Placement Agent Agreement
June
19,
2008
Xxxxxxx
Xxxxx & Company, L.L.C.
000
Xxxx
Xxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
XXXX
Capital Partners, LLC
00
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxxx, XX 00000
Ladies
and Gentlemen:
Section
1. Appointment
of Placement Agents.
This
Placement Agent Agreement (this “Agreement”) confirms our understanding that
Harbin Electric, Inc., a Nevada corporation (the “Company”), hereby appoints
Xxxxxxx Xxxxx & Company, L.L.C. and XXXX Capital Partners, LLC pursuant to
the terms of this Agreement as its exclusive placement agents (the “Placement
Agents”) in connection with the proposed direct placement (the “Placement”) to
certain investors of up to three million five hundred thousand (3,500,000)
shares (the “Shares”) of the Company’s common stock, par value $0.00001 per
share (the “Common Stock”). On the basis of the representations and warranties
contained herein and subject to the terms and conditions set forth herein,
the
Placement Agents severally agree to use their respective commercially reasonable
efforts to assist the Company in its solicitation, confirmation and receipt
of
offers to purchase the Shares. Such efforts under this Agreement shall include
providing administrative services as reasonably requested by the Company in
connection with confirming orders of purchases of shares, collecting payment
for
the shares and distributing the shares in the Placement, and assisting the
Company with (i) evaluating the structure of the offering, (ii) negotiating
the
terms of the Placement, (iii) soliciting indications of interest from potential
purchasers and (iv) allocating the shares in the Placement. Notwithstanding
anything to the contrary contained in this Agreement, neither Placement Agent
shall have any obligation to purchase any of the Shares or, other than as a
result of such Placement Agent’s bad faith, wilful misconduct or gross
negligence, any other liability to the Company if any prospective purchaser
(each a “Purchaser”) fails to consummate a purchase of any of the Shares. In the
event that any Purchaser fails to consummate a purchase of any of the Shares,
the Placement Agents may use their respective commercially reasonable efforts
to
solicit orders from and confirm sales to other investors identified by the
Company or the Placement Agents.
Section
2. Compensation.
In
connection with the Placement and sale of the Shares
by the
Company, the Placement Agents will charge the Company a placement fee (the
“Placement Fee”) payable in immediately available funds on the date of the
consummation of the Placement and sale of Shares (the “Closing Date”). The
Placement Fee shall be equal to six percent (6%) of the aggregate price at
which
the Shares are sold by the Company in the Placement. The Placement Agent
expenses shall be paid out of the Placement Fee, and thereafter the net amount
shall be paid 66.665% to Xxxxxxx Xxxxx & Company, L.L.C. and 33.335% to XXXX
Capital Partners LLC. The
parties acknowledge and agree that no fee shall be payable hereunder unless
the
sale of Shares is consummated.
Section
3. Representations
and Warranties.
The
Company represents and warrants to the Placement Agents that:
(a) This
Agreement has been duly authorized, executed and delivered by the
Company;
(b) The
making and performance by the Company of this Agreement (i) will not violate
any
provision of the Company’s charter or bylaws and (ii) will not result in the
breach, or be in contravention, of any provision of any agreement, franchise,
license, indenture, mortgage, deed of trust, or other instrument to which the
Company or any subsidiary is a party or by which the Company, any subsidiary
or
the property of any of them may be bound or affected, or any order, rule or
regulation applicable to the Company or any subsidiary of any court or
regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any subsidiary or any of their respective
properties, or any order of any court or governmental agency or authority
entered in any proceeding to which the Company or any subsidiary was or is
now a
party or by which it is bound, except in the case of clause (ii) to the extent
such breach or contravention would not have a material adverse effect on the
Company.
(c) No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated herein, except for compliance with the Securities Act of 1933,
as
amended (the “1933 Act”), and blue sky laws applicable to the sale of the
Shares.
Section
4. Agreements.
(a) The
Company agrees with the Placement Agents that, during the term of this
Agreement, if any event occurs or condition exists as a result of which the
Company's filings with the Securities and Exchange Commission since January
1,
2008 (the "SEC Filings") would include an untrue statement of a material fact,
or omit to state any material fact necessary to make the statements therein,
in
the light of the circumstances under which they were made, not misleading,
the
Company will promptly notify the Placement Agents of any such event, condition
or opinion of counsel to the Company and shall prepare an amendment or
supplement to any such filing that will correct such statement or omission
or
effect such compliance.
(b) Each
of
the parties hereto hereby agrees that it will comply with all laws, rules and
regulations applicable to it in conducting the Placement and carrying out its
obligations under this Agreement.
Section
5. Closing
Documents.
On the
Closing Date, the Company shall deliver to the Placement Agents:
(a) a
certificate of the chief executive officer and the principal financial officer
of the Company, dated as of the Closing Date, to the effect that the
representations and warranties of the Company set forth in this Agreement are
true and correct as of the date of this Agreement 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;
(b) copies
of
any other documents delivered to the Purchasers in connection with the sale
of
the Shares; and
(c) such
further certificates and documents as the Placement Agents may reasonably
request.
Section
6. Exclusive
Appointment.
The
Company shall not, directly or indirectly, sell or offer to sell any of the
Shares or any substantially similar equity security from the date hereof through
the Closing Date. Any sale or disposition of such Shares or any substantially
similar equity security by the Company during that period will be deemed to
be
as if such sale or disposition were undertaken by the Placement Agents directly
for purposes of calculating the compensation due hereunder.
Section
7. Indemnity
and Contribution.
(a) The
Company agrees to indemnify and hold harmless each Placement Agent and each
person, if any, who controls either Placement Agent within the meaning of the
1933 Act or the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which such Placement Agent or such controlling person
may
become subject under federal or state statutory law or regulation, at common
law
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) (i) arise out
of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any SEC Filing, or any amendment or supplement
thereto, 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 or (ii) arise in any manner out of or
are
based upon any claims relating to the Placement (other than losses, claims,
damages or liabilities that result from such Placement Agent’s bad faith, wilful
misconduct or gross negligence); and will reimburse each Placement Agent and
each such controlling person for any legal or other expenses reasonably incurred
by such Placement Agent or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
In
addition to its other obligations under this Section 7(a), the Company agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding subject to indemnification pursuant
to this Section 7(a), upon receipt of notices setting forth in reasonable detail
the matter for which indemnification is sought, it will reimburse the Placement
Agents on a monthly basis for all reasonable legal and other expenses incurred
in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of
a
judicial determination as to the propriety and enforceability of the Company’s
obligation to reimburse the Placement Agents for such expenses and the
possibility that such payments might later be held to have been improper by
a
court of competent jurisdiction. This indemnity agreement will be in addition
to
any liability which the Company may otherwise have.
(b) Promptly
after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the Company under this Section 7, notify the
Company of the commencement thereof; but the omission so to notify the Company
will not relieve it from any liability which it may have to any indemnified
party except to the extent that the Company was prejudiced by such failure
to
notify. In case any such action is brought against any indemnified party, and
it
notifies the Company of the commencement thereof, the Company will be entitled
to participate in, and, to the extent that it may wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and
the
Company and the indemnified party shall have reasonably concluded, based on
advice of counsel, that there may be legal defenses available to it and/or
other
indemnified parties which are different from or additional to those available
to
the Company, or the indemnified parties and the Company may have conflicting
interests which would make it inappropriate for the same counsel to represent
both of them, the indemnified party or parties shall have the right to select
separate counsel to assume such legal defense and otherwise to participate
in
the defense of such action on behalf of such indemnified party or parties.
Upon
receipt of notice from the Company to such indemnified party of its election
so
to assume the defense of such action and approval by the indemnified party
of
counsel, the Company will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defense in accordance with the proviso to the immediately
preceding sentence (it being understood, however, that the Company shall not
be
liable for the expenses of more than one separate counsel representing all
indemnified parties not having different or additional defenses or potential
conflicting interest among themselves who are parties to such action), (ii)
the
Company shall not have employed counsel satisfactory to the indemnified party
to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the Company has authorized in writing the
employment of counsel for the indemnified party at the expense of the Company.
The Company shall not, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
arising out of such proceeding.
(c) If
the
indemnification provided for in this Section 7 is unavailable to an indemnified
party under paragraph (a) in respect of any losses, claims, damages or
liabilities referred to therein, then the Company, in lieu of indemnifying
such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Placement Agents from the Placement 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
and
the Placement Agents, as well as any other relevant equitable considerations.
The respective relative benefits received by the Company and the Placement
Agents shall be deemed to be in the same proportion, in the case of the Company,
as the net proceeds to be received by the Company in the Placement (after
deducting the Placement Fee but before deducting expenses) bears to, and in
the
case of the Placement Agents, as the Placement Fee received by them bears to,
the total of such amounts paid by Purchasers in the Placement. The relative
fault of the Company and the Placement Agents shall be determined by reference
to, among other things, (i) in the case of any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, whether the untrue or alleged untrue statement of a material fact or
the
omission to state a material fact relates to information supplied by the Company
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and (ii) in the
case of any other action or omission, whether such action or omission was taken
or omitted to be taken by the Company or by the Placement Agents and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The
Company and the Placement Agents agree that it would not be just and equitable
if contribution pursuant to this Section 7(c) were determined by pro rata
allocation or by any other method of allocation which does not take account
of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7(c), neither Placement Agent
shall be required to contribute any amount in excess of the amount by which
the
Placement Fee actually received by it exceeds the amount of any damages that
such Placement Agent has otherwise been required to pay. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Placement Agents’ obligations to
contribute pursuant to this Section 7(c) are several in proportion to the
respective Placement Fees to be paid to them hereunder.
Section
8. Miscellaneous
(a) Representations,
Indemnity and Agreements to Survive.
The
respective representations, warranties and indemnities set forth herein will
remain in full force and effect regardless of any investigation made by or
on
behalf of the Placement Agents or the Company or any of their respective
officers, directors or controlling persons, and will survive delivery of any
payment for the Shares. The provisions of this Section and Sections 2, 3 and
7
hereof shall survive the termination or cancellation of this
Agreement.
(b)
Governing Law.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Illinois.
(c) Counterparts;
Headings.
This
Agreement may be signed in counterparts with the same effect as if the
signatures thereto were on the same instrument. The headings of the Sections
of
this Agreement have been inserted for convenience of reference only and shall
not be deemed a part of this Agreement.
(d) No
Third Party Beneficiaries. This
Agreement has been and is made solely for the benefit of the parties hereto,
the
indemnified persons and their respective successors and assigns, and nothing
in
this Agreement, expressed or implied, is intended to confer or does confer
on
any other person or entity any rights or remedies under or by reason of this
Agreement or the covenants of the parties contained herein.
(e) No
Fiduciary Relationship. It
is
understood and agreed that the Placement Agents will act under this Agreement
as
independent contractors and nothing in this Agreement or the nature of the
Placement Agents’ services shall be deemed to create a fiduciary or agency
relationship between the Placement Agents and the Company or its affiliates
or
stockholders.
*
* * * *
* *
If
the
foregoing is in accordance with your understanding of our agreement, please
sign
and return to us the enclosed duplicate hereof, whereupon this Agreement shall
represent a binding agreement between the Placement Agents and the
Company.
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Very
truly yours,
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By:
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Name:
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Title:
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Accepted
as of June 19, 2008
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By:
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Name:
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Title:
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XXXX
Capital Partners, LLC
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By:
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Title:
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