
Title:
