Exhibit 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated as of August
31, 2005, by and between HARBIN ELECTRIC, INC., a Nevada corporation (the
"Company"), and each of the entities whose names appear on the signature pages
hereof. Such entities are, individually, referred to herein as a "Purchaser"
and, collectively, as the "Purchasers".
WHEREAS, the Company has agreed, on the terms and subject to the conditions
set forth in the Common Stock Purchase Agreement of even date herewith (the
"Common Stock Purchase Agreement"), to issue and sell to each Purchaser shares
of the Company's Common Stock (the "Shares"); and
WHEREAS, in order to induce each Purchaser to enter into the Common Stock
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities Act").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Common Stock Purchase Agreement.
In consideration of each Purchaser entering into the Common Stock Purchase
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
I. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the meanings
specified:
A. "Effective Date" means the date on which the Registration Statement
(as defined below) is declared effective by the Securities and Exchange
Commission (the "Commission");
B. "Holder" means any person owning or having the right to acquire
Shares;
C. "Filing Deadline" means the 90th day following the Closing Date;
D. "Register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement or statements in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement by the Commission;
E. "Registration Period" has the meaning set forth in paragraph 2(c)
below; and
F. "Registration Statement" means the Registration Statement relating
to resales of the Shares.
II. REGISTRATION.
A. Registration Statement. On or before the Filing Deadline, the
Company shall prepare and file with the Commission a Registration Statement on
Form SB-2 or other applicable form covering the resale of the Shares.
B. Effectiveness. The Company shall use its reasonable best efforts to
cause the Registration Statement to become effective as soon as practicable
following the filing thereof. The Company shall respond promptly to any and all
comments made by the staff of the Commission on the Registration Statement, and,
if the Company learns that no review of a Registration Statement will be made by
the staff of the Commission or that the staff of the Commission has no further
comments on the Registration Statement, shall submit to the Commission a request
for acceleration of the effectiveness of the Registration Statement. Subject to
the provisions of Section 4, the Company will maintain the effectiveness of the
Registration Statement until the earlier to occur of (i) the date on which all
of the Shares have been publicly sold pursuant to either the Registration
Statement or Rule 144 and (ii) the date on which all of the Shares remaining to
be sold under the Registration Statement (in the reasonable opinion of counsel
to the Holder) may be immediately sold to the public without registration (the
period beginning on the Closing Date and ending on the earlier to occur of (i)
or (ii) above being referred to herein as the "Registration Period").
III. PIGGYBACK REGISTRATION.
If at any time prior to the expiration of the Registration Period, (i) the
Company proposes to register shares of Common Stock under the Securities Act in
connection with the public offering of such shares for cash (a "Proposed
Registration") and (ii) a registration statement covering the sale of all of the
Shares is not then effective and available for sales thereof by the Holders, the
Company shall, at such time, promptly give each Holder written notice of such
Proposed Registration. Each Holder shall have five (5) Business Days from its
receipt of such notice to deliver to the Company a written request specifying
the number of Shares that such Holder intends to sell and such Holder's intended
method of distribution. Upon receipt of such request, the Company shall use its
best efforts to cause all Shares which the Company has been requested to
register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of such Holder; provided, however, that
the Company shall have the right to postpone or withdraw any registration
effected pursuant to this Section 3 without obligation to the Holder. If, in
connection with any underwritten public offering for the account of the Company
or for stockholders of the Company that have contractual rights to require the
Company to register shares of Common Stock, the managing underwriter or
underwriters thereof shall impose a limitation on the number of shares of Common
Stock which may be included in a registration statement because, in the judgment
of such underwriter or underwriters, marketing or other factors dictate such
limitation is necessary to facilitate such offering, then the Company shall be
obligated to include in such registration statement only such limited portion of
the Shares with respect to which each Holder has requested inclusion thereunder
as such underwriter or underwriters shall permit. Any exclusion of Shares shall
be made pro rata among the Holders seeking to include Shares in a registration
statement, in proportion to the number of Shares sought to be included by such
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Holders; provided, however, that the Company shall not exclude any Shares unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled to inclusion of such securities in such registration statement
or are not entitled to pro rata inclusion with the Shares; and provided further,
that after giving effect to the immediately preceding proviso, any exclusion of
Shares shall be made pro rata with holders of other securities having the right
to include such securities in the registration statement.
IV. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations hereunder, including without
limitation those pursuant to Section 2, the Company shall, with respect to the
Registration Statement:
A. prepare and file with the Commission such amendments and supplements
to such Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to comply with the provisions of the
Securities Act or to maintain the effectiveness of the Registration Statement
during the Registration Period, or as may be reasonably requested by a Holder in
order to incorporate information concerning such Holder or such Holder's
intended method of distribution;
B. furnish to each Holder such number of copies of the prospectus
included in the Registration Statement, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such Holder may reasonably request in order to facilitate the disposition of
such Holder's Shares;
C. use all commercially reasonable efforts to register or qualify the
Shares under the securities or "blue sky" laws of such jurisdictions within the
United States as shall be reasonably requested from time to time by a Holder,
and do any and all other acts or things which may be necessary or advisable to
enable such Holder to consummate the public sale or other disposition of the
Shares in such jurisdictions; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such jurisdiction;
D. notify each Holder immediately after becoming aware of the
occurrence of any event or condition as a result of which the prospectus
included in the Registration Statement, as then in effect, contains an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and as promptly as practicable,
prepare, file and furnish to each Holder a reasonable number of copies of a
supplement or an amendment to such prospectus as may be necessary so that such
prospectus does not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
provided that, for not more than thirty (30) consecutive Business Days (or a
total of not more than sixty (60) calendar days in any twelve (12) month
period), in the event of a proposed merger or similar transaction, the Company
may delay the disclosure of material non-public information concerning such
transaction the public disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company, in the best interests of the
Company and which may, based on the written advice of outside counsel, be
delayed under applicable law or regulation (an "Allowed Delay"); provided,
further, that the Company shall promptly (i) notify each Holder in writing of
the existence of material non-public information giving rise to an Allowed Delay
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(but in no event, without the prior written consent of such Holder, shall the
Company disclose to such Holder any of the facts or circumstances regarding any
material non-public information) and (ii) advise each Holder in writing to cease
all sales under such Registration Statement until the termination of the Allowed
Delay;
E. use all commercially reasonable efforts to prevent the issuance of
any stop order or other order suspending the effectiveness of such Registration
Statement and, if such an order is issued, to obtain the withdrawal thereof at
the earliest possible time and to notify each Holder of the issuance of such
order and the resolution thereof;
F. furnish to each Holder, on the date that such Registration Statement
becomes effective, a letter, dated such date, of outside counsel representing
the Company (and reasonably acceptable to such Holder) addressed to such Holder,
confirming the effectiveness of such Registration Statement and, to the
knowledge of such counsel, the absence of any stop order, (A) a copy of an
opinion, dated such date, of such outside counsel, in such form and substance as
is required to be given to the underwriters, and (B) a letter addressed to such
Holder, dated such date, from the Company's independent certified public
accountants, in such form and substance as is required to be given by the
Company's independent certified public accountants to such underwriters;
G. provide to each Holder and its representatives the reasonable
opportunity to conduct a reasonable inquiry of the Company's financial and other
records during normal business hours and make available its officers, directors
and employees for questions regarding information which such Holder may
reasonably request in order to fulfill any due diligence obligation on its part;
and
H. permit counsel for each Holder to review the Registration Statement
and all amendments and supplements thereto, and any comments made by the staff
of the Commission concerning such Holder and/or the transactions contemplated by
the Transaction Documents and the Company's responses thereto, within a
reasonable period of time prior to the filing thereof with the Commission (or,
in the case of comments made by the staff of the Commission, within a reasonable
period of time following the receipt thereof by the Company).
V. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of the Shares pursuant to the
Registration Statement, each Holder shall:
A. timely furnish to the Company in writing such information regarding
itself and the intended method of disposition of the Shares (which shall not
include an underwritten of the offering) as the Company shall reasonably request
in order to effect the registration thereof;
B. upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraphs 4(e) or 4(f), immediately discontinue
any sale or other disposition of such Shares pursuant to such Registration
Statement until the filing of an amendment or supplement as described in
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paragraph 4(e) or withdrawal of the stop order referred to in paragraph 4(f),
and use commercially reasonable efforts to maintain the confidentiality of such
notice and its contents;
C. to the extent required by applicable law, deliver a prospectus to
the purchaser of the Shares;
D. notify the Company when it has sold all of the Shares held by it;
E. notify the Company in the event that any information supplied by
such Holder in writing for inclusion in such Registration Statement or related
prospectus is untrue or omits to state a material fact required to be stated
therein or necessary to make such information not misleading in light of the
circumstances then existing; immediately discontinue any sale or other
disposition of the Shares pursuant to the Registration Statement until the
filing of an amendment or supplement to such prospectus as may be necessary so
that such prospectus does not contain an untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing; and use commercially reasonable efforts to assist the Company as may
be appropriate to make such amendment or supplement effective for such purpose;
and
F. not take, and cause the persons under its direction or control not
to take, any action during the term of this Agreement designed to stabilize or
manipulate the price of any security of the Company.
VI. INDEMNIFICATION.
In the event that any Shares are included in the Registration Statement
under this Agreement:
A. To the extent permitted by law, the Company shall indemnify and hold
harmless each Holder, the officers, directors, employees, agents and
representatives of such Holder, and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), against any losses, claims, damages,
liabilities or reasonable out-of-pocket expenses (whether joint or several)
(collectively, including legal or other expenses reasonably incurred in
connection with investigating or defending same, "Losses"), insofar as any such
Losses arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Subject to the provisions of paragraph 6(c) below, the
Company will reimburse such Holder, and each such officer, director, employee,
agent, representative or controlling person, for any legal or other expenses as
reasonably incurred by any such entity or person in connection with
investigating or defending any such Losses; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any Loss if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be obligated to
indemnify any person for any Loss to the extent that such Loss is based upon and
is in conformity with written information furnished by such person expressly for
use in such Registration Statement.
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B. To the extent permitted by law, each Holder who is named in such
Registration Statement as a selling stockholder, acting severally and not
jointly, shall indemnify and hold harmless the Company, the officers, directors,
employees, agents and representatives of the Company, and each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act, against any Losses to the extent (and only to the extent) that any
such Losses are based upon and in conformity with written information furnished
by such Holder expressly for use in such Registration Statement. Subject to the
provisions of paragraph 6(c) below, such Holder will reimburse any legal or
other expenses as reasonably incurred by the Company and any such officer,
director, employee, agent, representative, or controlling person, in connection
with investigating or defending any such Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any such
Loss if such settlement is effected without the consent of such Holder (which
consent shall not be unreasonably withheld); and provided, further, that, in no
event shall any indemnity under this subsection 6(b) exceed the net proceeds
resulting from the sale of the Shares sold by such Holder under such
Registration Statement.
C. Promptly after receipt by an indemnified party under this Section 6
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in and to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the reasonably
incurred fees and expenses of one such counsel for all indemnified parties to be
paid by the indemnifying party, if representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate under
applicable standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, to the extent prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 6 with respect to such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 6 or
with respect to any other action unless the indemnifying party is materially
prejudiced as a result of not receiving such notice.
D. In the event that the indemnity provided in paragraph (a) or (b) of
this Section 6 is unavailable or insufficient to hold harmless an indemnified
party for any reason, the Company and each Holder agree, severally and not
jointly, to contribute to the aggregate Losses to which the Company or such
Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and such Holder in connection with the statements
or omissions which resulted in such Losses; provided, however, that in no case
shall such Holder be responsible for any amount in excess of the proceeds
resulting from the sale of the Shares sold by it under the Registration
Statement. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or by such Holder. The Company and each Holder agree that it would not
be just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
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contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 6, each person who controls a
Holder within the meaning of either the Securities Act or the Exchange Act and
each officer, director, employee, agent or representative of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Securities Act or the
Exchange Act and each officer, director, employee, agent or representative of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
E. The obligations of the Company and each Holder under this Section 6
shall survive the completion of any offering or sale of Shares pursuant to a
Registration Statement under this Agreement, or otherwise.
VII. MISCELLANEOUS.
A. Expenses of Registration. All reasonable expenses, other than
underwriting discounts and commissions and fees and expenses of counsel to each
Holder, incurred in connection with the registrations, filings or qualifications
described herein, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, the fees and disbursements of
counsel for the Company, shall be borne by the Company.
B. Amendment; Waiver. Any provision of this Agreement may be amended or
waived only pursuant to a written instrument executed by the Company and each
Holder. Any amendment or waiver effected in accordance with this paragraph shall
be binding upon each Holder, each future Holder, and the Company. The failure of
any party to exercise any right or remedy under this Agreement or otherwise, or
the delay by any party in exercising such right or remedy, shall not operate as
a waiver thereof.
C. Notices. Any notice, demand or request required or permitted to be
given by the Company or a Holder pursuant to the terms of this Agreement shall
be in writing and shall be deemed delivered (i) when delivered personally or by
verifiable facsimile or electronic transmission, unless such delivery is made on
a day that is not a Business Day, in which case such delivery will be deemed to
be made on the next succeeding Business Day, (ii) on the second Business Day
after timely delivery to an overnight courier and (iii) on the Business Day
actually received if deposited in the U.S. mail (certified or registered mail,
return receipt requested, postage prepaid), addressed as follows:
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If to the Company:
Harbin Electric, Inc.
No. 9 Ha Ping Xi Lu
Ha Ping Lu ▇▇ ▇▇▇▇▇ Qu
▇▇▇▇▇▇ ▇▇▇ Fa Qu
Harbin, China 150060
Attn: Chungang Xia
Tel: ▇▇▇-▇▇▇-▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
and if to a Holder, to such address as shall be designated by such Holder in
writing to the Company.
D. Assignment. Upon the transfer of any Shares by a Holder, the rights
of such Holder hereunder with respect to such Shares shall be assigned
automatically to the transferee thereof, and such transferee shall thereupon be
deemed to be a "Holder" for purposes of this Agreement, as long as: (i) the
Company is, within a reasonable period of time following such transfer,
furnished with written notice of the name and address of such transferee, (ii)
the transferee agrees in writing with the Company to be bound by all of the
provisions hereof, and (iii) such transfer is made in accordance with the
applicable requirements of the Common Stock Purchase Agreement; provided,
however, that the registration rights granted in this Agreement shall not be
transferred to any person or entity that receives any Shares pursuant to an
effective registration statement under the Securities Act or pursuant to a
public transaction under Rule 144 or any successor provision thereto.
E. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall be deemed
one and the same instrument. This Agreement, once executed by a party, may be
delivered to any other party hereto by facsimile transmission.
F. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada applicable to contracts made and
to be performed entirely within the State of Nevada.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
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HARBIN ELECTRIC, INC.,
a Nevada corporation
By:
Name:
Title:
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[_______________________] [_______________________]
By: By:
Name: Name:
Title: Title:
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[_______________________] [_______________________]
By: By:
Name: Name:
Title: Title:
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