6,250,000 Shares HARBIN ELECTRIC, INC. Common Stock UNDERWRITING AGREEMENT
Exhibit
1.1
6,250,000 Shares
Common Stock
UNDERWRITING
AGREEMENT
July 30, 2009
Xxxx Capital Partners,
LLC
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Ladies and
Gentlemen:
Harbin Electric, Inc., a Nevada corporation (the “Company”), proposes, subject to the terms and
conditions stated herein, to issue and sell to Xxxx Capital Partners, LLC (the
“Underwriter”) an aggregate of 6,250,000 authorized
but unissued shares (the “Underwritten
Shares”) of Common Stock, par value $0.00001
per share (the “Common
Stock”), of the Company. The Company has granted the Underwriter
the option to purchase an aggregate of up to 937,500 additional shares of Common
Stock (the “Additional
Shares”) as may be
necessary to cover over-allotments made in connection with the
offering. The Underwritten Shares and Additional Shares are
collectively referred to as the “Shares.”
The Company and the Underwriter hereby
confirm their agreement as
follows:
1. Registration
Statement and Prospectus. The Company has prepared
and filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3
(File No. 333-159507) under the Securities Act of 1933 (the “Securities
Act”) and the rules and
regulations (the “Rules and
Regulations”) of the
Commission thereunder, and such amendments to such registration statement
(including post effective amendments) as may have been required to the date of this
Agreement. Such registration statement, as amended (including any
post effective amendments), has been declared effective by the
Commission. Such registration statement, as amended (including post
effective amendments thereto), the exhibits and any schedules thereto, the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act and the documents and information otherwise deemed to
be a part thereof or included therein by Rule 430B under the Securities Act or
otherwise pursuant to the Rules and Regulations, is herein called the
“Registration
Statement.” If the Company has
filed or files an abbreviated registration statement pursuant to Rule 462(b)
under the Securities Act (the “Rule 462 Registration
Statement”), then any reference herein to the term Registration Statement
shall include such Rule 462 Registration Statement.
The Company is filing with the
Commission pursuant to Rule 424 under the Securities Act a final prospectus
supplement relating to the Shares to a form of prospectus included in the
Registration Statement. Such prospectus in the form in which it
appears in the Registration Statement is hereinafter called the “Base
Prospectus,” and such final
prospectus supplement as filed, along with the Base Prospectus, is hereinafter
called the “Final
Prospectus.” Such Final Prospectus and any preliminary prospectus supplement
or “red xxxxxxx,”
in the form in which
they shall be filed with the Commission
pursuant to Rule 424(b) under the Securities Act (including the Base Prospectus as so
supplemented) is hereinafter called a “Prospectus.” Any reference herein to the Base Prospectus, the
Final Prospectus or
a Prospectus shall be deemed to include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act as
of the date of such Prospectus.
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For purposes of this Agreement, all
references to the Registration Statement, the Rule 462 Registration Statement,
the Base Prospectus, the
Final Prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Interactive Data Electronic Applications system. All references in this Agreement to
financial statements and schedules and other information which is “described,” “contained,” “included” or “stated” in
the Registration Statement,
the Rule 462 Registration
Statement, the Base
Prospectus, the Final
Prospectus or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements, pro forma financial
information and schedules
and other information which is incorporated by reference in or otherwise deemed
by the Rules and Regulations to be a part of or included in the Registration
Statement, the Rule 462
Registration Statement, the
Base Prospectus, the Final
Prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, the Rule 462
Registration Statement, the Base Prospectus, the Final Prospectus or the
Prospectus shall be deemed to mean and include the subsequent filing of any
document under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), that is deemed to be incorporated
therein by reference therein or otherwise deemed by the Rules and Regulations to
be a part thereof.
2. Representations and Warranties Regarding
the Offering.
(a) The Company represents and warrants to,
and agrees with, the Underwriter, as of the date hereof and as of the Closing
Date (as defined in Section 5(c) below), except as otherwise indicated, as
follows:
(i) At each time of effectiveness, at the
date hereof and at the Closing Date, the Registration Statement and any
post-effective amendment thereto complied or will comply in all material
respects with the requirements of the Securities Act and the
Rules and Regulations and did not and will 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 not misleading. The Time of Sale
Disclosure Package (as defined in Section 2(a)(iii)(A)(1) below) as of the date
hereof and at the Closing Date, and the Final Prospectus, as amended or
supplemented, at the time of filing pursuant to Rule 424(b) under the Securities
Act and at the Closing Date, did not and will 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 light of the circumstances under which they were made,
not misleading. The representations and warranties set forth in the
two immediately preceding sentences shall not apply to statements in or
omissions from the Registration Statement or any Prospectus in reliance upon,
and in conformity with, written information furnished to the Company by the
Underwriter specifically for use in the preparation
thereof. The Registration Statement (including each document
incorporated by reference therein) contains all exhibits and schedules required
to be filed by the Securities Act or the Rules and Regulations. No order preventing or suspending the
effectiveness or use of the Registration Statement or any Prospectus is in
effect and no proceedings for such purpose have been instituted or are pending,
or, to the knowledge of the Company, are contemplated or threatened by the
Commission.
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(ii) The documents incorporated by reference
in the Registration Statement, the Time of Sale Disclosure Package and any
Prospectus, when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, were filed on a timely basis with the Commission
and none of such documents, when they were filed (or, if amendments to such
documents were filed, when such amendments were filed), contained an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they were made,
not misleading. Any further documents so filed and incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package or
the Prospectus, when such documents are filed with the Commission, will conform
in all material respects to the requirements of the Exchange Act, and will not
contain an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances under which they were made,
not misleading.
(iii) (A)
The Company has provided a copy to the Underwriter of each Issuer Free Writing
Prospectus (as defined below) used in the sale of Shares. The Company has
filed all Issuer Free Writing Prospectuses required to be so filed with the
Commission, and no order
preventing or suspending the effectiveness or use of any Issuer Free Writing
Prospectus is in effect and no proceedings for such purpose have been instituted
or are pending, or, to the knowledge of the Company, are contemplated or
threatened by the Commission. When taken together with the rest of
the Time of Sale Disclosure Package or the Prospectus, since its first use and at all
relevant times since then, no Issuer Free Writing Prospectus has, does or will
include (1) any untrue statement of a material fact or omission to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or
(2) information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, the Time of Sale Disclosure
Package or the Prospectus. The representations and warranties set
forth in the immediately preceding sentence shall not apply to statements in or
omissions from the Registration Statement, Time of Sale Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by the Underwriter
specifically for use in the preparation thereof. As used in
this paragraph and elsewhere in this Agreement:
(1) “Time of Sale Disclosure
Package” means the Base Prospectus, the Prospectus most recently
filed with the Commission before the time of this Agreement, including any
preliminary prospectus supplement deemed to be a part thereof, each Issuer Free
Writing Prospectus, and any description of the final terms of the
transaction and related information provided by the Underwriter (the “Transaction
Description”).
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(2) “Issuer Free
Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 under the
Securities Act, relating to the Shares that (A) is required to be filed with the Commission by
the Company, or (B) is exempt from filing pursuant to Rule 433(d)(5)(i)
or (d)(8) under the Securities Act, in each case in the form filed or
required to be filed with the Commission or,
if not required to be filed, in the form retained in
the Company’s records pursuant to Rule 433(g) under
the Securities Act.
(B) At the time of filing of the
Registration Statement and at the date hereof, the Company was not and is not an
“ineligible issuer,” as defined in Rule 405 under the Securities Act or an
“excluded issuer” as defined in Rule 164 under the Securities
Act.
(C) Each Issuer Free Writing Prospectus
satisfied, as of its issue date and at all subsequent times through the
Prospectus Delivery Period, all other conditions as may be applicable to its use
as set forth in Rules 164 and 433 under the Securities Act, including any
legend, record-keeping or other requirements.
(iv) The financial statements of the Company,
together with the related notes, included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus
comply in all material respects with the applicable requirements of the Securities Act and the
Exchange Act and fairly present the financial condition of
the Company as of the dates indicated and the results of operations and changes
in cash flows for the periods therein specified in conformity with generally
accepted accounting principles consistently applied throughout the periods
involved; and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein. No
other financial statements, pro forma financial information or schedules are
required under the Securities Act to be
included or incorporated by reference in the Registration Statement, the Time of
Sale Disclosure Package or the Prospectus. To the Company’s
knowledge, Xxxxx Xxxxxxxx Xxxxx Xxxxxx and Xxxxxx, LLP, which has expressed its
opinion with respect to the financial statements and schedules filed as a part
of the Registration Statement and included in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus is an independent public
accounting firm with respect to the Company within the
meaning of the Securities Act and the Rules and
Regulations..
(v) The
Company had a reasonable basis for, and made in good faith, each
“forward-looking statement” (within the meaning of Section 27A of the Act or
Section 21E of the Exchange Act) contained or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the
Prospectus.
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(vi) All
statistical or market-related data included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the Prospectus
are based on or derived from sources that the Company reasonably believes to be
reliable and accurate, and the Company has obtained the written consent to the
use of such data from such sources, to the extent required.
(vii) The Common Stock is registered pursuant
to Section 12(b) of the Exchange Act and is included or approved for inclusion
on the Nasdaq Global Market. There is no action pending by the Company or, to
the Company’s knowledge, the Nasdaq Global
Market to delist the Common Shares from the Nasdaq Global Market, nor has
the Company received any notification that the Nasdaq Global Market is
contemplating terminating such listing. When issued, the Shares will
be listed on the Nasdaq Global Market.
(viii) The
Company has not taken, directly or indirectly, any action that is designed to or
that has constituted or that would reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(ix)
The Company is not and during the
past three years neither the Company nor any predecessor was: (A) a blank check
company as defined in Rule 419(a)(2) of the Securities Act, (B) a shell company,
other than a business combination shell company, each as defined in Rule 405 of
the Securities Act, or (C) an issuer for an offering of xxxxx stock as defined
in Rule 3a51-1 of the Exchange Act.
(x)
The Company is not and, after
giving effect to the offering and sale of the Shares, will not be an “investment
company,” as such term is defined in the Investment Company Act of 1940, as
amended.
(xi) The Company was at the time of filing
the Registration Statement, and at the date hereof, remains eligible to use
Form S-3 under the
Securities Act. In addition, at the time of filing of
the Registration Statement and at the date hereof, the Company had or has (A) a
non-affiliate public float of (1) $150 million, or (2) $100 million and an
annual trading volume of at least 3 million shares, (B) filed all the material
required to be filed by the Company pursuant
to the Exchange Act for a period of at least 36 calendar months, and (C) filed
in a timely manner all reports required to be filed during the past 12
calendar months, and, in the case of (B) and (C), any portion of a month
immediately preceding such dates. For purposes of this subsection
(xi), “non-affiliate public float” shall mean the number of shares held by
non-affiliates of the Company multiplied by the price at which the Common
Stock was last sold before the filing of the Registration Statement or the
Closing Date, as applicable, and “annual trading volume” shall mean the volume of Company stock
traded in any continuous 12 month period ended within 60 days prior to the
filing of the Registration Statement or the Closing Date, as
applicable.
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(b) Any certificate signed by any officer of
the Company and delivered to the Underwriter or to the Underwriter’s counsel
shall be deemed a representation and warranty by the Company to the Underwriter
as to the matters covered thereby.
3. Representations and Warranties Regarding
the Company.
(a) The Company represents and warrants to
and agrees with, the Underwriter, except as set forth in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus, as
follows:
(i) Each of the Company and its subsidiaries
has been duly organized and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its subsidiaries has the corporate power
and authority to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would have or is
reasonably likely to result in a material adverse effect upon the business,
prospects, properties, operations, condition (financial or otherwise) or results
of operations of the Company and its subsidiaries, taken as a whole, or in its
ability to perform its obligations under this Agreement (“Material
Adverse Effect”).
(ii) The Company has the power and authority
to enter into this Agreement and to authorize, issue and sell the Shares as
contemplated by this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company, and constitutes a valid,
legal and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as rights to indemnity hereunder may be
limited by federal or state securities laws and except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general principles of
equity.
(iii) The execution, delivery and performance
of this Agreement and the consummation of the transactions herein contemplated
will not (A) result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any law, rule or regulation to which the
Company or any subsidiary is subject, or by which any property or asset of the
Company or any subsidiary is bound or affected, (B) conflict with, result in any
violation or breach of, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any right
of termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, lease, credit facility, debt, note,
bond, mortgage, indenture or other instrument (the “Contracts”) or obligation or other understanding to
which the Company or any subsidiary is a party of by which any property or asset
of the Company or any subsidiary is bound or affected, or (C) result in a breach
or violation of any of the terms and provisions of, or constitute a default
under, the Company’s charter or by-laws.
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(iv) All consents, approvals, orders,
authorizations and filings required on the part of the Company and its
subsidiaries in connection with the execution, delivery or performance of this
Agreement have been obtained or made, other than such consents, approvals,
orders and authorizations the failure of which to make or obtain is not
reasonably likely to result in a Material Adverse Effect.
(v) All of the issued and outstanding shares
of capital stock of the Company are duly authorized and validly issued, fully
paid and nonassessable, and have been issued in compliance with all applicable
securities laws, and conform to the description thereof in the Registration
Statement, the Time of Sale Disclosure Package and the
Prospectus. Except for the issuances of options or restricted stock
in the ordinary course of business, since the respective dates as of which
information is provided in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus, the Company has not entered into or
granted any convertible or exchangeable securities, options, warrants,
agreements, contracts or other rights in existence to purchase or
acquire from the Company any shares of the
capital stock of the Company. The Shares, when issued, will
be duly authorized and validly issued,
fully paid and nonassessable, will be issued in compliance with all applicable
securities laws, and will be free of preemptive, registration or similar
rights.
(vi) Except
for Advanced Electric Motors, Inc., Advanced Automation Group, LLC and the PRC
Entities (as defined in 4(a)(iii) below), the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any partnership,
corporation, business trust, limited liability company, limited liability
partnership, joint stock company, trust, unincorporated association, joint
venture or other entity.
(vii) Each
of the Company and its subsidiaries has filed all returns (as hereinafter
defined) required to be filed with taxing authorities prior to the date hereof
or has duly obtained extensions of time for the filing thereof. Each
of the Company and its subsidiaries has paid all taxes (as hereinafter defined)
shown as due on such returns that were filed and has paid all taxes imposed on
or assessed against the Company or such respective subsidiary. The
provisions for taxes payable, if any, shown on the financial statements filed
with or as part of the Registration Statement are sufficient for all accrued and
unpaid taxes, whether or not disputed, and for all periods to and including the
dates of such consolidated financial statements. Except as disclosed
in writing to the Underwriter, (i) no issues have been raised (and are currently
pending) by any taxing authority in connection with any of the returns or taxes
asserted as due from the Company or its subsidiaries, and (ii) no waivers of
statutes of limitation with respect to the returns or collection of taxes have
been given by or requested from the Company or its subsidiaries. The
term “taxes”
mean all federal, state, local, foreign, and other net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments, or charges of any kind whatever,
together with any interest and any penalties, additions to tax, or additional
amounts with respect thereto. The term “returns” means all
returns, declarations, reports, statements, and other documents required to be
filed in respect to taxes.
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(viii) Since the respective dates as of which
information is given in the Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, (a) neither the Company nor any of its subsidiaries
has incurred any material liabilities or obligations, direct or contingent, or entered into any
material transactions other than in the ordinary course of business, (b) the
Company has not declared or paid any dividends or made any distribution of any
kind with respect to its capital stock; (c) there has not been any change in the
capital stock of the Company or any of its subsidiaries (other than a change in
the number of outstanding shares of Common Stock due to the issuance of shares
upon the exercise of outstanding options or warrants or the issuance of restricted stock
awards or restricted stock units under the Company’s existing stock awards
plan, or any new grants thereof in the
ordinary course of business), (d) there has not been any material
adverse change in the Company’s long-term or short-term debt, and (e) there has
not been the occurrence of any Material Adverse Effect.
(ix) There is not pending or, to the
knowledge of the Company, threatened, any action, suit or proceeding to which
the Company or any of its subsidiaries is a party or of which any property or
assets of the Company is the subject before or by any court or governmental
agency, authority or body, or any arbitrator or mediator, which is reasonably
likely to result in a Material Adverse Effect.
(x) The Company and each of its subsidiaries
holds, and is in compliance with, all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders (“Permits”) of any governmental or self-regulatory
agency, authority or body required for the conduct of its business, and
all such Permits are in full force and effect, in each case except where
the failure to hold, or comply with, any of them is not reasonably likely to
result in a Material Adverse Effect.
(xi) The Company and its subsidiaries have
good and marketable title to all property (whether real or personal) described
in the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus as being owned by them that are material to the business of the
Company, in each case free and clear of all liens, claims, security interests,
other encumbrances or defects, except those that are not reasonably likely to
result in a Material Adverse Effect. To the knowledge of the Company,
the property held under lease by the Company and its subsidiaries is held by
them under valid, subsisting and enforceable leases with only such exceptions
with respect to any particular lease as do not interfere in any material respect
with the conduct of the business of the Company and its
subsidiaries.
(xii) The Company and each of its subsidiaries
owns or possesses or has valid right to use all patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service xxxx
registrations, copyrights, licenses, inventions, trade secrets and similar
rights (“Intellectual
Property”) necessary for
the conduct of the business of the Company and its subsidiaries as currently
carried on and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus. To the knowledge of the
Company, no action or use by the Company or any of its subsidiaries will involve
or give rise to any infringement of, or license or similar fees for, any
Intellectual Property of others, except where such action, use, license
or fee is not reasonably likely to result in a Material Adverse
Effect. Neither the
Company nor any of its subsidiaries has received any notice alleging any such
infringement or fee.
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(xiii) The
Company and each of its subsidiaries has complied with, is not in violation of,
and has not received any notice of violation relating to any law, rule or
regulation relating to the conduct of its business, or the ownership or
operation of its property and assets, including, without limitation, (A) the
Currency and Foreign Transactions Reporting Act of 1970, as amended, or any
money laundering laws, rules or regulations, (B) any laws, rules or regulations
related to health, safety or the environment, including those relating to
the regulation of hazardous substances, (C) the Xxxxxxxx-Xxxxx Act and the rules and
regulations of the Commission thereunder, (D) the Foreign Corrupt
Practices Act of 1977 and the rules and regulations thereunder, and (E) the
Employment Retirement Income Security Act of 1974 and the rules and regulations
thereunder, in each case except where the failure to be in compliance is not
reasonably likely to result in a Material Adverse Effect.
(xiv) Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, employee, representative, agent or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the
Company will not directly or indirectly use the proceeds of the offering of the
Shares contemplated hereby, or lend, contribute or otherwise make available such
proceeds to any person or entity, for the purpose of financing the activities of
any person currently subject to any U.S. sanctions administered by
OFAC.
(xv) The Company and each of its subsidiaries
carries, or is covered by, insurance in such amounts and covering such risks as
is adequate for the conduct of its business and the value of its properties and
as is customary for companies engaged in similar businesses in similar
industries.
(xvi) No
labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is imminent that is reasonably likely to result in a Material
Adverse Effect.
(xvii) Neither the Company nor any of its
subsidiaries is in violation, breach or default under its certificate of incorporation,
by-laws or other equivalent organizational or governing documents, except where
the violation is not
reasonably likely to result in a Material Adverse Effect.
(xviii) Neither
the Company, its subsidiaries nor, to its knowledge, any other party is in
violation, breach or default of any Contract that is reasonably likely to result
in a Material Adverse Effect.
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(xix) No
supplier, customer, distributor or sales agent of the Company
has notified the Company that it intends to discontinue
or decrease the rate of business done with the Company, except
where such decrease is not reasonably likely to result in a Material Adverse
Effect.
(xx) Other
than the Underwriter, no person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the transactions
contemplated hereby.
4. Representations and Warranties of the
Company Regarding the PRC.
(a) The Company represents and warrants to,
and agrees with, the Underwriter, as of the date hereof and as of the Closing
Date, as follows:
(i) Each
of Harbin Tech Full Electric Co., Ltd. (the “HTFE”) and Advanced Automation
Group Shanghai, Ltd. (“AAG”) has been duly organized and is validly existing as
a wholly foreign owned enterprise with limited liability under the PRC laws and
regulations; each of HTFE’s and AAG’s respective business licenses are in full
force and effect; each of HTFE and AAG has been duly qualified as a foreign
invested enterprise; 100% of the equity interests of HTFE are owned by Advanced
Electric Motors, Inc. and 100% of the equity interests of AAG are owned by
Advanced Automation Group, LLC, and such equity interests are free and clear of
all liens, encumbrances, equities or claims; and the articles of association,
the business licenses and other constituent documents of HTFE and AAG,
respectively, comply with the requirements of applicable PRC laws and
regulations and are in full force and effect.
(ii) Each
of Shanghai Tech Full Electric Co., Ltd.(the “STFE”) and Weihai Tech Full Simo
Motors Co., Ltd. (the “Weihai Tech”) has been duly organized and is validly
existing as a limited liability company under the PRC laws and regulations; each
of STFE’s and Weihai Tech’s respective business licenses are in full force and
effect; 40% of the equity interests of STFE are owned by Advanced Electric
Motors, Inc., and 60% of the equity interests of STFE are owned by HTFE, and
100% of the equity interests of Weihai Tech are owned by HTFE, and such equity
interests are free and clear of all liens, encumbrances, equities or claims; and
the articles of association, the business licenses and other constituent
documents of STFE and Weihai Tech, respectively, comply with the requirements of
applicable PRC laws and regulations and are in full force and
effect.
(iii) Each
of (i) HTFE, (ii) AAG, (iii) STFE, and (iv) Weihai Tech (collectively, the
“PRC
Entities”), has been duly established, is validly existing as a company
in good standing under the laws of the PRC, has the corporate power and
authority to own, lease and operate its property and to conduct its business as
described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus, and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing is not reasonably likely to result in a
Material Adverse Effect. Each PRC Entity has applied for and obtained
all requisite business licenses, clearance and permits required under PRC laws
and regulations as necessary for the conduct of its businesses, each PRC Entity
has complied in all material respects with all PRC laws and regulations in
connection with foreign exchange, including without limitation, carrying out all
relevant filings, registrations and applications for relevant permits with the
PRC State Administration of Foreign Exchange and any other
relevant authorities, and all such permits are validly
subsisting. The registered capital of each PRC Entity has been fully
paid up in accordance with the schedule of payment stipulated in its respective
articles of association, approval document, certificate of approval and legal
person business license (hereinafter referred to as the “Establishment
Documents”) and in compliance with PRC laws and regulations, and there is
no outstanding capital contribution commitment for any PRC
Entity. The Establishment Documents of the PRC Entities have been
duly approved in accordance with the laws of the PRC and are valid and
enforceable. The business scope specified in the Establishment
Documents of each PRC Entity complies with the requirements of all relevant PRC
laws and regulations. The outstanding equity interests of each PRC
Entity is owned of record by the Company or a wholly owned subsidiary, except
for such specific entities or individuals identified as the registered holders
thereof in the Registration
Statement, the Time of Sale Disclosure Package and the
Prospectus.
10
(iv) There
are no contractual arrangements or agreements including, but not limited to, any
consulting or service agreements, share pledge agreements, voting agreements, or
option agreements, among any of the PRC Entities or any of the registered equity
holders of any of the PRC Entities allowing one PRC Entity to obtain control or
the right to the revenue of another PRC Entity.
(v) No
PRC Entity is currently prohibited, directly or indirectly, from paying any
dividends to the Company (or the Company’s subsidiary that holds the outstanding
equity interest of such PRC Entity). No PRC Entity is prohibited,
directly or indirectly, from making any other distribution on such PRC Entity’s
equity capital, from repaying to the Company any loans or advances to such PRC
Entity from the Company or any of the Company’s subsidiaries.
(vi) None
of the PRC Entities nor any of their properties, assets or revenues are entitled
to any right of immunity on the grounds of sovereignty from any legal action,
suit or proceeding, from set-off or counterclaim, from the jurisdiction of any
court, from services of process, from attachment prior to or in aid of execution
of judgment, or from any other legal process or proceeding for the giving of any
relief or for the enforcement of any judgment.
(vii) It
is not necessary that this Agreement, the Registration Statement, the Time of
Sale Disclosure Package, the Prospectus or any other document be filed or
recorded with any governmental agency, court or other authority in the
PRC.
(viii) No
transaction, stamp, capital or other issuance, registration, transaction,
transfer or withholding taxes or duties are payable in the PRC by or on behalf
of the Underwriter to any PRC taxing authority in connection with (i) the
issuance, sale and delivery of the Shares by the Company and the delivery of the
Shares to or for the account of the Underwriter, (ii) the purchase from the
Company and the initial sale and delivery by the Underwriter of the Shares to
purchasers thereof, or (iii) the execution and delivery of this
Agreement.
11
(ix) The
current beneficial owners of the Company who are PRC residents are applying for
registration with the applicable local offices of SAFE with respect to their
ownership interests in Weihai Tech, STFE and AAG, and upon completion of such
registrations, the Company will have complied with, and used its reasonable best
efforts to ensure compliance by all of the Company’s direct or indirect
shareholders and option holders who are PRC residents with, any applicable rules
and regulations of the PRC State Administration of Foreign Exchange of the PRC
(the “SAFE Rules and
Regulations”).
(x) The
Company is aware of, and has been advised as to, the content of the Rules on
Mergers and Acquisitions of Domestic Enterprises by Foreign Investors jointly
promulgated on August 8, 2006, as revised on June 22, 2009, by the PRC Ministry
of Commerce, the PRC State Assets Supervision and Administration Commission, the
PRC State Administration of Taxation, the PRC State Administration of Industry
and Commerce, the China Securities Regulatory Commission (“CSRC”) and the PRC
State Administration of Foreign Exchange of the PRC (the “M&A Rules”), in
particular the relevant provisions thereof that purport to require offshore
special purpose vehicles controlled directly or indirectly by PRC-incorporated
companies or PRC residents and established for the purpose of obtaining a stock
exchange listing outside of the PRC to obtain the approval of the CSRC prior to
the listing and trading of their securities on any stock exchange located
outside of the PRC. The Company has received legal advice
specifically with respect to the M&A Rules from its PRC counsel and the
Company understands such legal advice. In addition, the Company has
communicated such legal advice in full to each of its directors that signed the
Registration Statement and each such director has confirmed that he or she
understands such legal advice.
(xi) The
issuance and sale of the Shares, the listing and trading of the Shares on the
Nasdaq Global Market and the consummation of the transactions contemplated by
this Agreement, the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus are not and will not be, as of the date hereof and on the
Closing Date, subject to or affected by the M&A Rules or any official
clarifications, guidance, interpretations or implementation rules in connection
with or related to the M&A Rules, including the guidance and notices issued
by the CSRC on September 8 and September 21, 2006 (together with the M&A
Rules, the “M&A
Rules and Related Clarifications”).
(xii) As
of the date hereof, the M&A Rules and Related Clarifications do not require
the Company to obtain the approval of the CSRC prior to the issuance and sale of
the Shares, the listing and trading of the Shares on the Nasdaq Global Market,
or the consummation of the transactions contemplated by this Agreement, the
Registration Statement, the Time of Sale Disclosure Package or the
Prospectus.
12
(xiii) Each
of the PRC Entities is in compliance with all requirements under all applicable
PRC laws and regulations to qualify for their exemptions from enterprise income
tax or other income tax benefits (the “Tax Benefits”) as
described in the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus, and the actual operations and business activities of each such
PRC Entity are sufficient to meet the qualifications for the Tax
Benefits. No submissions made to any PRC government authority in
connection with obtaining the Tax Benefits contained any misstatement or
omission that would have affected the granting of the Tax
Benefits. No PRC Entity has received notice of any deficiency in its
respective applications for the Tax Benefits, and the Company is not aware of
any reason why any such PRC Entity might not qualify for, or be in compliance
with the requirements for, the Tax Benefits.
(xiv) All
local and national PRC governmental tax holidays, exemptions, waivers, financial
subsidies, and other local and national PRC tax relief, concessions and
preferential treatment enjoyed by any PRC Entity as described in the
Registration Statement, the Time of Disclosure Package and the Prospectus are
valid, binding and enforceable and do not violate any laws, regulations, rules,
orders, decrees, guidelines, judicial interpretations, notices or other
legislation of the PRC.
5. Purchase, Sale and Delivery of
Shares.
(a) On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell the
Underwritten Shares to the Underwriter, and the Underwriter agrees to purchase
the Underwritten Shares. The purchase price for each Underwritten
Share shall be $15.04 per share (the “Per Share
Price”).
(c) The Underwritten Shares will be
delivered by the Company to the Underwriter against payment of the purchase
price therefor by wire transfer of same day funds payable to the order of the
Company at the offices of Xxxx Capital Partners, LLC, 00 Xxxxxxxxx Xxxxx,
Xxxxxxx Xxxxx, XX 00000, or such other location as may be mutually acceptable,
at 6:00 a.m. PST, on the third (or if the Underwritten Shares are
priced, as contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30
p.m. Eastern time, the fourth) full business day following the date hereof, or
at such other time and date as the Underwriter and the Company determine
pursuant to Rule 15c6-1(a) under the Exchange Act, or, in the case of the
Additional Shares, at such date and time set forth in the Option
Notice. The time and date of delivery of the Underwritten Shares or the Additional
Shares, as applicable, is referred to herein as the “Closing
Date.” Delivery of the
Underwritten Shares or the Additional Shares, as applicable shall be made on the
applicable Closing Date through the electronic DWAC facilities of Corporate
Stock Transfer, Inc., and such Shares shall be registered in such name or names
and shall be in such denominations, as instructed by the Underwriter.
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6. Covenants.
(a) The Company covenants and agrees with
the Underwriter as follows:
(i) During the period beginning on the date
hereof and ending on the later of the Closing Date or such date as determined by
the Underwriter the Prospectus is no longer required by law to be delivered in connection
with sales by an underwriter or dealer (the “Prospectus
Delivery Period”), prior to
amending or supplementing the Registration Statement, including any Rule 462
Registration Statement, the Time of Sale Disclosure Package or the Prospectus,
the Company shall furnish to the Underwriter for review and comment a copy of
each such proposed amendment or supplement, and the Company shall not file any
such proposed amendment or supplement to which the Underwriter reasonably
objects.
(ii) From the date of this Agreement until
the end of the Prospectus Delivery Period, the Company shall promptly advise the
Underwriter in writing (A) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (B) of the time and
date of any filing of any post-effective amendment to the Registration Statement
or any amendment or supplement to the Time of Sale Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus, (C) of the time and date that
any post-effective amendment to the Registration Statement becomes effective,
and (D) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending its use or the use of the Time of Sale Disclosure Package or any
Issuer Free Writing Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any securities
exchange upon which it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at
any time during the Prospectus Delivery Period, the Company will use its
reasonable efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with
the provisions of Rules 424(b), 430A and 430B, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any filings made by the Company
under Rule 424(b) or Rule 433 were received in a timely manner by the Commission
(without reliance on Rule 424(b)(8) or 164(b) of the Securities
Act).
14
(iii) (A) During the Prospectus Delivery
Period, the Company will comply with all requirements imposed upon it by the Securities
Act, as now and hereafter amended, and by the Rules and Regulations, as from
time to time in force, and by the Exchange Act, as now and hereafter amended, so
far as necessary to permit the continuance of sales of or dealings in the Shares
as contemplated by the provisions hereof, the Time of Sale Disclosure Package,
the Registration Statement and the Prospectus. If during such period
any event occurs the result of which the Prospectus (or if the Prospectus is not
yet available to prospective purchasers, the Time of Sale Disclosure Package)
would include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary or appropriate in the
opinion of the Company or its counsel or the Underwriter or its counsel to amend
the Registration Statement or supplement the Prospectus (or if the Prospectus is
not yet available to prospective purchasers, the Time of Sale Disclosure
Package) to comply with the Securities Act or to file under the Exchange Act any
document that would be deemed to be incorporated by reference in the Prospectus
in order to comply with the Securities Act or the Exchange Act, the Company will
promptly notify the Underwriter and will amend the Registration Statement or
supplement the Prospectus (or if the Prospectus is not yet available to
prospective purchasers, the Time of Sale Disclosure Package) or file such
document (at the expense of the Company) so as to correct such statement or
omission or effect such compliance.
(B) If at any time following the issuance of
an Issuer Free Writing Prospectus there occurred or occurs an event or
development the result of which such Issuer Free Writing Prospectus conflicted
or would conflict with the information contained in the Registration Statement,
the Time of Sale Disclosure Package or the Prospectus or included or would
include an untrue statement of a material fact or omitted or would omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances prevailing at that subsequent
time, not misleading, the Company has promptly notified or promptly will notify
the Underwriter and has promptly amended or will promptly amend or supplement,
at its own expense, such Issuer Free Writing Prospectus to eliminate or correct
such conflict, untrue statement or omission.
(iv) The Company shall take or cause to be
taken all necessary action to qualify the Shares for sale under the securities
laws of such jurisdictions as the Underwriter reasonably designates and to
continue such qualifications in effect so long as required for the distribution of the Shares,
except that the Company shall not be required in connection therewith to qualify as
a foreign corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified, to execute a general consent to service of process in
any state or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise subject.
(v) The Company will furnish to the
Underwriter and counsel for the Underwriter copies of the Registration
Statement, each Prospectus, any Issuer Free Writing Prospectus, and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Underwriter may from time to time reasonably
request.
15
(vi) The Company will make generally
available to its security holders as soon as practicable, but in any event not
later than 15 months after the end of the Company’s current fiscal quarter, an
earnings statement (which need not be audited) covering a 12-month period that
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
of the Rules and Regulations.
(vii) The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay or cause to be paid (A) all
expenses (including transfer taxes allocated to the respective transferees)
incurred in connection with the delivery to the Underwriter of the Shares,
including the reasonable legal fees of Underwriter’s counsel, up to a maximum
amount of $150,000 for all such expenses and fees, (B) all expenses and fees
(including, without limitation, fees and expenses of the Company’s counsel) in
connection with the preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein and all
amendments, schedules, and exhibits thereto), the Shares, the Time of Sale
Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus and any
amendment thereof or supplement thereto, (C) all reasonable filing fees and
reasonable fees and disbursements of the Underwriter’s counsel incurred in
connection with the qualification of the Shares for offering and sale by the
Underwriter or by dealers under the securities or blue sky laws of the states
and other jurisdictions that the Underwriter shall designate, (D) the fees and
expenses of any transfer agent or registrar, (E) listing fees, if any, and (F)
all other costs and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for herein.
(viii) The Company intends to apply the net
proceeds from the sale of the Shares to be sold by it hereunder for the purposes
set forth in the Time of Sale Disclosure Package and in the
Prospectus.
(ix) The Company will not take, directly or indirectly, during the Prospectus Delivery
Period, any action designed to or which might reasonably be expected to cause or
result in, or that has constituted, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(x) The Company represents and agrees that,
unless it obtains the prior written consent of the Underwriter, and the
Underwriter represents and agrees that, unless it obtains the prior written
consent of the Company, it has not made and will not make any offer relating to
the Shares that would constitute an Issuer Free Writing Prospectus; provided
that the prior written consent of the parties hereto shall be deemed to have
been given in respect of the Transaction Description. Any such free
writing prospectus consented to by the Company and the Underwriter is
hereinafter referred to as a “Permitted
Free Writing Prospectus.” The Company represents that
it has treated or agrees that it will treat each Permitted Free Writing
Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and
has complied or will comply with the requirements of Rule 433 applicable to any
Permitted Free Writing Prospectus, including timely Commission filing where
required, legending and
record-keeping.
16
(xi) The
Company hereby agrees that, without the prior written consent of the
Underwriter, it will not, during the period ending 60 days after the date hereof
(“Lock-Up
Period”), (A) offer, pledge, issue, sell, contract to sell, purchase,
contract to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock; or (B) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (A) or (B) above is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise; or (C) file any registration
statement with the Commission relating to the offering of any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock. The restrictions contained in the preceding sentence
shall not apply to (1) the Shares to be sold hereunder, (2) the issuance of
Common Stock upon the exercise of options or warrants disclosed as
outstanding in the Registration Statement (excluding exhibits thereto) or the
Prospectus, or (3) the issuance of employee stock options not exercisable during
the Lock-Up Period and the grant of restricted stock awards or restricted stock
units pursuant to equity incentive plans described in the Registration Statement
(excluding exhibits thereto) and the Prospectus. Notwithstanding the
foregoing, if (x) the Company issues an earnings release or material news, or a
material event relating to the Company occurs, during the last 17 days of the
Lock-Up Period, or (y) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-Up Period, the restrictions imposed by
this clause shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event, unless the Underwriter waives such extension in
writing.
7. Conditions
of the Underwriter’s Obligations. The obligations of the
Underwriter hereunder to purchase the Shares are subject to the accuracy, as of
the date hereof and at the Closing Date (as if made at the Closing Date), of and
compliance with all representations, warranties and agreements of the Company
contained herein, the performance by the Company of its obligations hereunder
and the following additional conditions:
(a) If the filing of the Prospectus, or any
amendment or supplement thereto, or any Issuer Free Writing Prospectus, is
required under the Securities Act or the Rules
and Regulations, the Company shall have filed the Prospectus (or such amendment
or supplement) or such Issuer Free Writing Prospectus with the Commission in the
manner and within the time period so required (without reliance on Rule 424(b)(8)
or 164(b) under the Securities Act); the Registration Statement shall remain
effective; no stop order suspending the effectiveness of the Registration
Statement or any part thereof, any Rule 462 Registration Statement, or any
amendment thereof, nor suspending or preventing the use of the Time of Sale
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall
have been issued; no proceedings for the issuance of such an order shall have
been initiated or threatened; any request of the Commission or the Underwriter
for additional information (to be included in the Registration Statement, the
Time of Sale Disclosure Package, the Prospectus, any Issuer Free Writing
Prospectus or otherwise) shall have been complied with to the Underwriter’s
satisfaction.
17
(b) The Underwriter shall not have
reasonably determined, and
advised the
Company, that the
Registration Statement, the Time of Sale Disclosure Package or the Prospectus,
or any amendment thereof or supplement thereto, or any Issuer Free Writing
Prospectus, contains an untrue statement of fact which, in the Underwriter’s reasonable
opinion, is material, or
omits to state a fact which, in the Underwriter’s reasonable
opinion, is material and is
required to be stated therein or necessary to
make the statements therein not misleading.
(c) On or after the date hereof (i) no
downgrading shall have occurred in the rating accorded any of the Company’s
securities by any “nationally recognized statistical organization,” as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the Securities
Act, and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
any of the Company’s securities.
(d) On the Closing Date, there shall have
been furnished to the Underwriter the opinion and negative assurance letter of
Loeb & Loeb LLP, dated the Closing Date and addressed to the Underwriter, in
form and substance reasonably satisfactory to the Underwriter, substantially to
the effect set forth in Schedule
I
(e) On the Closing Date, there shall have
been furnished to the Underwriter the opinion of Xxxxxx Xxxxxx & Xxxxxxx,
Nevada counsel for the Company, dated the Closing Date and addressed to the
Underwriter, in form and substance reasonably satisfactory to the Underwriter,
substantially to the effect set forth in Schedule
II.
(f) On the Closing Date, there shall have
been furnished to the Underwriter the opinion of Jingtian & Gongcheng, the Company’s China counsel, dated the Closing Date
and addressed to the Underwriter, in form and substance reasonably satisfactory
to the Underwriter, substantially to the effect set forth in Schedule
III.
(g) Xxxx shall have received a letter of
Xxxxx Xxxxxxxx Xxxxx Xxxxxx and Xxxxxx, LLP, on the date hereof and on the
Closing Date addressed to Xxxx, confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualifications of
accountants under Rule 2-01 of Regulation S-X of the Commission, and
confirming, as of the date of each such letter
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Time of Sale Disclosure Package, as of a date not prior to the date hereof or
more than five days prior to the date of such letter), the conclusions and
findings of said firm with respect to the financial
information and other matters required by Xxxx.
(h) On the Closing Date, there shall have
been furnished to the Underwriter a certificate, dated the Closing Date and
addressed to the Underwriter, signed by the chief executive officer and the
chief financial officer of the Company, in their capacity as officers of the Company, to
the effect that:
18
(i) The representations and warranties of
the Company in this Agreement are true and correct, in all material respects, as
if made at and as of the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) No
stop order or other order (A) suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof, (B) suspending the
qualification of the Shares for offering or sale, or (C) suspending or
preventing the use of the Time of Sale Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus, has been issued, and no proceeding for that
purpose has been instituted or, to their knowledge, is contemplated by the
Commission or any state or regulatory body; and
(iii) There
has been no occurrence of any event resulting or reasonably likely to result in
a Material Adverse Effect during the period from and after the date of this
Agreement and prior to the Closing Date.
(i) On or before the date hereof, the
Underwriter shall have received duly executed “lock-up” agreements, in
substantially the form set forth in Schedule
IV, with those persons set
forth on Schedule
V.
(j) The Company shall have furnished to the
Underwriter and its counsel such additional documents, certificates and evidence
as the Underwriter or its counsel may have reasonably
requested.
If
any condition specified in this Section 7 shall not have been fulfilled when and
as required to be fulfilled, this Agreement may be terminated by the Underwriter
by notice to the Company at any time at or prior to the Closing Date and such
termination shall be without liability of any party to any other party, except
that Section 6(a)(vii), Section 8 and Section 9 shall survive any such
termination and remain in full force and effect.
8. Indemnification
and Contribution.
(a) The Company agrees to indemnify, defend
and hold harmless the Underwriter, its affiliates, directors and officers and
employees, and each person,
if any, who controls the Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any losses, claims,
damages or liabilities to which the Underwriter or such person may become
subject, under the Securities Act or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, including the information deemed to be a part of the Registration
Statement at the time of effectiveness and at any subsequent time pursuant to
Rules 430A and 430B of the Rules and Regulations, the Time of Sale Disclosure
Package, the Prospectus, or any amendment or supplement thereto (including any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Registration Statement or the Prospectus), or any Issuer Free
Writing Prospectus or in any materials or information
provided to investors by, or with the written approval of, the Company in
connection with the marketing of the offering of the Shares, including any roadshow or investor
presentations (whether in person or electronically) (“Marketing
Materials”), or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made,
not misleading, (ii) in whole or in part, any inaccuracy in the representations
and warranties of the Company contained herein, or (iii) in whole or in part,
any failure of the Company to perform its obligations hereunder or under law,
and will reimburse the Underwriter for any legal or other expenses reasonably
incurred by it in connection with evaluating, investigating or defending against
such loss, claim, damage, liability or action; provided,
however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto, any Issuer Free Writing Prospectus or in
any Marketing Materials, in reliance upon and in conformity with written
information furnished to the Company by the Underwriter specifically for use in
the preparation thereof.
19
(b) The Underwriter will indemnify, defend
and hold harmless the Company, its affiliates, directors, officers and
employees, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange
Act, from and against any
losses, claims, damages or liabilities to which the Company may become subject, under the Securities
Act or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of such Underwriter), insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Time of Sale
Disclosure Package, the Prospectus, or any amendment or supplement thereto, any
Issuer Free Writing Prospectus or any Marketing Materials, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, the Time of
Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto,
any Issuer Free Writing Prospectus or any Marketing Materials in reliance upon
and in conformity with written information furnished to the Company by the
Underwriter specifically for use in the preparation thereof, and will reimburse
the Company for any legal or other expenses
reasonably incurred by the Company in connection with defending against any such
loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified
party under subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the failure to
notify the indemnifying party shall not relieve the indemnifying party from any
liability that it may have to any indemnified party except to the extent such
indemnifying party has been materially prejudiced by such failure. In
case any such action shall be brought against any indemnified party, and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of the indemnifying party’s election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof; provided, however, that if (i) the indemnified party has
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, (ii) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action on behalf
of the indemnified party), or (iii) the indemnifying party has not in fact
employed counsel reasonably satisfactory to the indemnified party to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, the indemnified party shall have the right to employ
a single counsel to represent it in any claim in respect of which indemnity may
be sought under subsection (a) or (b) of this Section 8, in which event the
reasonable fees and expenses of such separate counsel shall be borne by the
indemnifying party or parties and reimbursed to the indemnified party as
incurred.
20
The indemnifying party under this
Section 8 shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by
reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is a party or could be named and indemnity was or would be sought hereunder by
such indemnified party, unless such settlement, compromise or consent (a)
includes an unconditional release of such indemnified party from all liability
for claims that are the subject matter of such action, suit or proceeding and
(b) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in
this Section 8 is unavailable or insufficient to hold harmless an indemnified
party under subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities referred to in subsection (a) or
(b) above, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one
hand and the Underwriter on the other hand from the offering and sale of the
Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company on the one hand and the Underwriter
on the other hand in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the one
hand and the Underwriter on the other hand shall be deemed to be in the
same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriter, in
each case as set forth in the table on the cover page of the Final
Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriter and the parties’ relevant
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Underwriter
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were to be determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in the first sentence of this subsection
(d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim that is the subject of this subsection
(d). Notwithstanding the provisions of this subsection
(d), the Underwriter shall not be
required to contribute any amount in excess of
the amount of the Underwriter’s commissions referenced in the Prospectus
actually received by the
Underwriter pursuant to this Agreement. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
21
(e) The obligations of the Company under
this Section 8 shall be in addition to any liability that the Company may
otherwise have and the benefits of such obligations shall extend,
upon the same terms and conditions, to each person,
if any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act; and the obligations of the
Underwriter under this Section 8 shall be in addition to any liability that the
Underwriter may otherwise have and the benefits of such obligations shall extend,
upon the same terms and conditions, to the Company,
and its officers, directors and each person who controls the
Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange
Act.
(f) For purposes of this Agreement, the
Underwriter confirms, and the Company acknowledges, that
there is no information concerning the Underwriter furnished in writing to the
Company by the Underwriter specifically for preparation of or inclusion in the
Registration Statement, the Time of Sale Disclosure Package, the Prospectus or
any Issuer Free Writing Prospectus, other than the statements set forth in the last
paragraph on the cover page of the Prospectus and the statements set forth in
the “Underwriting” section of the Prospectus and Time of Sale Disclosure
Package, only insofar as
such statements relate to the amount of selling concession and re-allowance or
to over-allotment and related activities that may be undertaken by the
Underwriter.
9. Representations
and Agreements to Survive Delivery. All representations,
warranties, and agreements
of the Company herein or in certificates delivered pursuant hereto, including,
but not limited to, the agreements of the Underwriter and the Company contained
in Section 6(a)(vii) and Section 8 hereof, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Underwriter or any controlling person thereof, or the Company or any of its
officers, directors, or controlling persons, and
shall survive delivery of, and payment for, the Shares to and by the Underwriter
hereunder.
22
10. Termination
of this Agreement.
(a) The Underwriter shall have the right to
terminate this Agreement by giving notice to the Company as hereinafter
specified at any time at or prior to the Closing Date, if (i) trading in the
Company’s Common Stock shall have been suspended by the Commission or the
Nasdaq Global
Market or trading in
securities generally on the Nasdaq Global Market, New York Stock Exchange or
NYSE Amex shall have been suspended, (ii) minimum or maximum prices for trading
shall have been fixed, or maximum ranges for prices for securities shall have
been required, on the Nasdaq Global Market, New
York Stock Exchange or NYSE Amex, by such exchange or by order of the Commission
or any other governmental authority having jurisdiction, (iii) a banking moratorium shall have been
declared by federal or state or the PRC authorities, (iv) there shall have
occurred any attack on, outbreak or escalation of hostilities or act of
terrorism involving the United States or the PRC, any declaration by the United
States or the PRC of a national emergency or war, any
change in financial markets, any substantial change or development involving a
prospective substantial change in United States or the PRC or other
international political, financial or economic conditions or any other calamity
or crisis, or (v) the Company suffers any loss by strike, fire, flood, earthquake, accident or other
calamity, whether or not covered by insurance, the effect of which, in each case
described in this subsection (a), in the Underwriter’s reasonable judgment is material and
adverse and makes it impractical or inadvisable to proceed with the completion
of the sale of and payment for the Shares. Any such termination shall
be without liability of any party to any other party except that the provisions of Section 6(a)(vii)
and Section 8 hereof
shall at all times be
effective and shall survive such termination.
(b) If the Underwriter elects to terminate
this Agreement as provided in this Section, the Company shall be notified
promptly by the Underwriter by telephone, confirmed by letter.
11. Notices. Except as otherwise
provided herein, all communications hereunder shall be in writing and, if to
Xxxx, shall be mailed, delivered or telecopied to Xxxx Capital Partners, LLC, 00
Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000, telecopy number: (000) 000-0000,
Attention: Managing Director; and if to the Company, shall be
mailed, delivered or telecopied to it at Harbin Electric, Inc., No/9 Ha Ping Xx
Xx, Xxxxxx Xx Xx Xx, Xxxxxx 000000, People’s Republic of China, telecopy number: x00 000 0000-0000, Attention: Xxxxxx Xxxx and
Xxxxxxx Xxxx; or in each case to such other address as the person to be notified
may have requested in writing. Any party to this Agreement may change
such address for notices by sending to the parties to this Agreement written
notice of a new address for such purpose.
12. Persons
Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties
hereto and their respective successors and assigns and
the controlling persons, officers and directors referred to in Section
8. Nothing in this Agreement is intended or shall be construed to
give to any other person, firm or corporation any legal or equitable
remedy or claim under or in respect of this Agreement or any provision herein
contained. The term “successors and assigns” as herein used shall not
include any purchaser, as such purchaser, of any of the Shares from the
Underwriter.
23
13. Absence
of Fiduciary Relationship. The Company acknowledges and agrees that: (a) the
Underwriter has been retained solely to act as underwriter in connection with
the sale of the Shares and that no fiduciary, advisory or agency relationship
between the Company and the Underwriter has been created in respect of any of
the transactions contemplated by this Agreement, irrespective of whether the Underwriter
has advised or is advising the Company on other matters; (b) the price and other
terms of the Shares set forth in this Agreement were established by the Company
following discussions and arms-length negotiations with the Underwriter and the
Company is capable of evaluating and understanding and understands and accepts
the terms, risks and conditions of the transactions contemplated by this
Agreement; (c) it has been advised that the Underwriter and its affiliates are
engaged in a broad range of transactions that may involve interests that differ
from those of the Company and that the Underwriter has no obligation to disclose
such interest and transactions to the Company by virtue of any fiduciary, advisory or agency
relationship; (d) it has been advised that the Underwriter is acting, in respect
of the transactions contemplated by this Agreement, solely for the benefit of the Underwriter, and not on
behalf of the Company.
14. Amendments
and Waivers. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The failure of
a party to exercise any right or remedy shall not be deemed or constitute a
waiver of such right or remedy in the future. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (regardless of whether similar), nor shall any such
waiver be deemed or constitute a continuing waiver unless otherwise expressly
provided.
15. Partial
Unenforceability. The invalidity or
unenforceability of any section, paragraph, clause or provision of this
Agreement shall not affect the validity or enforceability of any other section,
paragraph, clause or provision.
16. Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
17. Counterparts. This Agreement may be
executed and delivered (including by facsimile transmission and electronic mail
attaching a portable document file (.pdf)) in one or more counterparts and, if
executed and delivered in more than one counterpart, the executed counterparts
shall each be deemed to be an original and all such counterparts shall together
constitute one and the same instrument.
24
Please sign and return to the Company
the enclosed duplicates of this letter whereupon this letter will become a
binding agreement between the Company and the Underwriter in accordance with its
terms.
| Very truly yours, | ||||
| HARBIN ELECTRIC, INC. | ||||
| By: | ||||
| Name: | ||||
|
|
Title: |
|
||
Confirmed as of the date first above-
mentioned by the
Underwriter.
XXXX CAPITAL PARTNERS,
LLC
| By: |
|
|
|||
| Name: |
Xxxxx
X. Xxxxxxxx
|
|
|||
| Title: |
Head
of Equity Capital Markets
|
|
[Signature
page to Underwriting Agreement]
SCHEDULE I
Loeb & Loeb LLP
Opinions
1. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, the holders of outstanding shares of capital stock of the
Company are not entitled to any preemptive right or right of first refusal to
our Knowledge, granted by the Company in any currently effective written
agreement.
2. The
Registration Statement has been declared effective by the
Commission. We have been orally advised by the Staff of the
Commission that no stop order suspending the effectiveness of the Registration
Statement has been issued, and to our Knowledge, no proceedings for that purpose
have been instituted or overtly threatened by the Commission. Any
required filing of the Prospectus, and any required supplement thereto, pursuant
to Rule 424(b) under the Securities Act, has been made in the manner and within
the time period required by Rule 424(b).
3. The
Company is not, and after giving effect to the offering and sale of the Shares
and the application of the proceeds thereof as described in the Time of Sale
Disclosure Package and the Final Prospectus will not be, required to register as
an “investment company” as defined in the Investment Company Act.
4. No
consent, approval, authorization or filing with or order of any U.S. Federal,
court or governmental agency or body having jurisdiction over the Company is
required, under the laws, rules and regulations of the United States of America
for the consummation by the Company of the transactions contemplated by the
Agreement, except (i) such as have been made or obtained under the Securities
Act and (ii) such as may be required under the blue sky laws of any jurisdiction
in connection with the purchase and distribution of the Shares by you in the
manner contemplated in the Agreement and in the Final Prospectus, as to which we
express no opinion.
5. The
issue and sale of the Shares pursuant to the Agreement will not result in a
breach or violation of (or constitute any event that with notice, lapse of time
or both would result in a breach of violation of): (i) any statute,
rule, or regulation of the United States of America which, in our experience, is
typically applicable to transactions of the nature contemplated by the Agreement
and is applicable to the Company, (iii) any currently effective order, writ,
judgment, injunction, decree, or award that names and has been entered against
the Company and of which we have Knowledge, or (iv) any Contract that was filed
as an exhibit to (or incorporated by reference into) the Company’s most recent
annual report on Form 10-K, in each case (ii) through (iv) the breach or
violation of which would materially and adversely affect the
Company.
6. To
our Knowledge, except as set forth in the Time of Sale Disclosure Package and
the Final Prospectus, the Company is not a party to any written agreement
granting any holders of securities of the Company rights to require the
registration under the Securities Act of resales of such
securities.
In addition to rendering legal advice
and assistance to the Company in the course of the preparation of the
Registration Statement, the Time of Sale Disclosure Package and the Prospectus,
involving, among other things, discussions and inquiries concerning various legal matters and
the review of certain corporate records, documents and proceedings, we also
participated in conferences with certain officers and other representatives of
the Company, its independent certified public accountants and you and your
counsel, at which the contents of the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, the documents incorporated by reference
in the Time of Sale Disclosure Package and the Prospectus and related matters
were discussed. We have also reviewed and relied upon certain
corporate records and documents of the Company, letters from counsel and
accountants, and oral and written statements and certificates of officers and
other representatives of the Company and others as to the existence and
consequences of certain factual and other matters.
The purpose of our professional
engagement was not to establish or confirm factual matters or financial or
quantitative information. Therefore, we are not passing upon and do not assume
any responsibility for the accuracy, completeness or fairness of the statements
or information contained or incorporated by reference in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus (except to the
extent set forth herein) and have not made, or undertaken any obligation to
make, an independent check or verification thereof (except as set forth
herein). Moreover, many of the determinations required to be made in
the preparation of the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus involve matters of a non-legal nature.
However, subject to the foregoing and
based on our participation, review and reliance described in the second
preceding paragraph, (i) we believe (a) the Registration Statement (as of
its effective date), the Time of Sale Prospectus (as of the Applicable
Time), the Prospectus (as of its date), and
any further amendments and supplements thereto (as of their respective dates), as applicable, made
by the Company prior to the Closing Date (other than the financial
statements and schedules and other financial and statistical data included
therein or derived therefrom, as to which we express no belief) appeared on
their face to be appropriately responsive, and complied as to form, in all
material respects to the
requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder and (b) the
documents incorporated by reference in the Registration Statement, the Time of
Sale Prospectus and the Prospectus (other than the financial statements and
schedules and other financial and statistical data included therein or derived
therefrom, as to which we express no belief), at the time they were filed with
the Commission, appeared on their face to be appropriately responsive, and
complied as to form, in all material respects to the requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder, and
(ii) we confirm that no facts have come to our attention that caused us to
believe (a) that the Registration Statement or any amendment thereto filed by
the Company prior to the Closing Date (other than the financial statements and
schedules and other financial and statistical data included therein or derived
therefrom, as to which we express no belief), when the Registration Statement or
such amendment became effective contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (b) that the Time of
Sale Disclosure Package (other than the financial statements and schedules and
other financial and statistical data included therein or derived therefrom, as
to which we express no belief), as of 6:00 a.m. PDT on __________, 2009 (the
“Applicable
Time,” which, you have informed us, is a time before the time of the
first sale of the Shares by any Underwriter) contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; or (c) that, as of its date and as of the Closing Date,
the Prospectus or any further amendment or supplement thereto made by the
Company prior to the Closing Date (other than the financial statements and
schedules and other financial and statistical data included therein or derived
therefrom, as to which we express no belief) contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. We do not express any
belief with respect to the assessments of or reports on the effectiveness of
internal control over financial reporting contained in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus.
In addition, we supplementally inform
you that, to our Knowledge, there is no action, suit or proceeding by or
before any court or other governmental agency, authority or body or any
arbitrator pending or overtly threatened against the Company or its properties
by a third party of a character required to be disclosed in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus that is not
disclosed in the Registration Statement, the Time of Sale Disclosure Package or
the Prospectus as required by the Securities Act and the rules
thereunder.
The term “Knowledge” as used in this
opinion shall mean the actual knowledge of the attorneys who have been directly
involved in representing the Company after due and reasonable
inquiry.
SCHEDULE
II
Xxxxxx
Xxxxxx & Xxxxxxx Opinions
1. The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Nevada, with the requisite
corporate power to own or lease, as the case may be, and operate its properties,
and to conduct its business, as described in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus.
2. The
issuance of the Shares has been duly authorized and, when issued and paid for by
you pursuant to the Agreement, the Shares will be validly issued, fully paid and
nonassessable.
3. The
Underwriting Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company.
4. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, the holders of outstanding shares of capital stock of the
Company are not entitled to any preemptive right or right of first refusal set
forth in or provided for by the Company’s currently effective certificate of
incorporation or bylaws (the “Company Governing Documents”).
5. The
statements in the Base Prospectus, the most recent Prospectus that is part of
the Time of Sale Disclosure Package (the “Time of Sale Prospectus”) and the
Final Prospectus under the headings “Description of Capital Stock” and in the
Registration Statement in Part II, Item 15, insofar as such statements
constitute a summary of matters of Nevada law, a summary of Nevada proceedings
or Nevada legal conclusions, fairly summarize such legal matters, agreements or
documents, in all material respects.
6. No
consent, approval, authorization or filing with or order of any State of Nevada
court or governmental agency or body having jurisdiction over the Company is
required, under the laws, rules and regulations of the State of Nevada for the
consummation by the Company of the transactions contemplated by the Agreement,
except such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Shares by you in the manner
contemplated in the Agreement and in the Final Prospectus, as to which we
express no opinion.
7. The
issue and sale of the Shares pursuant to the Agreement will not result in a
breach or violation of (or constitute any event that with notice, lapse of time
or both would result in a breach of violation of): (i) the Company
Governing Documents, (ii) any statute, rule, or regulation of the the State of
Nevada which, in our experience, is typically applicable to transactions of the
nature contemplated by the Agreement and is applicable to the
Company.
SCHEDULE
III
China
Opinions
1. Harbin
Tech Full Electric Co., Ltd. (the “HTFE”) has been duly organized and is validly
existing as a wholly foreign owned enterprise with limited liability under the
PRC laws and regulations; HTFE’s business license is in full force and effect;
HTFE has been duly qualified as a foreign invested enterprise; 100% of the
equity interests of HTFE are owned by Advanced Electric Motors, Inc., and to our
Knowledge, such equity interests are free and clear of all liens, encumbrances,
equities or claims; and the articles of association, the business license and
other constituent documents of HTFE comply with the requirements of applicable
PRC laws and regulations and are in full force and effect.
2. Shanghai
Tech Full Electric Co., Ltd.(the “STFE”) has been duly organized and is validly
existing as a limited liability company under the PRC laws and regulations;
STFE’s business license is in full force and effect; 40% of the equity interests
of STFE are owned by Advanced Electric Motors, Inc., and 60% of the equity
interests of STFE are owned by HTFE , and to our Knowledge, such equity
interests are free and clear of all liens, encumbrances, equities or claims; and
the articles of association, the business license and other constituent
documents of STFE comply with the requirements of applicable PRC laws
and regulations and are in full force and effect.
3. Weihai
Tech Full Simo Motors Co., Ltd. (the “Weihai Tech”) has been duly organized and
is validly existing as a limited liability company under the PRC laws and
regulations; Weihai Tech’s business license is in full force and effect; 100% of
the equity interests of Weihai Tech are owned by HTFE, and to our Knowledge,
such equity interests are free and clear of all liens, encumbrances, equities or
claims; and the articles of association, the business license and other
constituent documents of Weihai Tech comply with the requirements of applicable
PRC laws and regulations and are in full force and effect.
4. Advanced
Automation Group Shanghai, Ltd. (the “AAG”) has been duly organized and is
validly existing as a wholly foreign owned enterprise with limited liability
under the PRC laws and regulations; AAG’s business license is in full force and
effect; AAG has been duly qualified as a foreign invested enterprise; 100% of
the equity interests of AAG are owned by AdvancedAutomation Group, LLC., and to
our Knowledge, such equity interests are free and clear of all liens,
encumbrances, equities or claims; and the articles of association, the business
license and other constituent documents of AAG comply with the requirements of
applicable PRC laws and regulations and are in full force and
effect.
5. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, each of (i) HTFE, (ii) STFE, (iii) Weihai Tech, and (iv) AAG
(collectively, the “PRC Group
Companies”), has full corporate right, power and authority and has all
necessary governmental authorizations of and from, and has made all necessary
declarations and filings with, all governmental agencies to own, lease, license
and use its properties, assets and conduct its business as described in its
business license, and such governmental authorizations contain no materially
burdensome restrictions or conditions; to our Knowledge, none of the PRC Group
Companies has any reason to believe that any regulatory body is considering
modifying, suspending, revoking or not renewing any such governmental
authorizations; and each of the PRC Group Companies is in compliance in all
material respects with the provisions of all such governmental authorizations
and conducts its business in all material respects in compliance with any PRC
laws and regulations to which it is subject or by which it is
bound.
6. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, none of the PRC Group Companies has taken any action nor
have any steps been taken or legal or administrative proceedings been commenced
or threatened for the winding up, dissolution or liquidation of any of the PRC
Group Companies or for the suspension, withdrawal, revocation or cancellation of
any of their respective business license.
7. The
ownership structure of the PRC Group Companies does not violate any prohibitory
provisions of the applicable PRC laws and regulations and the transactions
conducted in the PRC involving the PRC Group Companies relating to the
establishment of such ownership structure, in each case, did not and do not
violate any explicit provisions of the applicable PRC laws and
regulations.
8. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, each of the PRC Group Companies owns or otherwise has the
legal right or valid license to use the intellectual property (“Intellectual
Property”) as currently used or as currently contemplated to be used by
the PRC Group Companies.
9. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, to our Knowledge, none of the PRC Group Companies is
infringing, misappropriating or violating any intellectual property right of any
third party in the PRC; none of the PRC Group Companies is subject to any
outstanding decree, order, injunction, judgment or ruling restricting the use of
such Intellectual Property in the PRC that would impair the validity or
enforceability of such Intellectual Property; and none of the Company or any of
the PRC Group Companies has received any notice of any claim of infringement or
conflict with any such rights of others.
10. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, there are no material legal, arbitration or governmental
proceedings in progress or pending or, to our Knowledge, threatened, in the PRC
to which the Company, or any PRC Group Company is a party or of which any
property of any PRC Group Company is subject.
11. On
August 8, 2006, six PRC regulatory agencies, namely, the PRC Ministry of
Commerce, the State Assets Supervision and Administration Commission, the State
Administration for Taxation, the State Administration for Industry and Commerce,
the China Securities Regulatory Commission (“CSRC”), and the State
Administration of Foreign Exchange, jointly adopted the Regulations on Mergers
and Acquisitions of Domestic Enterprises by Foreign Investors (the “New M&A Rule”),
which became effective on September 8, 2006 and later revised on June 22,
2009. The New M&A Rule purports, among other things to require
offshore special purpose vehicles, or SPVs, formed for overseas listing purposes
through acquisitions of PRC domestic companies and controlled directly or
indirectly by PRC companies or individuals, to obtain the approval of the CSRC
prior to publicly listing their securities on an overseas stock exchange. On
September 21, 2006, pursuant to the New M&A Rule and other PRC laws and
regulations, the CSRC, in its official website, promulgated relevant guidance
with respect to the issues of listing and trading of domestic enterprises’
securities on overseas stock exchanges, including a list of application
materials with respect to the listing on overseas stock exchanges by SPVs. Based
on our understanding of current PRC laws and regulations, we believe that CSRC
approval is not required in respect of this Offering.
12. Except
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, the current beneficial owners of the Company who are PRC
residents, have registered with the applicable local office of the SAFE in
accordance with the SAFE’s Notice on Relevant Issues Concerning Foreign Exchange
Administration for PRC Residents to Engage in Financing and Inbound Investment
via Overseas Special Purpose Vehicles, issued on October 21, 2005.
13. As
a matter of PRC laws and regulations, none of the PRC Group Companies or their
properties, assets or revenues has any right of immunity, on any grounds, from
any legal action, suit or proceeding, from the giving of any relief in any such
legal action, suit or proceeding, from setoff or counterclaim, from the
jurisdiction of any court, from service of process, attachment upon or prior to
judgment, or attachment in aid of execution of judgment, or from execution of a
judgment, or other legal process or proceeding for the giving of any relief with
respect to their respective obligations, liabilities or any other matter under
or arising out of or in connection with the transactions contemplated by the
Underwriting Agreement.
14. The
sale of the Shares and the compliance by the Company with all of the provisions
of the Underwriting Agreement and the consummation of the transactions
contemplated thereby do not result in any violation of the provisions of the
articles of association, business license or any other constituent documents of
any of the PRC Group Companies or any applicable statute or any order, rule or
regulation, including without limitation the New M&A Rule, of any
governmental agency having jurisdiction over any of the PRC Group Companies or
any of its properties. No governmental authorization of any
governmental agency in the PRC is required for the consummation of the
transactions contemplated by the Underwriting Agreement, other than those
already obtained.
15. No
stamp or other issuance or transfer taxes or duties and no capital gains,
income, withholding or other taxes are payable by the Underwriter to the
government of the PRC or to any political subdivision or taxing authority
thereof or therein in connection with the execution and delivery of the
Underwriting Agreement, the sale and delivery by the Company of the Shares to or
for the account of the Underwriter, the sale and delivery outside the PRC by the
Underwriter of the Shares to the purchasers thereof in the manner contemplated
in the Underwriting Agreement, or the consummation of any other transaction
contemplated in the Underwriting Agreement.
Although we do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Time of Sale Disclosure Package or
the Prospectus, we have no reason to believe, that (a) when it became of
effective, any part of the Registration Statement (other than the financial
statements and related schedules therein, as to which we express no opinion)
describing or summarizing PRC laws and regulations or documents, agreements or
proceedings governed by PRC laws and regulations contained an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein not misleading; (b) as of the date of the Underwriting
Agreement and the date hereof, any part of the Time of Sale Disclosure Package
(other than the financial statements and related schedules therein, as to which
we express no opinion) describing or summarizing PRC laws and regulations or
documents, agreements or proceedings governed by PRC laws and regulations
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein not misleading;
or (c) at the time the Prospectus was filed with the Commission or at the date
hereof, any part of the Prospectus (other than the financial statements and
related schedules therein, as to which we express no opinion) describing or
summarizing PRC laws and regulations or documents, agreements or proceedings
governed by PRC laws and regulations contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact necessary to
make the statements therein not misleading.
The term “Knowledge” as used in this
opinion shall mean the actual knowledge of the attorneys who have been directly
involved in representing the Company after due and reasonable
inquiry.
SCHEDULE
IV
Lock-Up
Agreement
July 30,
2009
Xxxx
Capital Partners, LLC
00
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Ladies
and Gentlemen:
The
undersigned understands that Xxxx Capital Partners, LLC (the “RCP” or “Underwriter”) proposes to
enter into an Underwriting Agreement (the “Underwriting Agreement”) with
Harbin Electric, Inc., a Nevada corporation (the “Company”), providing for the
public offering (the “Public
Offering”) by the Underwriter of shares (the “Shares”) of the common stock,
par value $0.00001 per share, of the Company (the “Common Stock”).
To induce
the underwriters that may participate in the Public Offering to continue their
efforts in connection with the Public Offering, the undersigned hereby agrees
that, without the prior written consent of RCP, he will not, during the period
commencing on the date hereof and ending 180 days after the date of the final
prospectus supplement relating to the Public Offering (the “Prospectus”) (the “Lock-Up Period”), (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall
not apply to (a) pledges of Common Stock made by the undersigned in support of
any loans to the Company after the date hereof, (b) transactions relating to
shares of Common Stock or other securities acquired in open market transactions
after the completion of the Public Offering, provided that no filing
under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) shall be
required or shall be voluntarily made in connection with subsequent sales of
Common Stock or other securities acquired in such open market transactions, or
(c) transfers of shares of Common Stock or any security convertible into Common
Stock as a bona fide gift, by will or intestacy or to a family member or trust
for the benefit of a family member; provided that in the case of
any transfer or distribution pursuant to clause (c), (i) each donee or
distributee shall sign and deliver a lock-up letter substantially in the form of
this letter and (ii) no filing under Section 16(a) of the Exchange Act,
reporting a reduction in beneficial ownership of shares of Common Stock, shall
be required or shall be voluntarily made during the Lock-up
Period. In addition, the undersigned agrees that, without the prior
written consent of RCP, he will not, during the period commencing on the date
hereof and ending 180 days after the date of the Prospectus, make any demand for
or exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company’s transfer agent and registrar against
the transfer of the undersigned’s shares of Common Stock except in compliance
with the foregoing restrictions.
If (i)
the Company issues an earnings release or material news, or a material event
relating to the Company occurs, during the last 17 days of the Lock-Up Period,
or (ii) prior to the expiration of the Lock-Up Period, the Company announces
that it will release earnings results during the 16-day period beginning on the
last day of the Lock-Up Period, the restrictions imposed by this agreement shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event, unless RCP waives such extension.
No
provision in this agreement shall be deemed to restrict or prohibit the exercise
or exchange by the undersigned of any option or warrant to acquire shares of
Common Stock, or securities exchangeable or exercisable for or convertible into
Common Stock, provided
that the undersigned does not transfer the Common Stock acquired on such
exercise or exchange during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this agreement. In addition, no provision
herein shall be deemed to restrict or prohibit the entry into or modification of
a so-called “10b5-1” plan at any time (other than the entry into or modification
of such a plan in such a manner as to cause the sale of any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock within the Lock-Up Period).
The
undersigned understands that the Company and the Underwriter are relying upon
this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is
irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors and assigns.
The
undersigned understands that, if the Underwriting Agreement is not executed by
August 15, 2009, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released from all obligations under this letter
agreement.
Whether
or not the Public Offering actually occurs depends on a number of factors,
including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriter.
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SCHEDULE
V
Persons
Subject to Lock-Up Agreements
Xxxxxx
Xxxx
