LOAN AGREEMENT dated July 28, 2010 between HARBIN ELECTRIC, INC., a Nevada corporation as Borrower, and ABAX EMERALD LTD., as Lender
Exhibit
10.1
dated
July
28, 2010
between
a
Nevada corporation
as
Borrower,
and
ABAX
EMERALD LTD.,
as
Lender
TABLE
OF CONTENTS
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Page
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1.
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DEFINITIONS
AND RULES OF INTERPRETATION
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1
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Section
1.1
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Rules
of Interpretation
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1
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Section
1.2
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Definitions
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1
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2.
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THE
LOAN
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1
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Section
2.1
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Loan
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1
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Section
2.2
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Accretion
of Value; Repayment of Principal Amount at Maturity
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2
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Section
2.3
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Optional
Prepayments
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2
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Section
2.4
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Mandatory
Prepayment
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2
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Section
2.5
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Evidence
of Debt
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2
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Section
2.6
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Computation
of Accreted Value, Default Interest and Fees
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3
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Section
2.7
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Payments
Generally
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3
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Section
2.8
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No
Set-off or Withholding; Taxes
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3
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Section
2.9
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Default
Interest
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3
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Section
2.10
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Illegality
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4
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Section
2.11
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Increased
Cost
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4
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Section
2.12
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Interest
Rate Limitation
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4
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Section
2.13
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Lender’s
Certificate
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4
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3.
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CLOSING
CONDITIONS; CONDITIONS PRECEDENT TO LOAN
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4
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4.
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REPRESENTATIONS
AND WARRANTIES
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5
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Section
4.1
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Existence,
Qualification and Power
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5
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Section
4.2
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Authorization;
No Contravention
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6
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Section
4.3
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Governmental
Authorization; Other Consents
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6
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Section
4.4
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Binding
Effect
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6
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Section
4.5
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Absence
of Litigation
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6
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Section
4.6
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No
Default
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6
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Section
4.7
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Ownership
of Property; No Other Liens
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6
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Section
4.8
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No
Material Changes
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6
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Section
4.9
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Disclosure
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7
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Section
4.10
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Compliance
with Laws, Etc
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7
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Section
4.11
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Tax
Status
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7
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Section
4.12
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Absence
of Financing Statements, Etc
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7
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Section
4.13
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Brokers
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7
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Section
4.14
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Other
Debt
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7
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Section
4.15
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Solvency
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7
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Section
4.16
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Organizational
Documents
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8
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Section
4.17
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Employee
Benefit Plans
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8
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Section
4.18
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SEC
Reports
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8
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5.
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AFFIRMATIVE
COVENANTS
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8
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Section
5.1
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Punctual
Payment
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8
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Section
5.2
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Preservation
of Existence
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8
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Section
5.3
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Payment
of Obligations
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8
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i
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Section
5.4
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Limitation
on Borrower’s Business
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9
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Section
5.5
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Listing
of Borrower’s Common Stock
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9
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Section
5.6
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Compliance
with Law, Etc
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9
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Section
5.7
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Ranking
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9
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Section
5.8
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Notices
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9
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Section
5.9
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Disclosure
Filings and Information.
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9
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Section
5.10
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Further
Assurances
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10
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6.
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NEGATIVE
COVENANTS
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10
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Section
6.1
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Restriction
on Liens
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11
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Section
6.2
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Restriction
on Fundamental Changes; Asset Sales
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11
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Section
6.3
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Transactions
with Shareholders and Affiliates
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11
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Section
6.4
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Stay,
Extension and Usury Laws
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11
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Section
6.5
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Consolidated
Fixed Charge Coverage Ratio
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11
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Section
6.6
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Leverage
Ratio
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11
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7.
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EVENTS
OF DEFAULT AND REMEDIES
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11
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Section
7.1
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Events
of Default
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11
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Section
7.2
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Remedies
Upon Event of Default
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13
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8.
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MISCELLANEOUS
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14
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Section
8.1
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Amendments,
etc
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14
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Section
8.2
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Notices
and Other Communications
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14
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Section
8.3
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No
Waiver; Cumulative Remedies
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15
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Section
8.4
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Expenses
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15
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Section
8.5
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Indemnification
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15
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Section
8.6
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Survival
of Representations, Etc
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16
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Section
8.7
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Payments
Set Aside
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16
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Section
8.8
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Successors
and Assigns
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16
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Section
8.9
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No
Third Party Beneficiary
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16
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Section
8.10
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Set-off
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16
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Section
8.11
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Counterparts;
Integration
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17
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Section
8.12
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Survival
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17
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Section
8.13
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Severability
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17
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Section
8.14
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Governing
Law
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17
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Section
8.15
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Jurisdiction
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17
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Section
8.16
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JURY
TRIAL WAIVER
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17
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Section
8.17
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Judgment
Currency
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18
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Section
8.18
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Counterclaims
and Other Actions
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18
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Section
8.19
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Service
of Process
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18
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9.
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DEFINITIONS;
CONSTRUCTION
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19
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ii
This
LOAN AGREEMENT dated
July 28, 2010 and between Harbin Electric, Inc., a Nevada corporation (the
“Borrower”)
and Abax Emerald Ltd. (the “Lender”).
RECITALS
WHEREAS, the Borrower has
requested that the Lender provide a $15,000,000 loan to the Borrower;
and
WHEREAS, the Lender is willing
to provide such loan on and subject to the terms and conditions set forth
herein.
NOW, THEREFORE, in
consideration of the recitals herein and mutual covenants and agreements
contained herein, the parties hereto covenant and agree as follows:
1. DEFINITIONS
AND RULES OF INTERPRETATION
Section
1.1 Rules of
Interpretation.
(a) This
agreement, together with the Exhibits hereto, shall form a single agreement
(collectively, this “Agreement”).
(b) A
reference to any document or agreement shall include such document or agreement
as amended, modified or supplemented from time to time in accordance with its
terms and the terms of this Agreement.
(c) The
singular includes the plural and the plural includes the singular.
(d) A
reference to any law includes any amendment or modification to such
law.
(e) A
reference to any Person includes its permitted successors and permitted
assigns.
(f) The
words “include”, “includes” and “including” are not limiting.
(g) The
words “herein”, “hereof”, “hereunder” and words of like import shall refer to
this Agreement as a whole and not to any particular Article or subdivision of
this Agreement.
Section
1.2 Definitions.
The terms defined in Article 9 and in the Exhibits hereto will have the
meanings therein specified for purposes of this Agreement.
2. THE
LOAN
Section
2.1 Loan.
Subject to the terms and conditions set forth herein, the Lender agrees to make
a loan (the “Loan”) to
the Borrower, on the Closing Date, in an aggregate amount not to exceed
$15,000,000. The Loan shall be made pursuant to one or more borrowings (each, an
“Advance”)
from time to time from the Closing Date to the date falling on the expiration of
five (5) months after the Closing Date by delivery from the Borrower to the
Lender of a Borrowing Notice in the form of Exhibit A hereto. The
date on which any Advance is made from Lender to Borrower shall be referred to
herein as a “Borrowing
Date”. An Advance may be for an aggregate amount not to exceed
$15,000,000 less the sum of all other Advances (calculated at original value and
not at Accreted Value) then outstanding (the “Available
Commitment”).
1
Section
2.2 Accretion of Value;
Repayment of Principal Amount at Maturity. In
lieu of payment of interest in cash on each Advance, the outstanding principal
amount thereof shall accrete in value for the period commencing on the Borrowing
Date for such Advance and ending on the day on which such Advance is repaid, at
a rate equal to 10% per annum, computed as described herein. On the Maturity
Date, the Borrower shall repay the remaining outstanding Obligations not
theretofore paid, together with all fees and other amounts payable hereunder. If
the Borrower prepays any Advance prior to the Maturity Date, the accreted value
of the amount so prepaid will be computed (such principal amount at any given
time at such rate of accretion shall be referred to herein as the “Accreted
Value” of such Advance, and the aggregate Accreted Value of all Advances
then outstanding shall constitute the Accreted Value of the Loan), and the
remaining principal amount of all Advances not theretofore repaid shall continue
to accrete in value at the same rate as before such prepayment, with any
remaining principal amount outstanding after the Maturity Date accreting in
value at such rate heretofore described until payment in full in cash has been
made.
Section
2.3 Optional
Prepayments. The
Borrower may voluntarily prepay any Advance (or portion thereof) or all Advances
at its Accreted Value or their aggregate Accreted Value, as the case may be, and
together with all fees and other amounts payable hereunder, without premium or
penalty upon written notice by the Borrower to the Lender in the form of Exhibit B hereto. Any
prepayment of the Loan (or portion thereof) shall be in an integral multiple of
$100,000 or, if less, the entire Accreted Value thereof then
outstanding.
Section
2.4 Mandatory
Prepayment. On
or before the date of any event described in clauses (b) through (d) of the
definition of “Change of Control”, the Borrower shall prepay all Obligations
then outstanding. Within five (5) Business Days following any other event
constituting a Change of Control, the Borrower shall prepay all Obligations then
outstanding. In all cases of prepayment pursuant to this paragraph, the Accreted
Value of the Loan then outstanding, and therefore due and payable, shall be
deemed to be equal to the Accreted Value of such amounts as if they had remained
outstanding until the Maturity Date (the “Principal Amount
at Maturity”).
Section
2.5 Evidence of
Debt. Each
Advance, its Accreted Value and all Borrowing Dates and payments with respect
thereto shall be evidenced by one or more accounts or records maintained by the
Lender in the ordinary course of business and, if requested by Lender, a
promissory note in the form of Exhibit C hereto (the
“Note”).
Such accounts, records and promissory note (including any appendices thereto and
any endorsements or other recordation of the date, amount and maturity of each
Loan thereon) shall be conclusive evidence absent manifest error, of the amount
of each Advance made by the Lender to the Borrower, its Borrowing Date, Accreted
Value and the payments thereon. Any failure to so record or any error in doing
so shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to the
Obligations.
2
Section
2.6 Computation of Accreted
Value, Default Interest and Fees. All
computations of Default Interest, fees and Accreted Value shall be made on the
basis of a 360-day year and actual days elapsed. Accreted Value shall accrete on
an Advance for the day on which such Advance is made, and shall not accrete on
such Advance, or any portion thereof, for the day on which such Advance or such
portion is paid. Default Interest shall accrue on all outstanding Obligations
from and including the date of Default giving rise to payment of Default
Interest as herein provided, to but excluding the date on which each such
Advance is paid or the Default is cured by the Borrower or waived by the
Lender.
Section
2.7 Payments
Generally. Except
as otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Lender in Dollars and in immediately available funds not
later than 1:00 p.m. (Hong Kong time) on the date specified herein to the
Lender’s account specified below the Lender’s signature hereto or as otherwise
specified by the Lender from time to time. All payments received by the Lender
after 1:00 p.m. (Hong Kong time) shall be deemed received on the next succeeding
Business Day and any applicable Accreted Value, Default Interest or fee shall
continue to accrete or accrue, as the case may be. If any payment to be made by
the Borrower shall come due on a day other than a Business Day, payment shall be
made on the next succeeding Business Day, and such extension of time shall be
reflected in computing Accreted Value, Default Interest or fees, as the case may
be.
Section
2.8 No Set-off or Withholding;
Taxes. Except
for Taxes (as defined hereinafter), if any, required to be withheld as
contemplated in the next succeeding sentence, all payments by the Borrower to
the Lender hereunder shall be made to the Lender in full without condition or
reduction for any counterclaim, defense, recoupment or setoff and free and clear
of and exempt from, and without deduction or withholding for or on account of,
any present or future taxes, levies, imposts, duties or charges of whatsoever
nature imposed by any Governmental Authority or any taxing authority thereof
(“Taxes”).
If the Borrower shall be required by any Law to deduct or withhold for any Taxes
(other than taxes imposed on the Lender’s net income, and franchise taxes
imposed on the Lender, by the jurisdiction under the Laws of which the Lender is
organized or any political subdivision thereof (“Excluded
Taxes”)) from any such payments, the Borrower shall increase the amount
of such payment by an amount such that the Lender receives an amount equal to
the sum it would have received had no such deduction or withholding been made.
In addition, the Borrower will indemnify the Lender for the full amount of any
Taxes other than Excluded Taxes and any liability resulting therefrom regardless
of whether such Taxes were correctly or legally imposed.
Section
2.9 Default
Interest. If
any amount payable by the Borrower under any Transaction Document is not paid
when due (taking into account any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, such amount shall thereafter bear
interest (“Default
Interest”) at an interest rate per annum at all times equal to the
Default Rate, to the fullest extent permitted by applicable Laws. Any
outstanding Advance shall accrue Default Interest on the Principal Amount at
Maturity thereof. Any such amounts (including interest on Accreted Value) shall
be due and payable upon demand. Furthermore, while any Event of Default has
occurred and is continuing (including as a result of the commencement of any
proceeding under any applicable Debtor Relief Law), the Borrower shall pay
interest on all outstanding Obligations hereunder at an interest rate per annum
equal to the Default Rate, to the fullest extent permitted by applicable
Laws.
3
Section
2.10 Illegality. If
the Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for the Lender to make,
maintain or fund the Loan, the Lender shall have the right to declare the Loan
to be terminated and the Borrower shall, upon demand from the Lender, prepay the
aggregate Accreted Value of all of the outstanding Advances, together with any
accrued but unpaid Default Interest, fees and other Obligations payable
hereunder.
Section
2.11 Increased
Cost. The
Borrower shall reimburse or compensate the Lender, upon demand, for all costs
incurred, losses suffered or payments made by the Lender which are applied or
reasonably allocated by the Lender to the transactions contemplated herein (all
as determined by the Lender in its reasonable discretion) by reason of (i) any
and all future reserve, deposit, capital adequacy or similar requirements
against (or against any class of or change in or in the amount of) assets,
liabilities or commitments of, or extensions of credit by, the Lender or (ii)
compliance by the Lender with any directive, or requirements from any
Governmental Authority, whether or not having the force of law.
Section
2.12 Interest Rate
Limitation. Notwithstanding
anything to the contrary contained in any Transaction Document, the interest
deemed to have been paid or agreed to be paid under the Transaction Documents
shall not exceed the maximum rate of non-usurious interest permitted by
applicable Law (the “Maximum
Rate”). If the Lender shall receive (or be deemed to have received)
interest in an amount that exceeds the Maximum Rate, the excess interest shall
be applied to the principal of any Advance chosen at the Lender’s sole and
exclusive discretion or, if it exceeds such unpaid principal, refunded to the
Borrower. In determining whether the interest contracted for, charged or
received by the Lender exceeds the Maximum Rate, the Lender may, to the extent
permitted by applicable Law, (i) characterize any payment that is not principal
as an expense, fee or premium rather than interest, (ii) exclude voluntary
prepayments and the effects thereof and (iii) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.
Section
2.13 Lender’s
Certificate. A
certificate setting forth any amounts payable pursuant to Section 2.12 and an
explanation which reasonably describes the basis for such amounts which are due,
submitted by the Lender to the Borrower, shall be conclusive in the absence of
manifest error.
3. CLOSING
CONDITIONS; CONDITIONS PRECEDENT TO LOAN
This
Agreement shall become effective upon, and the obligation of the Lender to make
any Advance hereunder on any Borrowing Date is subject to, the satisfaction of
the following conditions precedent:
(a) Transaction Documents. Each
of the Transaction Documents shall have been duly executed and delivered by the
respective parties thereto, shall be in full force and effect and shall be in
form and substance satisfactory to the Lender. The Lender shall have received a
fully executed counterpart of each such document, including, in the case of any
Advance, a Borrowing Notice in respect thereof;
(b) Opinions of
Counsel. The Lender shall have received favorable opinions
addressed to the Lender and dated as of the Closing Date, in form and substance
reasonably satisfactory to the Lender, from counsel of the Borrower as to such
matters as the Lender shall reasonably request;
4
(c) Performance: No
Default. The Borrower shall have performed and complied with
all terms and conditions herein required to be performed or complied with by it
on or prior to the relevant Borrowing Date, and on the relevant Borrowing Date
there shall exist no Default or Event of Default, and no Default or Event of
Default would result from the Loan;
(d) Representations
True. Each of the representations and warranties contained in
this Agreement, the other Transaction Documents, or in any document or
instrument delivered pursuant to or in connection with this Agreement shall be
true and correct in all material respects on the relevant Borrowing
Date;
(e) No Legal
Impediment. No law or regulation or interpretations thereof
shall in the reasonable opinion of the Lender make it illegal for the Lender to
make the Advance;
(f)
Governmental
Regulation. The Lender shall have received (i) such
information as the Lender is required to obtain, verify and record identifying
the Borrower, which information may include the legal name, address and tax
identification number of the Borrower and (ii) such other information and
documents in substance and form reasonably satisfactory to the Lender as the
Lender shall require for the purpose of compliance with any laws or regulations
applicable to the transactions contemplated hereby;
(g) Proceedings and
Documents. All proceedings in connection with the transactions
contemplated by this Agreement and the other Transaction Documents shall be
reasonably satisfactory to the Lender in form and substance, and the Lender
shall have received all information and such counterpart originals or certified
copies of such documents and such other certificates, opinions or documents as
the Lender may reasonably require;
(h)
Due
Diligence. The Lender shall have completed and be satisfied
with its due diligence analysis and review of the transactions contemplated by
the Transaction Documents, and the condition (financial and otherwise),
business, operations, debt service capacity, properties, assets, nature of
assets, accounting treatment, liabilities (including environmental liabilities)
and prospects of the Borrower (after giving effect to the transactions
contemplated by the Transaction Documents);
(i) Officer’s
Certificate. Borrower shall have delivered to Lender an
Officers’ Certificate in the form of Exhibit D hereto
signed by the Borrower’s Chief Executive Officer and Chief Financial
Officer;
(j) Other. The
Lender shall have reviewed such other documents, instruments, certificates,
opinions, assurances, consents and approvals as the Lender may reasonably have
requested.
4. REPRESENTATIONS
AND WARRANTIES
The
Borrower represents and warrants to the Lender that:
Section
4.1 Existence, Qualification and
Power. The
Borrower has all requisite capacity, power and authority to execute, deliver and
perform its obligations under the Transaction Documents to which the Borrower is
a party.
5
Section
4.2 Authorization; No
Contravention. The
execution, delivery and performance by the Borrower of each Transaction Document
to which the Borrower is party do not and will not (i) conflict with, or result
in any breach or contravention of, or the creation of any Lien under, (A) any
Contractual Obligation to which the Borrower is a party or (B) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which the Borrower or the Borrower’s property is subject; or (ii) violate any
Law.
Section
4.3 Governmental Authorization;
Other Consents. No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, the Borrower of this Agreement or any other Transaction
Document to which such Person is a party.
Section
4.4 Binding
Effect. This
Agreement has been, and each other Transaction Document to which the Borrower is
a party, when executed and delivered, will have been, duly executed and
delivered by the Borrower. This Agreement constitutes, and each such other
Transaction Document when so delivered will constitute, a legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by Debtor
Relief Laws and by general principles of equity.
Section
4.5 Absence of
Litigation. Except
as set forth in the reports and announcements required to be filed by the
Borrower under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof (the foregoing materials being collectively
referred to herein as the “SEC
Reports”), there are no actions, suits, proceedings, claims, charges,
demands or disputes pending or, to the Borrower’s knowledge, threatened or
contemplated, at law, in equity, in arbitration or by or before any Governmental
Authority, by or against the Borrower or any of its Subsidiaries that (i)
purport to affect or pertain to this Agreement or any other Transaction
Document, or any of the transactions contemplated hereby or (ii) either
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect. There are no unsatisfied judgments, final orders or awards
outstanding against or affecting the Borrower or any of the Borrower’s property
or Subsidiaries.
Section
4.6 No
Default. Neither
the Borrower nor any of its Subsidiaries is in default under or with respect to
any Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No Default
(i) has occurred and is continuing or (ii) would result from the consummation of
the transactions contemplated by this Agreement or any other Transaction
Document.
Section
4.7 Ownership of Property; No
Other Liens. Except
as set forth in the SEC Reports, the Borrower and each of its Subsidiaries owns
all their respective assets subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
Liens or other encumbrances except Permitted Liens.
Section
4.8 No Material
Changes. Since
the most recent SEC Report filed prior to the date of such Advance, there has
occurred no change that has had or could reasonably be expected to have a
Material Adverse Effect.
6
Section
4.9 Disclosure. The
Borrower has disclosed to the Lender all agreements, instruments, other
Contractual Obligations and all corporate or other restrictions to which the
Borrower or any of its Subsidiaries is subject, and all facts known (or which
should upon the reasonable exercise of diligence be known) to the Borrower that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of the
Borrower to the Lender in connection with the transactions contemplated hereby
and the negotiation of the Transaction Documents or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements here in or therein, in the light of the circumstances under
which the same were made, not misleading. For purposes of this paragraph, the
SEC Reports will be deemed to be disclosure by the Borrower to the
Lender.
Section
4.10 Compliance with Laws,
Etc. Except
as set forth in the SEC Reports, neither the Borrower nor any of its
Subsidiaries is in violation of any decree, order, judgment, statute, license,
rule or regulation in a manner that, in any of the foregoing cases, has resulted
or could reasonably be expected to result in a Material Adverse
Effect.
Section
4.11 Tax
Status. The
Borrower and each of its Subsidiaries (a) has made or filed all income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (b) has paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and by appropriate
proceedings. There are no unpaid taxes in any material amount claimed to be due
from the Borrower or any of its Subsidiaries by the taxing authority of any
jurisdiction, and the Borrower knows of no basis for any such
claim.
Section
4.12 Absence of Financing Statements,
Etc. Except
with respect to Permitted Liens, there is no financing statement, security
agreement, mortgage, charge, debenture or other document filed or recorded with
any filing records, registry, or other public office, that purports to cover,
affect or give notice of any present or possible future lien on, or security
interest or security title in, any property of the Borrower or any of its
Subsidiaries or rights thereunder.
Section
4.13 Brokers. The
Borrower has not engaged or otherwise dealt with any broker, finder or similar
entity in connection with this Agreement or the Loan contemplated
hereunder.
Section
4.14 Other
Debt. Except
as set forth in the SEC Reports, neither the Borrower nor any of its Subsidiarie
is liable in respect of any Indebtedness or any other agreement evidencing
Indebtedness, mortgage, deed of trust, security agreement, financing agreement,
indenture, charge, debenture or lease. The Borrower is not a party to or bound
by any agreement, instrument or indenture that requires the subordination in
right or time or payment of any of the Obligations to any other indebtedness or
obligation of the Borrower.
Section
4.15 Solvency. As
of the relevant Borrowing Date and after giving effect to the transactions
contemplated by this Agreement and the other Transaction Documents, including
the Advance made or to be made hereunder, the Borrower (i) is solvent on a
balance sheet basis whereby the sum of such Person’s debts and other liabilities
(including contingent liabilities) equals or exceeds the sum of such Person’s
assets, (ii) such Person is able to pay its debts as they become due, (iii) such
Person has sufficient capital to carry on its business and (iv) is not
“insolvent” as such term is defined in Section 101(32) of the Bankruptcy
Code.
7
Section
4.16 Organizational
Documents. All
contractual and statutory duties, obligations and responsibilities required to
be performed by the Borrower, if any, under the Organizational Documents of the
Borrower and each of the Borrower’s Subsidiaries have been performed, and no
default or condition related to such duties, obligations and responsibilities
which with the passage of time or the giving of notice, or both, would
constitute a default exists under any of such Organizational
Documents.
Section
4.17 Employee Benefit
Plans. Except
as set forth in the SEC Reports, the Borrower does not, and has not at any time,
maintained any Employee Benefit Plan.
Section
4.18 SEC Reports. Since
March 31, 2010, the Borrower has filed all SEC Reports on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Borrower is in compliance
with any and all applicable requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 of
the United States that are effective as of the date hereof, and any and all
applicable rules and regulations promulgated by the Commission thereunder that
are effective as of the date hereof. The financial statements of the
Borrower included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.
5. AFFIRMATIVE
COVENANTS
So long
as any Advance, Note or other Obligation hereunder shall remain
outstanding:
Section
5.1 Punctual
Payment. The
Borrower shall duly and punctually pay or cause to be paid the principal on each
Advance and any Default Interest, Obligations and fees provided for in this
Agreement, all in accordance with the terms of this Agreement and the Note as
well as all other sums owing pursuant to the Transaction Documents.
Section
5.2 Preservation of
Existence. The
Borrower shall, and shall procure that each of its Subsidiaries (i) preserve,
renew and maintain in full force and effect their respective legal existence and
good standing under the Laws of the respective jurisdiction of its organization;
and (ii) take all reasonable action to maintain all rights, privileges, permits,
licenses and franchises necessary or desirable in the normal conduct of its
business, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.
Section
5.3 Payment of
Obligations. The
Borrower shall, and shall cause each of its Subsidiaries to, pay and discharge,
as the same shall become due and payable, all obligations and liabilities,
including (i) all tax liabilities, assessments and governmental charges or
levies upon the Borrower or such Subsidiary, as the case may be, or the
properties or assets of such Person, unless the same are being contested in good
faith by appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by such Person; (ii) all material
lawful claims which, if unpaid, would by law become a Lien upon the property of
such Person; and (iii) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
8
Section
5.4 Limitation on
Borrower’s
Business. The
Borrower shall not, and the Borrower shall not permit any Subsidiary to,
directly or indirectly, engage in any business other than a Related
Business.
Section
5.5 Listing of
Borrower’s Common
Stock. The
Borrower shall maintain the listing of the Common Stock on the Trading Market
and will procure that that such common stock will be freely tradable in
accordance with the rules and requirements and directives of the Trading
Market.
Section
5.6 Compliance with Law,
Etc. The
Borrower shall, and shall procure that each of its Subsidiaries shall, comply
with the requirements of any and all indentures, loan or credit agreements or
any other agreement or instrument to which it is a party or by which it or any
of its properties is bound, Laws and all orders, writs, injunctions and decrees
of any court, arbitrator, Governmental Authority, or regulatory or
self-regulatory authority applicable to it (including in relation to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters and Regulations T, U and X of the FRB)
or to its business or property, except in such instances in which the failure to
comply therewith could not reasonably be expected to have a Material Adverse
Effect.
Section
5.7 Ranking. The
Borrower shall ensure that the Obligations constitute and remain senior, direct,
unconditional and unsubordinated obligations of the Borrower.
Section
5.8 Notices. Upon
the Borrower obtaining knowledge thereof, promptly notify the Lender
of:
(a) the
occurrence of any Default or Event of Default;
(b)
the institution of any Proceeding against or affecting the Borrower or any of
its Subsidiaries or any property of the Borrower or any of its Subsidiaries, if
not previously disclosed in writing by the Borrower to the Lender;
and
(c) any
matter that has resulted or could reasonably be expected to result in a Material
Adverse Effect.
Section
5.9 Disclosure Filings and
Information.
(a) Borrower
shall file, in a timely fashion, each annual, regular, periodic and special
reports and registration statements which the Borrower is required to file, and
any announcement or other disclosure which the Borrower is required to make,
with the Commission under Section 13 or 15(d) of the Exchange Act or pursuant to
the rules and regulations of the Trading Market. The Borrower shall not
terminate its status as an issuer required to file reports under the Exchange
Act, even if the Exchange Act or the rules and regulations thereunder would
otherwise permit such termination.
9
(b) Without
derogating from the obligation set forth in Section 5.9(a), if
SEC Reports are not timely filed with the Commission, Borrower shall deliver to
Lender, in form and detail reasonably satisfactory to Lender as soon as
available, but in any event within 90 days after the end of each fiscal year of
Borrower, a consolidated balance sheet of Borrower and its Subsidiaries as at
the end of such fiscal year, and the related consolidated statements of income
or operations, changes in shareholders’ equity and cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and prepared in accordance with
GAAP, audited and accompanied by a report and opinion of an independent
certified public accountant of internationally recognized standing reasonably
acceptable to Lender, which report and opinion shall be prepared in accordance
with generally accepted auditing standards and shall not be subject to any
“going concern” or like qualification or exception or any qualification or
exception as to the scope of such audit;
(c) Without
derogating from the obligation set forth in Section 5.9(a), if
SEC Reports are not timely filed with the Commission, Borrower shall deliver to
Lender, in form and detail reasonably satisfactory to Lender as soon as
available, but in any event within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of Borrower commencing with the fiscal
quarter ended June 30, 2010, a consolidated balance sheet of Borrower and its
Subsidiaries as at the end of such fiscal quarter, and the related consolidated
statements of income or operations, changes in shareholders’ equity and cash
flows for such fiscal quarter and for the portion of Borrower’s fiscal year then
ended, setting forth in each case in comparative form, as applicable, the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail and
certified by the Chief Executive Officer of Borrower as fairly presenting the
financial condition, results of operations, shareholders’ equity and cash flows
of Borrower and its Subsidiaries in accordance with GAAP, subject only to normal
year-end audit adjustments and the absence of footnotes;
(d) Without
derogating from the obligation set forth in Section 5.9(a), if
SEC Reports are not timely filed with the Commission, Borrower shall deliver to
Lender, in form and detail reasonably satisfactory to Lender concurrently with
the delivery of the financial statements referred to in Section 5.9(b), a
certificate of the independent certified public accountants of Borrower
certifying such financial statements;
Concurrently
with the delivery of the financial statements referred to in Sections 5.9(b) and
(c), a duly
completed compliance certificate signed by the Chief Executive Officer of
Borrower stating whether or not at any time in the preceding fiscal quarter
Borrower was in compliance with Sections 6.5 and
6.6 and setting
forth in reasonable detail the calculations used to reach such
conclusions.
Section
5.10 Further
Assurances. The
Borrower will cooperate with the Lender and execute such further instruments and
documents as the Lender shall reasonably request to carry out to its
satisfaction the transactions contemplated by this Agreement and the other
Transaction Documents.
6. NEGATIVE
COVENANTS
So long
as any Advance, Note or other Obligation hereunder shall remain
outstanding:
10
Section
6.1 Restriction on
Liens. Neither
the Borrower nor any of its Subsidiaries shall create, Incur, assume or permit
to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of the Borrower or such Subsidiary, whether now owned or hereafter
acquired, or any income or profits therefrom, or file or permit the filing of,
or permit to remain in effect, any financing statement or other similar notice
of any Lien with respect to any such property, asset, income or profits under
the UCC or under any similar recording or notice statute, except Permitted
Liens.
Section
6.2 Restriction on Fundamental
Changes; Asset
Sales. The
Borrower shall not alter its corporate, capital or legal structure or enter into
any transaction of merger or consolidation, or liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease or
sub-lease (as lessor or sublessor), transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any part of its business,
property or assets (including its notes or receivables and equity interests in
its Subsidiaries, whether newly issued or outstanding), whether now owned or
hereafter acquired.
Section
6.3 Transactions with
Shareholders and Affiliates. The
Borrower shall not directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any holder of 5% or more of any class of
equity interests of the Borrower or with any Affiliate of the Borrower or of any
such holder, on terms that are less favorable to the Borrower than those that
might be obtained at the time from Persons who are not such a holder or
Affiliate; provided
that the foregoing restriction shall not apply to reasonable and customary fees
and expenses paid to independent members of the Board of Directors of the
Borrower.
Section
6.4 Stay, Extension and Usury
Laws. The
Company covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, that may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the enforcement of any lawful remedy by the Lender, but shall suffer
and permit the enforcement of any such lawful remedy as though no such law has
been enacted.
Section
6.5 Consolidated Fixed Charge
Coverage Ratio. The
Borrower shall not permit the Consolidated Fixed Charge Coverage Ratio to be
less than 3.0 to 1.0.
Section
6.6 Leverage
Ratio. The
Borrower shall not permit the Leverage Ratio to be greater than 2.0 to
1.0.
7. EVENTS
OF DEFAULT AND REMEDIES
Section
7.1 Events of
Default. Any
of the following shall constitute an “Event of Default”:
(a) Payment
Default. The Borrower shall fail to pay (A) any principal of
any Advance when the same shall become due and payable, whether at the Maturity
Date or any accelerated date of maturity or at any other date fixed for payment
or (B) any Default Interest, Obligation, fees or sums due hereunder or under any
of the other Transaction Documents when the same shall become due and payable,
whether at the Maturity Date or any accelerated date of maturity or at any other
date fixed for payment and, in the case of clause (A) or clause (B) of this
paragraph, such failure continues for five (5) Business Days;
or
11
(b) Specific
Covenants. The Borrower shall fail to perform or observe any
term, covenant or agreement contained in any of Sections 2.4, 2.7, 5.1 or Section 6 and such
failure continues for five (5) Business Days; or
(c) Other
Defaults. The Borrower shall fail to perform any other term,
covenant or agreement (not specified in subsection (a) or (b) above) contained
herein or in any Transaction Document to be performed or observed by the
Borrower and such failure continues for five (5) days; or
(d) Representations and
Warranties. Any representation or warranty made by or on
behalf of the Borrower in this Agreement or any other Transaction Document, or
in any report, certificate, financial statement, or in any other document or
instrument delivered pursuant to or in connection with this Agreement, any
Advance or any of the other Transaction Documents shall prove to have been
incorrect or false in any material respect upon the date when made or deemed to
have been made or repeated; or
(e) Involuntary
Bankruptcy;
Appointment of Receiver, etc. (i) A court having jurisdiction
in the premises shall enter a decree or order for relief in respect of the
Borrower or any of its Significant Subsidiaries in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, which decree or order is not stayed; or any
other similar relief shall be granted under any applicable federal or state law;
or (ii) an involuntary case shall be commenced against the Borrower or any of
its Significant Subsidiaries under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect; or
a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Borrower or any of its Significant
Subsidiaries, or over all or a substantial part of its property, shall have been
entered; or there shall have occurred the involuntary appointment of an interim
receiver, trustee or other custodian of the Borrower or any of its Significant
Subsidiaries for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of the Borrower or any of its Significant
Subsidiaries, and any such event described in this clause (ii) shall continue
for 30 days unless dismissed, bonded or discharged; provided that the Borrower
(for itself and its Significant Subsidiaries) hereby expressly authorizes the
Lender to appear in any court conducting any relevant case or proceeding during
such 30-day period to preserve, protect and defend its rights under the
Transaction Documents; or
(f) Voluntary Bankruptcy;
Appointment of Receiver, etc. (i) The Borrower or any of its
Significant Subsidiaries shall have an order for relief entered with respect to
it or commence a voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such law,
or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or the
Borrower or any of its Significant Subsidiaries shall make any assignment for
the benefit of creditors, or (ii) the Borrower or any of its Significant
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the governing body
of the Borrower or any of its Significant Subsidiaries (or any committee
thereof) shall adopt any resolution or otherwise authorize any action to approve
any of the actions referred to in clause (i) above or this clause (ii);
or
12
(g) Invalidity of Transaction
Documents. Any of the Transaction Documents shall be canceled,
terminated, revoked or rescinded otherwise than in accordance with the terms
thereof or with the express prior written agreement, consent or approval of the
Lender, or any action at law, suit in equity or other legal proceeding to
cancel, revoke or rescind any of the Transaction Documents shall be
commenced by or on behalf of the Borrower, or any court or any Governmental
Authority of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of the
Transaction Documents is illegal, invalid or unenforceable in accordance with
the terms thereof; or the Borrower denies that it has any further liability or
obligation under any Transaction Document, or purports to revoke, terminate or
rescind any Transaction Document; or
(h) Dissolution. Any
order, judgment or decree shall be entered against the Borrower or any of its
Significant Subsidiaries decreeing the dissolution or split up of the Borrower
or such Significant Subsidiary and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
(i) Cross-Default. A
default under any Indebtedness by the Borrower or any of its Subsidiaries that
results in acceleration of the maturity of such Indebtedness, or failure to pay
any such Indebtedness when due, in an aggregate amount greater than $1.0 million
or its foreign currency equivalent at the time; or
(j) Material Litigation.
any legal proceeding in respect of, or judgment or judgments, writ or warrant of
attachment or similar process for the payment of money in an aggregate amount
potentially in excess of $10.0 million (or its foreign currency equivalent at
the time) shall be instituted or rendered against Borrower or any of its
Subsidiaries and that shall not be waived, satisfied or discharged for any
period of 60 consecutive days during which a stay of enforcement shall not be in
effect (or in any event later than 5 days prior to the date of any proposed sale
thereunder); or
(k) The
Common Stock is delisted from the Trading Market or suspended from trading on
the Trading Market for five (5) consecutive Trading Days or for more than ten
(10) Trading Days in any 365-day period.
Section
7.2 Remedies Upon Event of
Default
If any
Event of Default occurs and is continuing, the Lender may take any or all of the
following actions:
(a) declare
the unpaid Principal Amount at Maturity of all of the outstanding Advances, all
Obligations, fees and other amounts owing or payable hereunder or under any
other Transaction Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and
13
(b)
exercise all rights and remedies available to it under the Transaction Documents
or applicable Law.
provided, however, that upon the
occurrence of an Event of Default under Section 7.1(e) or
(f), the unpaid
Principal Amount at Maturity of all outstanding Advances and any Default
Interest, Obligations and other amounts as aforesaid shall automatically become
due and payable, in each case without further act of the Lender.
8. MISCELLANEOUS
Section
8.1 Amendments,
etc. No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by the Borrower therefrom, shall be effective unless in writing signed
by the Lender and the Borrower, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section
8.2 Notices and Other
Communications. Unless
otherwise expressly provided herein, all notices and other communications
provided for hereunder shall be in writing (including by facsimile transmission
and electronic mail) and delivered to such numbers or addresses set forth below
or as given from each party to the other in writing from time to time; provided
that electronic mail may be used only to distribute routine communications, such
as information required to be provided pursuant to Section
5.3. All notices and other communications shall be deemed to
be effective upon receipt. The Lender shall be entitled to rely and
act upon any notices purportedly given by or on behalf of the Borrower even if
(i) such notices were not made in a manner specified herein, were incomplete or
were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof.
|
If
to Borrower:
|
|
|
No.
9 Ha Ping ▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Attention:
▇▇▇▇▇▇ ▇▇▇▇
|
|
|
Telephone: (▇▇▇)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
|
|
|
Facsimile:
(▇▇▇) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
|
|
|
with
a copy to:
|
|
|
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
▇▇▇
|
|
|
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
|
|
|
Telephone: (▇▇)
▇▇▇ ▇▇▇ ▇▇▇▇
|
|
|
E-mail:
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
If
to Lender:
|
Abax
Emerald Ltd.
|
|
▇/▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇) Ltd.
67/F
Two International Finance Centre
▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇
|
|
|
Attention:
▇▇▇▇▇▇▇ ▇▇▇
|
|
|
Telephone: (▇▇▇▇)
▇▇▇▇-▇▇▇▇
|
|
|
Facsimile:
(▇▇▇▇)
▇▇▇▇-▇▇▇▇
|
14
All
notices, elections, requests and demands required or permitted under this
Agreement shall be in the English language. All notices, elections, requests and
demands under this Agreement shall be effective and deemed received upon the
earliest of (i) the actual receipt of the same by personal delivery or
otherwise, (ii) one (1) Business Day after being deposited with an
internationally recognized overnight courier service as required above, (iii)
three (3) Business Days after being deposited with the postal office as required
above or (iv) on the day sent if sent by facsimile with confirmation on or
before 5:00 p.m. Hong Kong time on any Business Day or on the next Business Day
if so delivered after 5:00 p.m. Hong Kong time or on any day other than a
Business Day. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, election, request, or
demand sent.
Section
8.3 No Waiver; Cumulative
Remedies. No
failure by the Lender to exercise, and no delay by the Lender in exercising, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
Section
8.4 Expenses. Except
as otherwise expressly provided in this Agreement, all costs and expenses
incurred in connection with this Agreement, the transactions contemplated hereby
and any enforcement actions taken in respect thereof shall be borne by the
Borrower, provided that such costs and expenses do not exceed
$30,000.
Section
8.5 Indemnification. The
Borrower agrees to indemnify and hold harmless the Lender and its Affiliates,
directors, officers, employees, counsel, agents, attorneys-in-fact and each
Person who controls the Lender (collectively the “Indemnitees”)
from and against any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind or
nature whatsoever arising out of or relating to this Agreement or any of the
other Transaction Documents or the transactions contemplated hereby and thereby
including, without limitation (a) any brokerage, finders or similar fees
asserted against any Person indemnified under this Section 8.5 based
upon any agreement, arrangement or action made or taken, or alleged to have been
made or taken, by the Borrower, (b) any actual or proposed use by the Borrower
of the proceeds of any Advance or (c) the Borrower entering into or performing
this Agreement or any of the other Transaction Documents. In litigation, or the
preparation therefor, the Lender shall be entitled to select a single nationally
recognized law firm as its own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If and to the extent that the obligations of the Borrower under
this Section
8.5 are unenforceable for any reason, the Borrower hereby agrees to make
the maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable Law. The provisions of this Section 8.5 shall
survive payment in full in cash of the Obligations.
15
Section
8.6 Survival of Representations,
Etc. All
representations and warranties made herein, in the Note, in any of the other
Transaction Documents or in any documents or other papers delivered by or on
behalf of the Borrower pursuant hereto or thereto shall be deemed to have been
relied upon by the Lender, notwithstanding any investigation heretofore or
hereafter made by it, and shall survive the making by the Lender of each
Advance, as herein contemplated, and shall continue in full force and effect so
long as any amount due under this Agreement or the Note or any of the other
Transaction Documents remains outstanding or the Lender has any obligation to
make the Loan. The indemnification obligations of the Borrower provided herein
and the other Transaction Documents shall survive the full repayment of amounts
due and the termination of the obligations of the Lender hereunder and
thereunder to the extent provided herein and therein. All statements contained
in any certificate or other paper delivered to the Lender at any time by or on
behalf of the Borrower pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by or on
behalf of the Borrower hereunder.
Section
8.7 Payments Set
Aside. To
the extent that any payment by or on behalf of the Borrower is made to the
Lender, or the Lender exercises its right of set-off, and such payment or the
proceeds of such set-off or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred.
Section
8.8 Successors and
Assigns. This
Agreement shall be binding upon Borrower and its successors and assigns and
shall inure to the benefit of Lender and its successors and assigns. The
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Lender. Lender, without the
prior written consent of Borrower in each instance, may assign, transfer or set
over to another, in whole or in part, all or any part of its benefits, rights,
duties and obligations hereunder, including, but not limited to, performance of
and compliance with conditions hereof.
Section
8.9 No Third Party
Beneficiary. Nothing
in this Agreement, express or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
Section
8.10 Set-off. In
addition to any rights and remedies of the Lender provided by law, upon the
occurrence and during the continuance of any Event of Default, the Lender is
authorized at any time and from time to time, without prior notice to the
Borrower, any such notice being waived by the Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, or indebtedness or
other obligation at any time owing by, the Lender to or for the credit or the
account of the Borrower against any and all Obligations owing to the Lender
hereunder or under any other Transaction Document, now or hereafter existing,
irrespective of whether or not the Lender shall have made demand under this
Agreement or any other Transaction Document and although such Obligations may be
contingent or unmatured or denominated in a currency different from that of the
applicable deposit, indebtedness or obligation. The Lender agrees to promptly
notify the Borrower after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.
16
Section
8.11 Counterparts;
Integration. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Agreement, together with the other Transaction Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter.
Section
8.12 Survival. Notwithstanding
any provision to the contrary, (i) all representations and warranties made
hereunder and in any other Transaction Document or other document delivered
pursuant hereto or thereto or in connection herewith or therewith shall survive
the execution and delivery hereof and thereof and (ii) the provisions of Section 8.4 and 8.5 shall survive any
termination of this Agreement.
Section
8.13 Severability. If
any provision of this Agreement or the other Transaction Documents is held to be
illegal, invalid or unenforceable, (i) the legality, validity and enforceability
of the remaining provisions of this Agreement and the other Transaction
Documents shall not be affected or impaired thereby and (ii) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section
8.14 Governing
Law. This
Agreement, and all matters arising therefrom or relating thereto, shall be
governed by, and construed in accordance with the laws of the State of New York,
without regard to choice of law rules.
Section
8.15 Jurisdiction. The
Borrower hereby submits to the nonexclusive jurisdiction of the United States
District Court and each state court in the City and County of New York for the
purposes of all legal proceedings arising out of or relating to any of the
Transaction Documents or the transactions contemplated thereby. The Borrower
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to the Borrower at its
address set forth in Section 8.2. The
Borrower irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
Section
8.16 JURY TRIAL WAIVER. BORROWER
AND ALL PERSONS CLAIMING BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER OR
LENDER WITH RESPECT TO THIS AGREEMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER
HEREBY AGREES AND CONSENTS THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO
THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. BORROWER ACKNOWLEDGES THAT
IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND
ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE
LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE
LOAN.
17
Section
8.17 Judgment
Currency. If,
under any applicable Law and whether pursuant to a judgment being made or
registered against the Borrower or for any other reason, any payment under or in
connection with this Agreement, is made or satisfied in a currency (the “Other
Currency”) other than Dollars then, to the extent that the payment (when
converted into Dollars at the rate of exchange on the date of payment or, if it
is not practicable for the party entitled thereto (the “Payee”) to
purchase Dollars with the Other Currency on the date of payment, at the rate of
exchange as soon thereafter as it is practicable for it to do so) actually
received by the Payee falls short of the amount due under the terms of this
Agreement, the Borrower shall, to the extent permitted by law, as a separate and
independent obligation, indemnify and hold harmless the Payee against the amount
of such short-fall. For the purpose of this Section 8.17, “rate
of exchange” means the rate at which the Payee is able on the relevant date to
purchase Dollars with the Other Currency and shall take into account any premium
and other costs of exchange.
Section
8.18 Counterclaims and Other
Actions. Borrower
hereby expressly and unconditionally waives, in connection with any suit, action
or proceeding brought by Lender in connection with this Agreement, any and every
right it may have to (i) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or proceeding
brought by Lender on this Agreement and cannot be maintained in a separate
action) and (ii) have any such suit, action or proceeding consolidated with any
other or separate suit, action or proceeding.
Section
8.19 Service of
Process. If
the Borrower does not have a principal place of business in the United States or
any state or other political subdivision thereof, the Borrower hereby
irrevocably designates and appoints the Process Agent, as its authorized agent,
to accept and acknowledge on its behalf, service of any and all process which
may be served in any suit, action or proceeding of the nature referred to in
Section 8.15 of
this Agreement in any federal or New York State court sitting in New York City,
and hereby consents to process being served upon the Process Agent in any such
suit, action or proceeding. The Borrower irrevocably waives, to the
fullest extent permitted by law, all claim of error by reason of any such
service and agrees that such service shall be deemed in every respect effective
service of process upon the Borrower in any such suit, action or proceeding and
shall, to the fullest extent permitted by law, be taken and held to be valid and
personal service upon and personal delivery to the Borrower. Nothing in this
provision shall affect the right of the Lender to serve process in any other
manner permitted by law or limit the right of the Lender to bring proceedings
against the Borrower in the courts of any jurisdiction or jurisdictions. The
Borrower represents and warrants that the Process Agent has agreed in writing to
accept such appointment and that a true copy of such designation and acceptance
has been delivered to the Lender. Such designation and appointment shall be
irrevocable until all Accreted Value, any Obligations, Default Interest and all
other amounts payable under this Agreement shall have been paid in full in cash
in accordance with the provisions hereof. If such agent shall cease to so act
for the Borrower, the Borrower covenants and agrees to designate irrevocably and
appoint without delay another such agent satisfactory to the Lender and to
deliver promptly to the Lender evidence in writing of such other agent’s
acceptance of such appointment.
18
9. DEFINITIONS;
CONSTRUCTION
Except as
otherwise set forth in the Exhibits hereto, the following terms, as used herein,
have the following meanings:
“Accreted
Value” has the meaning specified in Section
2.2.
“Advance”
has the meaning specified in Section
2.1.
“Affiliate”
means any other Person directly or indirectly controlling, controlled by, or
under common control with, that Person. For purposes of this definition,
“control” (including, with correlative meanings, the terms “controlling”,
“controlled by” and “under common control with”), as applied to any Person,
means (a) the possession, directly or indirectly, of the power to vote ten
percent (10%) or more of the stock, shares, voting trust certificates,
beneficial interest, partnership interests, member interests or other interests
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise,
or (b) the ownership of (i) a general partnership interest, (ii) a managing
member's interest in a limited liability company or (iii) a limited partnership
interest or preferred stock (or other ownership interest) representing ten
percent (10%) or more of the outstanding limited partnership interests,
preferred stock or other ownership interests of such Person.
“Agreement”
has the meaning specified in Section
1.1.
“Asset
Sale” means any
sale, lease, transfer, issuance or other disposition (or series of related
sales, leases, transfers, issuances or dispositions) by the Borrower or any of
its consolidated Subsidiaries, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a “disposition”), of
(a) any
shares of Capital Stock of a consolidated Subsidiary (other than directors’
qualifying shares), or
(b) any
other Property of the Borrower or any of its consolidated Subsidiaries outside
of the ordinary course of business of the Borrower or such Subsidiary, other
than, in the case of clause (a) or (b) above,
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(1) any
disposition by a consolidated Subsidiary to the Borrower or by the
Borrower or a consolidated Subsidiary to a Wholly Owned Subsidiary,
or
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(2)
any disposition in a single transaction or a series of related
transactions of assets for aggregate consideration of less than $1.0
million.
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19
“Available
Commitment” has the meaning specified in Section
2.1.
“Bankruptcy
Code” means Title 11 of the United States Code entitled “Bankruptcy”, as
now and hereafter in effect, or any successor statute.
“Board of
Directors” means (1) in respect of a corporation, the board of directors
of the corporation, or (except if used in the definition of “Change of Control”)
any duly authorized committee thereof; and (2) in respect of any other Person,
the board or committee of that Person serving an equivalent
function.
“Borrower”
shall have the meaning ascribed to such term in the introductory paragraph
hereof.
“Borrowing
Date” has the meaning specified in Section
2.1.
“Business
Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, Hong Kong and, if such day relates to any Advance, means any such day
on which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.
“Capital Lease
Obligations”
means any obligation under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP; and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligations determined in accordance with GAAP; and the stated maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty.
“Capital
Stock” means,
with respect to any Person, any shares or other equivalents (however designated)
of any class of corporate stock or partnership interests or any other
participations, rights, warrants, options or other interests in the nature of an
equity interest in such Person, including Preferred Stock, but excluding any
debt security convertible or exchangeable into such equity
interest.
“Change of
Control” means the occurrence of any of the following
events:
(a) the
Permitted Holders cease to be the “beneficial owners” (as defined in Rule 13d 3
under the Exchange Act, except that a Person will be deemed to have “beneficial
ownership” of all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of at least 27.5% of the total voting power of the
Voting Stock of the Borrower, or ceases to be the beneficial owner of the
largest percentage of the Voting Stock of the Borrower, or the Permitted Holders
do not otherwise have the ability to control the Borrower, whether as a result
of the issuance of securities of the Borrower, any merger, consolidation,
liquidation or dissolution of the Borrower, any direct or indirect transfer of
securities by the Permitted Holders or otherwise (for purposes of this clause
(a), the Permitted Holders will be deemed to beneficially own any Voting Stock
of a specified corporation held by a parent corporation so long as the Permitted
Holders beneficially own, directly or indirectly, in the aggregate a majority of
the total voting power of the Voting Stock of such parent corporation, and the
term “control” shall be defined to include the ability, directly or indirectly,
to influence any decision of, or to direct or cause the direction of, the
management and policies of the Borrower and each of its direct and indirect
subsidiaries); or
20
(b) the
sale, transfer, assignment, lease, conveyance or other disposition, directly or
indirectly, of all or substantially all of the Property of the Borrower and its
Subsidiaries, considered as a whole (other than a disposition of such Property
as an entirety or virtually as an entirety to a Wholly Owned Subsidiary or one
or more Permitted Holders), shall have occurred, or the Borrower merges,
consolidates or amalgamates with or into any other Person (other than one or
more Permitted Holders) or any other Person (other than one or more Permitted
Holders) merges, consolidates or amalgamates with or into the Borrower, in any
such event pursuant to a transaction in which the outstanding Voting Stock of
the Borrower is reclassified into or exchanged for cash, securities or other
Property, other than any such transaction where:
(1) the
outstanding Voting Stock of the Borrower is reclassified into or exchanged for
other Voting Stock of the Borrower or for Voting Stock of the Surviving Person,
and
(2) the
holders of the Voting Stock of the Borrower immediately prior to such
transaction own, directly or indirectly, not less than a majority of the Voting
Stock of the Borrower or the Surviving Person immediately after such transaction
and in substantially the same proportion as before the transaction;
or
(c) Continuing
Directors cease for any reason to constitute a majority then in office of the
Board of Directors of the Borrower; or
(d) the
shareholders of the Borrower shall have approved any plan of liquidation or
dissolution of the Borrower.
“Closing
Date” means the later of (i) July 28, 2010 and (ii) the date on which all
conditions in Section
3 of this Agreement are satisfied.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the Borrower’s common stock, par value
$0.00001.
“Consolidated
Current Liabilities” means, as of any date of
determination, the aggregate amount of liabilities of the Borrower and its
consolidated Subsidiaries which may properly be classified as current
liabilities (including taxes accrued as estimated), after
eliminating:
(a) all
intercompany items between the Borrower and any Subsidiary of the Borrower or
between the Borrower’s Subsidiaries, and
(b) all
current maturities of long-term Indebtedness.
“Consolidated
Fixed Charge Coverage Ratio” means, as of any date of determination, the
ratio of:
21
(a) the
aggregate amount of EBITDA for the most recent four consecutive fiscal quarters
ending at least 45 days prior to such determination date to
(b) Consolidated
Fixed Charges for such four fiscal quarters;
provided, however,
that:
(1) if
since the beginning of such period the Borrower or any of its Subsidiaries has
Incurred any Indebtedness that remains outstanding or Repaid any Indebtedness,
Consolidated Fixed Charges for such period shall be calculated after giving
effect on a pro forma
basis to such Incurrence or Repayment as if such Indebtedness was
Incurred or Repaid on the first day of such period, provided that, in the event
of any such Repayment of Indebtedness, EBITDA for such period shall be
calculated as if the Borrower or such Subsidiary had not earned any interest
income actually earned during such period in respect of the funds used to Repay
such Indebtedness,
(2) the
amount of Indebtedness Incurred under revolving credit facilities shall be
deemed to be the average daily balance of such Indebtedness during such
four-quarter period (or any shorter period in which such facilities are in
effect), and
(3) if
(A) since
the beginning of such period the Borrower or any of its Subsidiaries shall have
made any Asset Sale or an Investment (by merger or otherwise) in any Subsidiary
(or any Person which becomes a Subsidiary) or an acquisition of Property which
constitutes all or substantially all of an operating unit of a business,
or
(B) since
the beginning of such period any Person (that subsequently became a Subsidiary
of the Borrower or was merged with or into the Borrower or any of its
Subsidiaries since the beginning of such period) shall have made such an Asset
Sale, Investment or acquisition,
then
EBITDA for such period shall be calculated after giving pro forma effect to such
Asset Sale, Investment or acquisition as if such Asset Sale, Investment or
acquisition had occurred on the first day of such period.
If any
Indebtedness bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the base
interest rate in effect for such floating rate of interest on the date of
determination had been the applicable base interest rate for the entire period
(taking into account any Hedging Agreement for the interest rate applicable to
such Indebtedness if such Hedging Agreement has a remaining term in excess of
12 months). In the event the Capital Stock of any of the Borrower’s
Subsidiaries is sold during the period, the Borrower shall be deemed, for
purposes of clause (1) above, to have Repaid during such period the
Indebtedness of such Subsidiary to the extent the Borrower and its continuing
Subsidiaries are no longer liable for such Indebtedness after such
sale.
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“Consolidated
Fixed Charges”
means, for any period, the total interest expense of the Borrower and its
consolidated Subsidiaries, plus, to the extent not included in such total
interest expense, and to the extent Incurred by the Borrower or its consolidated
Subsidiaries,
(a) interest
expense attributable to leases constituting part of a Sale and Leaseback
Transaction and to Capital Lease Obligations,
(b) amortization
of debt discount and debt issuance cost, including commitment fees,
(c) capitalized
interest,
(d) non-cash
interest expense,
(e) commissions,
discounts and other fees and charges owed with respect to letters of credit and
banker’s acceptance financing,
(f) net
costs associated with Hedging Obligations (including amortization of
fees),
(g) Disqualified
Stock Dividends,
(h) Preferred
Stock Dividends,
(i) interest
Incurred in connection with Investments in discontinued operations,
(j) interest
accruing on any Indebtedness of any other Person to the extent such Indebtedness
is Guaranteed by the Borrower or any of its consolidated Subsidiaries,
and
(k) the
cash contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than the Borrower) in connection with Indebtedness Incurred
by such plan or trust.
“Consolidated
Indebtedness” means the outstanding Indebtedness of the Borrower and its
Subsidiaries on a consolidated basis.
“Consolidated Net
Income” means,
for any period, the net income (loss) of the Borrower and its consolidated
Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net
Income:
(a) any
net income (loss) of any Person (other than the Borrower) if such Person is not
a Subsidiary of the Borrower, except that:
(1) subject
to the exclusion contained in clause (d) below, equity of the Borrower and
its consolidated Subsidiaries in the net income of any such Person for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash distributed by such Person during such period to the Borrower or
a Wholly Owned Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution to a Wholly Owned Subsidiary, to the
limitations contained in clause (c) below), and
23
(2) the
equity of the Borrower and its consolidated Subsidiaries in a net loss of any
such Person for such period shall be included in determining such Consolidated
Net Income,
(b) any
net income (loss) of any Subsidiary of the Borrower if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of dividends or
the making of distributions, directly or indirectly, to the Borrower, except
that:
(1)
subject to the exclusion contained in clause (d) below, the equity of the
Borrower and its consolidated Subsidiaries in the net income of any such Wholly
Owned Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash distributed by such Wholly Owned
Subsidiary during such period to the Borrower or another Wholly Owned Subsidiary
as a dividend or other distribution (subject, in the case of a dividend or other
distribution to another Wholly Owned Subsidiary, to the limitation contained in
this clause), and
(2) the
equity of the Borrower and its consolidated Subsidiaries in a net loss of any
such Subsidiary for such period shall be included in determining such
Consolidated Net Income,
(d) any
gain (but not loss) realized upon the sale or other disposition of any Property
of the Borrower or any of its consolidated Subsidiaries (including pursuant to
any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in
the ordinary course of business,
(e) any
extraordinary gain or loss,
(f) the
cumulative effect of a change in accounting principles and
(g) any
non-cash compensation expense realized for grants of performance shares, stock
options or other rights to officers, directors and employees of the Borrower or
any Subsidiary of the Borrower, provided that such shares,
options or other rights can be redeemed at the option of the holder only for
Capital Stock of the Borrower (other than Disqualified Stock).
“Consolidated Net
Tangible Assets” means, as of any date
of determination, the sum of the amounts that would appear on a consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as the total
assets (less accumulated depreciation and amortization, allowances for doubtful
receivables, other applicable reserves and other properly deductible items) of
the Borrower and its Subsidiaries, after giving effect to purchase accounting
and after deducting therefrom Consolidated Current Liabilities and, to the
extent otherwise included, the amounts of (without duplication):
(a) the
excess of cost over fair market value of assets or businesses
acquired;
(b) any
revaluation or other write-up in book value of assets subsequent to the last day
of the fiscal quarter of the Borrower immediately preceding the Closing Date as
a result of a change in the method of valuation in accordance with
GAAP;
24
(c) unamortized
debt discount and expenses and other unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights, licenses,
organization or developmental expenses and other intangible items;
(d)
minority interests in consolidated Subsidiaries held by Persons other than the
Borrower or any Wholly Owned Subsidiary;
(e)
treasury stock; and
(f) cash
or securities set aside and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of Capital Stock
to the extent such obligation is not reflected in Consolidated Current
Liabilities.
“Continuing
Directors” means, as of any date of determination, any member of the
Board of Directors who (a) was a member of the Board of Directors on the date of
this Agreement or (b) was nominated for election to the Board of Directors by,
or whose election was ratified with the approval of, a majority of the
Continuing Directors who were members of the Board of Directors at the time of
such nomination or election.
“Contractual
Obligation” means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is
bound.
“Debtor Relief
Laws” means the Bankruptcy Code, if applicable, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.
“Default”
means any event or condition that constitutes an Event of Default or that, with
the giving of any notice, the passage of time, or both, would be an Event of
Default.
“Default
Interest” has the meaning specified in Section
2.9.
“Default
Rate” means, at any time, an interest rate equal to 5% per annum, to the
fullest extent permitted by applicable Laws.
“Disqualified
Stock” means any
Capital Stock of the Borrower or any of its Subsidiaries that by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable, in either case at the option of the holder thereof) or
otherwise:
(a) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise,
(b) is
or may become redeemable or repurchaseable at the option of the holder thereof,
in whole or in part, or
25
(c) is
convertible or exchangeable at the option of the holder thereof for Indebtedness
or Disqualified Stock,
on or
prior to, in the case of clause (a), (b) or (c), the first anniversary of
the Maturity Date.
“Disqualified
Stock Dividends” means all dividends with respect to Disqualified Stock
of the Borrower held by Persons other than a Wholly Owned
Subsidiary. The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the maximum
statutory federal income tax rate (expressed as a decimal number between 1 and
0) then applicable to the Borrower.
“Dollar”
and “$” mean
lawful money of the United States.
“EBITDA” means, for any period, an
amount equal to, for the Borrower and its consolidated
Subsidiaries:
(a) the
sum of Consolidated Net Income for such period, plus the following to the extent
reducing Consolidated Net Income for such period:
(1) the
provision for taxes based on income or profits or utilized in computing net
loss,
(2) Consolidated
Fixed Charges,
(3) depreciation,
(4)
amortization of intangibles, and
(5) any
other non-cash items (other than any such non-cash item to the extent that it
represents an accrual of, or reserve for, cash expenditures in any future
period), minus
(b) all
non-cash items increasing Consolidated Net Income for such period.
Notwithstanding
the foregoing clause (a), the provision for taxes and the depreciation,
amortization and non-cash items of a Subsidiary of the Borrower shall be added
to Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Borrower by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Subsidiary or
its shareholders.
“Employee Benefit
Plan” means any “employee benefit plan” as defined in Section 3(3) of
ERISA which is or has been maintained or contributed to by the
Borrower.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor thereto, and any regulations and interpretations
promulgated thereunder.
26
“Event of
Default” has the meaning specified in Section
7.1.
“Exchange
Act” means the Securities Exchange Act of 1934 of the United States, and
the rules and regulations promulgated thereunder, as in effect from time to
time.
“Excluded
Taxes” has the meaning specified in Section
2.8.
“Fair Market
Value” means,
with respect to any Property, the price that could be negotiated in an
arm’s-length free market transaction, for cash, between a willing seller and a
willing buyer, neither of whom is under undue pressure or compulsion to complete
the transaction. Fair Market Value shall be determined, except as otherwise
provided,
(a) if
such Property has a Fair Market Value equal to or less than $10.0 million,
by any Officer of the Borrower, or
(b) if
such Property has a Fair Market Value in excess of $10.0 million, by a
majority of the Borrower’s Board of Directors and evidenced by a board
resolution dated within 30 days of the relevant transaction, delivered to the
Lender.
“GAAP”
means generally accepted accounting principles as in effect in the United States
and set forth in opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body,
court, administrative tribunal, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
“Guarantee”
means, as to any Person, (i) any obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness, Contractual Obligations or other obligation payable or performable
by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (A)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness, Contractual Obligations or other obligation, (B) to purchase
or lease property, securities or services for the purpose of assuring the
obligee in respect of such Indebtedness, Contractual Obligations or other
obligation of the payment or performance of such Indebtedness, Contractual
Obligations or other obligation, (C) to maintain working capital, equity capital
or any other financial statement condition or liquidity or level of income or
cash flow of the primary obligor so as to enable the primary obligor to pay such
Indebtedness, Contractual Obligations or other obligation, or (D) entered into
for the purpose of assuring in any other manner the obligee in respect of such
Indebtedness, Contractual Obligations or other obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (ii) any Lien on any assets of such Person securing
any Indebtedness, Contractual Obligations or other obligation of any other
Person, whether or not such Indebtedness, Contractual Obligations or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith. The term “Guarantee” as a verb has a corresponding
meaning.
27
“Hedging
Obligation” of
any Person means any obligation of such Person pursuant to any agreement
intended to protect or benefit a party thereto from changes in interest rates,
foreign currency exchange rates, prices of commodities, stock indices, or any
other similar agreement or arrangement.
“Incur” means, with respect to any
Indebtedness or other obligation of any Person, to create, issue, incur (by
merger, conversion, exchange or otherwise), extend, assume, Guarantee or become
liable in respect of such Indebtedness or other obligation or the recording, as
required pursuant to GAAP or otherwise, of any such Indebtedness or obligation
on the balance sheet of such Person (and “Incurrence” and “Incurred” shall have
meanings correlative to the foregoing); provided, however, that a
change in GAAP that results in an obligation of such Person that exists at such
time, and is not theretofore classified as Indebtedness, becoming Indebtedness
shall not be deemed an Incurrence of such Indebtedness; provided further, however, that any
Indebtedness or other obligations of a Person existing at the time such Person
becomes a Subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be Incurred by such Subsidiary at the time it
becomes a Subsidiary; and provided further, however,
that amortization of debt discount shall not be deemed to be the Incurrence of
Indebtedness, provided
that in the case of Indebtedness sold at a discount, the amount of such
Indebtedness Incurred shall at all times be the aggregate principal amount at
the date stated for its maturity.
“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP: (i) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments, (ii) all direct or contingent
obligations of such Person arising under letters of credit (including standby
and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments, (iii) all obligations of such Person to pay the deferred purchase
price of property or services (other than trade accounts payable in the ordinary
course of business and personal mortgages), (iv) indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse, (v) capital leases, (vi) all
commitments of such Person to make an Investment in another Person, (vii) all
obligations of such Person to post margin or collateral (however characterized)
under any prime brokerage, securities account, options or similar agreements,
and (viii) all Guarantees of such Person in respect of any of the foregoing. For
all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person.
“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (i) the purchase or other acquisition of
capital stock or other securities of, or beneficial interest in, another Person,
(ii) a loan, advance or capital contribution to, Guarantee or assumption of debt
of, or purchase or other acquisition of any other debt or equity participation
or interest in, another Person, including any partnership or joint venture
interest in such other Person, or (iii) the purchase or other acquisition (in
one transaction or a series of transactions) of assets of another Person that
constitute a business unit.
28
“Laws”
means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
“Lender”
shall have the meaning ascribed to such term in the introductory paragraph
hereof.
“Leverage
Ratio” means the ratio of:
(a) the
outstanding Consolidated Indebtedness of the Borrower and its Subsidiaries,
to
(b) the
LTM Pro Forma EBITDA.
“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, debenture or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any holdback or flawed asset arrangement,
conditional sale or other title retention agreement, and any financing lease
having substantially the same economic effect as any of the
foregoing).
“Loan” has
the meaning specified in Section
2.1.
“LTM Pro Forma
EBITDA” means Pro Forma EBITDA for the four most recent consecutive
fiscal quarters ending at least 45 days prior to the date of determination
for which financial statements are available, where “Pro Forma EBITDA” means, for
any period, the EBITDA of the Borrower and its consolidated Subsidiaries, after
giving effect to the following:
if:
(a) since
the beginning of such period, the Borrower or any of its Subsidiaries shall have
made any Asset Sale or an Investment (by merger or otherwise) in any Subsidiary
(or any Person that becomes a Subsidiary of the Borrower) or an acquisition of
Property, or
(b) since
the beginning of such period any Person (that subsequently became a Subsidiary
of the Borrower or was merged with or into the Borrower or any of its
Subsidiaries since the beginning of such period) shall have made such an Asset
Sale, Investment or acquisition,
EBITDA
for such period shall be calculated after giving pro forma effect to such
Asset Sale, Investment or acquisition as if such Asset Sale, Investment or
acquisition occurred on the first day of such period.
29
“Material Adverse
Effect” means (a) a material adverse change in, or a material adverse
effect upon, the business, properties, assets, liabilities (actual or
contingent), or financial condition of the Borrower and its Subsidiaries on a
consolidated basis; or (b) a material impairment of the ability of the Borrower
to perform the Borrower’s obligations under any Transaction Document to which
the Borrower is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against the Borrower of any
Transaction Document to which the Borrower is a party.
“Maturity
Date” means January 28, 2011, or if such day is not a Business Day, the
next preceding Business Day.
“Maximum
Rate” shall have the meaning set forth in Section
2.12.
“Note” has
the meaning specified in Section
2.5.
“Obligations”
means all debts, liabilities, obligations, covenants and duties of the Borrower
arising under any Transaction Document, whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including the Post-Petition Interest and
Accreted Value of all Advances not theretofore paid.
“Organizational
Documents” means, (i) with respect to any corporation or company, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(ii) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (iii) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
“Other
Currency” shall have the meaning set forth in Section
8.17.
“Payee”
shall have the meaning set forth in Section
8.17.
“Permitted
Holders” means ▇▇. ▇▇▇▇ Tianfu, a resident of Harbin, the PRC, and his
estate, spouse, ancestors and lineal descendants, or the legal representatives
of any of the foregoing and the trustees of any bona fide trusts of which the
foregoing are the sole beneficiaries or the grantors, or any Person of which the
foregoing “beneficially owns” (as defined in Rule 13d-3 under the Exchange Act),
individually or collectively with any of the foregoing, at least 80% of the
total voting power of the Voting Stock of such Person.
“Permitted
Liens” means the following types of Liens:
(i) Liens
for taxes, assessments or governmental charges or levies on the Property of the
Borrower or any of its Subsidiaries if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings promptly instituted and diligently
concluded, provided
that any reserve or other appropriate provision that shall be required in
conformity with GAAP shall have been made therefor; and
30
(ii) Liens
imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and other
similar Liens, on the Property of the Borrowre or any of its Subsidiaries
arising in the ordinary course of business and securing payment of obligations
that are not more than 60 days past due or are being contested in good
faith and by appropriate proceedings;
(iii) Liens
on the Property of the Borrower or any of its Subsidiaries incurred in the
ordinary course of business to secure performance of obligations with respect to
statutory or regulatory requirements, performance or return-of-money bonds,
surety bonds or other obligations of a like nature and incurred in a manner
consistent with industry practice, in each case which are not incurred in
connection with the borrowing of money, the obtaining of advances or credit or
the payment of the deferred purchase price of Property and which do not in the
aggregate impair in any material respect the use of Property in the operation of
the business of the Borrower and its Subsidiaries taken as a whole
(iv)
Liens on Property at the time the Borrower or any
of its Subsidiaries acquired such Property, including any acquisition by means
of a merger or consolidation with or into the Borrower or any of its
Subsidiaries; provided,
however, that any such Lien may not extend to any other Property of the
Borrower or any of its Subsidiaries; provided further, however,
that such Liens shall not have been incurred in anticipation of or in connection
with the transaction or series of transactions pursuant to which such Property
was acquired by the Borrower or any of its Subsidiaries;
(v) Liens
on the Property of a Person at the time such Person becomes a Subsidiary of the
Borrower; provided,
however, that any such Lien may not extend to any other Property of the
Borrower or any other Subsidiary of the Borrower that is not a direct Subsidiary
of such Person; provided
further, however, that any such Lien was not incurred in anticipation of
or in connection with the transaction or series of transactions pursuant to
which such Person became a Subsidiary of the Borrower;
(vi) pledges
or deposits by the Borrower or any of its Subsidiaries under workers’
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which the Borrower or any of its
Subsidiaries is party, or deposits to secure public or statutory obligations of
the Borrower, or deposits for the payment of rent, in each case incurred in the
ordinary course of business;
(vii) utility
easements, building restrictions and such other encumbrances or charges against
real Property as are of a nature generally existing with respect to properties
of a similar character;
(viii) Liens
existing on the Closing Date not otherwise described in clauses (i) through
(vii) above;
31
(ix) Liens
on the Property of the Borrower or any of its Subsidiaries to secure any
Refinancing, in whole or in part, of any Indebtedness secured by Liens referred
to in clause (iv), (v) or (viii) above; provided, however, that any
such Lien shall be limited to all or part of the same Property that secured the
original Lien (together with improvements and accessions to such Property), and
the aggregate principal amount of Indebtedness (and other obligations
thereunder) that is secured by such Lien shall not be increased to an amount
greater than the sum of:
(1) the
outstanding principal amount, or, if greater, the committed amount, of the
Indebtedness (and other obligations thereunder) secured by Liens described under
clause (iv), (v) or (viii) above, as the case may be, at the time the
original Lien became a Permitted Lien under this Agreement, and
(2) an
amount necessary to pay any fees and expenses, including premiums and defeasance
costs, Incurred by the Borrower or such Subsidiary in connection with such
Refinancing;
(x) any
attachment or judgment Lien not constituting an Event of Default under Section 7.1(i);
and
(xi) Liens
not otherwise permitted by clauses (i) through (x) above encumbering Property
having an aggregate Fair Market Value not in excess of 20.0% of Consolidated Net
Tangible Assets, as determined based on the consolidated balance sheet of the
Borrower as of the end of the most recent fiscal quarter ending at least 45 days
prior to the date any such Lien shall be Incurred.
“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.
“Post-Petition
Interest” means any interest that accrues after the commencement of any
case, proceeding or other action under a Debtor Relief Law, whether or not such
interest is allowed or allowable as a claim in any such proceeding.
“Preferred Stock” means any Capital
Stock of a Person, however designated, which entitles the holder thereof to a
preference with respect to the payment of dividends, or as to the distribution
of assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of any other class of Capital Stock issued by such
Person.
“Preferred Stock
Dividends” means
all dividends with respect to Preferred Stock of the Borrower’s Subsidiaries
held by Persons other than the Borrower or a Wholly Owned
Subsidiary.
“Principal Amount
at Maturity” has the meaning specified in Section
2.4.
“Process
Agent” means ▇▇▇▇▇▇▇ ▇▇▇▇, located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇.
32
“Property” means, with respect to any
Person, any interest of such Person in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including Capital Stock in,
and other securities of, any other Person.
“Refinance” means, in respect of any
Indebtedness, to refinance, extend, renew, refund or Repay, or to issue other
Indebtedness, in exchange or replacement for, such
Indebtedness. “Refinanced” and “Refinancing” shall have correlative
meanings.
“Related
Business” means designing, manufacturing, servicing and marketing linear
motors and accessories, linear motor drive systems and accessories, high
efficiency motors and accessories, and special motors and
accessories.
“Repay” means, in respect of any
Indebtedness, to repay, prepay, repurchase, redeem, legally defease or otherwise
retire such Indebtedness. “Repayment” and “Repaid” shall have
correlative meanings. For purposes of the definition of “Consolidated
Fixed Charge Coverage Ratio,” Indebtedness shall be considered to have been
Repaid only to the extent the related loan commitment, if any, shall have been
permanently reduced in connection therewith.
“Sale and
Leaseback Transaction” means any direct or indirect
arrangement relating to Property now owned or hereafter acquired whereby the
Borrower or any of its consolidated Subsidiaries transfers such Property to
another Person and the Borrower or any of its consolidated Subsidiaries leases
it from such Person.
“SEC
Reports” has the meaning specified in Section
4.5.
“Securities
Act” means the Securities Act of 1933 of the United States, and the rules
and regulations promulgated thereunder, as in effect from time to
time.
“Significant
Subsidiary” means any Subsidiary that would be a “significant subsidiary”
of the Borrower within the meaning of Rule 1-02 under Regulation S-X promulgated
by the Commission.
“Subsidiaries” means, with respect to any
Person, any other Person with respect to which the first Person, directly or
indirectly, owns or controls 50% or more of the securities of the second Person
having the power to elect members of the Board of Directors or similar body
governing the affairs of such entity.
“Surviving
Person” means the surviving Person formed by a merger, consolidation or
amalgamation or a Person to whom all or substantially all of the Property of the
Borrower is sold, transferred, assigned, leased, conveyed or otherwise
disposed.
“Taxes”
has the meaning specified in Section 2.8.
“Trading
Day” means any
day when the Trading Market on which the Common Stock is then listed is open for
trading.
“Trading
Market” means any of the Nasdaq Capital Market, the Nasdaq Global Market
and the Nasdaq Global Select Market.
“Transaction
Documents” means this Agreement, the Exhibits hereto and each other
agreement, if any, executed pursuant to or in connection with the foregoing (as
the same may be varied, extended, supplemented, consolidated, amended, replaced,
renewed, modified, increased or restated).
33
“UCC”
means the Uniform Commercial Code as in effect in the State of Nevada, United
States of America.
“Voting
Stock” of any
Person means all classes of Capital Stock or other interests (including
partnership interests) of such Person then outstanding and normally entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof.
“Wholly Owned
Subsidiary”
means, at any time, a consolidated Subsidiary of the Borrower, all the Voting
Stock of which (except directors’ qualifying shares) is at such time owned,
directly or indirectly, by the Borrower and its other Wholly Owned
Subsidiaries.
[Remainder of page left intentionally
blank]
34
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed and delivered as
the date first written above.
BORROWER:
a
Nevada corporation
|
By:
|
|
|
|
Name:
|
||
|
Title:
|
35
LENDER:
ABAX
EMERALD LTD.
|
By:
|
|
|
|
Name:
|
||
|
Title:
|
Wire
instructions are as follows:
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
[SIGNATURE
PAGE TO LOAN AGREEMENT]
36
EXHIBIT
A
FORM OF BORROWING
NOTICE
From:
HARBIN ELECTRIC,
INC.
To:
ABAX EMERALD
LTD.
Dated: July
28, 2010
Dear
Sirs
Loan
Agreement dated July 28, 2010 (the “Loan Agreement”)
|
1.
|
We
refer to the Loan Agreement. This is a Borrowing Notice. Terms defined in
the Loan Agreement have the same meaning in this Borrowing Notice unless
given a different meaning in this Borrowing
Notice.
|
|
2.
|
We
wish to borrow an Advance on the following
terms:
|
|
Proposed
Borrowing Date:
|
[ ]
(or, if that is not a Business Day, the next Business
Day)
|
|
Amount:
|
$[ ]
or, if less, the Available
Commitment
|
|
3.
|
The
Borrower hereby represents and warrants that the conditions specified in
Section 3 of the Loan Agreement shall be satisfied on and as of the date
hereof.
|
|
4.
|
The
proceeds of this Advance should be credited
to:-
|
Account
Name:
Account
Number:
Account
Type:
Bank
Name:
ABA
Number:
Routing
Number:
SWIFT
Code:
|
5.
|
This
Borrowing Notice is irrevocable.
|
Yours
faithfully
|
|
|
Authorised
signatory
|
37
EXHIBIT
B
FORM OF OPTIONAL PREPAYMENT
NOTICE
From:
HARBIN ELECTRIC,
INC.
To:
ABAX EMERALD
LTD.
Dated: [ ]
Dear
Sirs
Loan
Agreement dated July 28, 2010 (the “Loan Agreement”)
|
6.
|
We
refer to the Loan Agreement. This is an Optional Prepayment Notice. Terms
defined in the Loan Agreement have the same meaning in this Optional
Prepayment Notice unless given a different meaning in this Optional
Prepayment Notice.
|
|
7.
|
We
wish to optionally prepay one or more Advances on the following terms,
each being separately identified
below:
|
a.
Borrowing Date (indicate separately for each Advance):[ ]
b.
Proposed Optional Prepayment Date (indicate separately for each
Advance):
[ ] (or, if that is not a
Business Day, the next Business Day)
c. Amount
of Advance to be Optionally Prepaid: $[ ]
d. Amount
of Advance to Remain Outstanding: $[ ]
|
8.
|
This
Optional Prepayment Notice is
irrevocable.
|
Yours
faithfully
|
|
|
Name:
|
|
Title:
Authorised signatory
|
38
EXHIBIT
C
FORM OF
NOTE
|
$[●],000,000
|
[Date]
|
FOR VALUE
RECEIVED, the undersigned Harbin Electric, Inc., a Nevada corporation, hereby
promises to pay to Abax Emerald Ltd. (the “Lender”)
or order, in accordance with the terms of that certain Loan Agreement dated as
of July 28, 2010 (the “Loan
Agreement”), as from time to time in effect, between the undersigned and
the Lender, to the extent not sooner paid, on or before the Maturity Date, the
original principal sum of [SPELL OUT NUMBER] UNITED STATES DOLLARS
($[●],000,000), or such amount as may be advanced by the payee hereof under the
Loan Agreement with daily Accreted Value from the date hereof, computed as
provided in the Loan Agreement, on the principal amount of the Loan from time to
time unpaid, at a rate per annum on each portion of the principal amount which
shall at all times be equal to the rate of accretion applicable to such portion
in accordance with the Loan Agreement, and with Default Interest on overdue
principal and, to the extent permitted by applicable law, on overdue
installments of Accreted Value and late charges at the rates provided in the
Loan Agreement. Accreted Value shall be payable on the dates specified in the
Loan Agreement, except that Accreted Value of all of the Advances up to the
Maturity Date shall be paid at the stated or accelerated maturity hereof or upon
the prepayment in full hereof pursuant to certain events constituting a Change
of Control. Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Loan Agreement.
Payments
hereunder shall be made to the Lender pursuant to Section 2.7 of the
Loan Agreement.
This Note
is one of one or more Notes evidencing borrowings under and is entitled to the
benefits and subject to the provisions of the Loan Agreement. The Accreted Value
of this Note may be due and payable in whole or in part prior to the maturity
date stated above and is subject to mandatory prepayment in the amounts and
under the circumstances set forth in the Loan Agreement, and may be prepaid in
whole or from time to time in part, all as set forth in the Loan
Agreement.
Notwithstanding
anything in this Note to the contrary, all agreements between the Borrower and
the Lender, whether now existing or hereafter arising and whether written or
oral, are hereby limited so that in no contingency, whether by reason of
acceleration of the maturity of any of the Obligations or otherwise, shall any
interest deemed to have been contracted for, charged or received by the Lender
exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, Default Interest or Accreted Value would otherwise be
payable to the Lender in excess of the maximum lawful amount, the Default
Interest or Accreted Value payable to the Lender shall be reduced to the maximum
amount permitted under applicable law; and if from any circumstance the Lender
shall ever receive anything of value deemed interest by applicable law in excess
of the maximum lawful amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal balance of the Obligations and if such
excessive interest exceeds the unpaid balance of principal of the Obligations,
such excess shall be refunded to the Borrower. All interest paid or agreed (or
deemed to have been paid or agreed) to be paid to the Lender shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full period until payment in full of the principal of the
Obligations (including the period of any renewal or extension thereof) so that
the interest deemed to have been paid thereon for such full period shall not
exceed the maximum amount permitted by applicable law. This paragraph shall
control all agreements between the Borrower and the Lender in respect to the
Loan.
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In case
an Event of Default shall occur, the entire Accreted Value of this Note up to
the Maturity Date may become or be declared due and payable in the manner and
with the effect provided in said Loan Agreement. In addition to and not in
limitation of the foregoing and the provisions of the Loan Agreement hereinabove
defined, the undersigned further agrees, subject only to any limitation imposed
by applicable law, to pay all expenses, including reasonable attorneys’ fees and
legal expenses, incurred by the holder of this Note in endeavoring to collect
any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
This Note
shall be governed by and construed in accordance with the laws of the State of
New York pursuant to Section 5-1401 of the New York General Obligations Law
(without giving effect to the conflict of laws rules of any
jurisdiction).
The
undersigned maker and all guarantors and endorsers, hereby waive presentment,
demand, notice, protest, notice of intention to accelerate the indebtedness
evidenced hereby, notice of acceleration of the indebtedness evidenced hereby
and all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, except as specifically otherwise
provided in the Loan Agreement, and assent to extensions of time of payment or
forbearance or other indulgence without notice.
[SIGNATURE ON NEXT
PAGE]
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IN
WITNESS WHEREOF the undersigned has caused this Note to be duly executed and
delivered as of the day and year first above written.
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HARBIN
ELECTRIC, INC.,
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a
Nevada corporation
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By:
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Name:
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EXHIBIT
D
FORM OF OFFICERS’
CERTIFICATE
From:
HARBIN ELECTRIC,
INC.
To:
ABAX EMERALD
LTD.
Dated: July
28, 2010
Dear
Sirs
Loan
Agreement dated July 28, 2010 (the “Loan Agreement”)
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1.
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We
refer to the Loan Agreement. This is an Officers’ Certificate required by
Section
3(i) of the Loan Agreement. Terms defined in the Loan Agreement
have the same meaning in this Officers’ Certificate unless given a
different meaning in this Officers’
Certificate.
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2.
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We
hereby certify that the representations and warranties in Section 4 of
the Loan Agreement are true, correct and complete in all material respects
on and as of the relevant Borrowing Date to the same extent as though made
on and as of that date (or, to the extent such representations and
warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all
material respects on and as of such earlier date) and that Borrower has
performed in all material respects all agreements and satisfied all
conditions which the Loan Agreement provides shall be performed or
satisfied by it on or before the Borrowing Date specified herein except as
otherwise disclosed to and agreed to in writing by
Lender.
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Yours
faithfully,
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Name:
YANG Tianfu
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Title:
Chief Executive Officer
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Name:
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Title:
Chief Financial Officer
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