PARTICIPATION AGREEMENT Baring Letterhead
EXHIBIT
7.01
Baring
Letterhead
November
19, 2010
Xx.
Xxxxxx Xxxx
No. 9, Ha
Ping Xi Lu
Ha Ping
Lu Xx Xxxxx Qu
Xxxxxx
Xxx Xx Xx
P.R.
China 150060
Dear Xx.
Xxxx:
You and
we are parties to a letter agreement dated October 10, 2010 (the “Agreement”), pursuant
to which you agreed to cooperate exclusively with Baring Private Equity
Asia Group Limited (“Baring”) to pursue a
possible acquisition (the “Transaction”) of Harbin
Electric, Inc. (“Harbin”). Pursuant to
the Agreement, you and Baring submitted a preliminary non-binding proposal for
the Transaction to the board of directors of Harbin (the “Board”) on October
10, 2010 (the “Proposal”).
You have
informed us that you now intend to seek alternative financing for the
Transaction . Accordingly, we hereby agree that Baring will not participate
in the Transaction, except as set forth below.
The
parties hereby amend and restate the Agreement to read in its entirety as
follows:
1. Modification of
Proposal. Promptly after the execution of this letter agreement, Xx. Xxxx
shall submit a letter, in the form of Exhibit A hereto, to
the Board and the special committee formed by the Board to evaluate the
Proposal.
2. Baring’s Future
Participation. Baring (through an affiliated investment fund) shall have
the opportunity (but not the obligation) to provide up to 10% of the financing
for the Transaction (either through debt, equity or a combination of debt and
equity) on terms mutually acceptable to the parties.
3. Confidentiality. Each
of Xx. Xxxx and Baring shall, and shall direct its employees, directors,
officers, partners, members, affiliates, agents, advisors (including but not
limited to legal counsel, accountants, consultants and financial advisors) to,
keep this letter agreement, the Agreement and all discussions, negotiations and
other information with respect to this letter agreement and the Agreement
confidential, other than as mutually agreed in writing by you and Baring or as
required by applicable laws, rules or regulations.
4. Governing Law;
Arbitration. This letter agreement and all matters arising out of or
relating to this letter agreement shall be governed by and construed in
accordance with the laws of Hong Kong, without reference to conflict of laws
principles. Any dispute, controversy or claim arising out of or relating to this
letter agreement, including the validity, invalidity, breach or termination
thereof, shall be settled by arbitration in Hong Kong under the Hong Kong
International Arbitration Centre Administered Arbitration Rules (the “Rules”) in force when
the notice of arbitration is submitted in accordance with these Rules. There
shall be three arbitrators. The arbitration proceedings shall be conducted in
English.
5. Counterparts; Entire
Agreement. This letter agreement may be signed and delivered by facsimile
or portable document format via electronic mail and in one or more counterparts,
each of which shall be deemed an original but all of which shall be deemed to
constitute a single instrument. This letter agreement sets forth the entire
agreement and understanding among the parties and supersedes all prior
agreements, discussions and documents relating thereto, including, but not
limited to, the Agreement. No party hereto will be entitled to punitive,
exemplary, special, unforeseen, incidental, indirect or other consequential
damages.
Please
confirm your agreement with the foregoing by having a duly authorized officer of
your organization sign and return one copy of this letter to the undersigned,
whereupon this letter agreement shall become a binding agreement among Xx. Xxxx
and Baring.
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Very
truly yours,
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BARING
PRIVATE EQUITY ASIA
GROUP
LIMITED
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By:
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/s/ Tek Xxx Xxx
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Name:
Tek Xxx Xxx
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Title:
Director
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CONFIRMED
AND AGREED
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as
of the date written above:
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By:
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/s/ Xxxxxx Xxxx
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Xxxxxx
Xxxx
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Exhibit
A
Letter
to the Board
November
___, 2010
Board of
Directors
No. 9 Ha
Xxxx Xx Lu,
Ha Ping
Lu Xx Xxxxx Qu
Xxxxxx
Xxx Xx Xx, Xxxxxx
X.X.
China 150060
Dear
Members of the Board:
On October 10, 2010, I and Baring
Private Equity Asia Group Limited (“Baring”) submitted a Proposal Letter to the
Board, setting forth our non-binding preliminary proposal to acquire Harbin
Electric, Inc. (“Harbin”) in a going-private transaction (the “Transaction”). As
you know, since the Proposal Letter constituted only our preliminary indication
of interest, it did not constitute a binding commitment to consummate the
Transaction.
I would like to notify the Board that
Baring and I have decided to amend our agreement to jointly pursue the
Transaction to allow me to obtain alternative financing sources to complete the
Transaction. The amended agreement also provides that an investment fund advised
by Baring will have the opportunity (but not the obligation) to provide up to
10% of the financing for the Transaction (either through debt, equity or a
combination of debt and equity) on terms mutually acceptable to the parties. I
intend to obtain alternative financing for the Transaction and anticipate that
such financing will be in place by the time the definitive transaction agreement
has been executed with Harbin. Accordingly, the Proposal Letter is modified to
reflect the foregoing.
Going forward, all questions from the
Board (including the special committee and its legal and financial advisors)
regarding the Transaction should be directed to me, Mr. Xxxxxxx Xxxxxxxx-Xxxxxxx
of Xxxxxxx at x000 0000 0000 or Xx. Xxxxxxx Xxxxxx of Skadden at x0 (000)
000-0000 or +8610 6535 5540, and not to Baring.
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Sincerely,
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Xxxxxx
Xxxx
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