-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HqwC0QdqQ2PFbpndzFmmI29BqU7MF1YkNVheXbfgEvMYqQNj5SXgeRkQj6IDTrSB PqIOLnOYhHmdigMs0JRsIw== 0001144204-06-037856.txt : 20060911 0001144204-06-037856.hdr.sgml : 20060911 20060911172202 ACCESSION NUMBER: 0001144204-06-037856 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20060911 DATE AS OF CHANGE: 20060911 GROUP MEMBERS: CITADEL EQUITY FUND LTD. GROUP MEMBERS: CITADEL INVESTMENT GROUP (HONG KONG) LIMITED GROUP MEMBERS: CITADEL INVESTMENT GROUP, L.L.C. GROUP MEMBERS: CITADEL KENSINGTON GLOBAL STRATEGIES FUND LTD. GROUP MEMBERS: CITADEL WELLINGTON LLC GROUP MEMBERS: KENNETH GRIFFIN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Harbin Electric, Inc CENTRAL INDEX KEY: 0001266719 STANDARD INDUSTRIAL CLASSIFICATION: MOTORS & GENERATORS [3621] IRS NUMBER: 980403396 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-80112 FILM NUMBER: 061084924 BUSINESS ADDRESS: STREET 1: NO. 9, HA PING XI LU STREET 2: HA PING LU JI ZHONG QU HARBIN KAI FA QU CITY: HARBIN STATE: F4 ZIP: 150001 BUSINESS PHONE: 86 45182621768 MAIL ADDRESS: STREET 1: NO. 9, HA PING XI LU STREET 2: HA PING LU JI ZHONG QU HARBIN KAI FA QU CITY: HARBIN STATE: F4 ZIP: 150001 FORMER COMPANY: FORMER CONFORMED NAME: TORCH EXECUTIVE SERVICES LTD DATE OF NAME CHANGE: 20031009 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CITADEL L P CENTRAL INDEX KEY: 0001027745 IRS NUMBER: 364111741 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 131 S. DEARBORN STREET, 32ND FLOOR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3123952100 MAIL ADDRESS: STREET 1: 131 S. DEARBORN STREET, 32ND FLOOR CITY: CHICAGO STATE: IL ZIP: 60603 SC 13D 1 v052468_sc13d.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. _______)*


HARBIN ELECTRIC, INC.
(Name of Issuer)

Common Stock, $0.00001 par value
(Title of Class of Securities)

41145W109
(CUSIP Number)

Matthew B. Hinerfeld
Citadel Investment Group, L.L.C.
131 S. Dearborn Street, 32nd Floor
Chicago, Illinois 60603
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

August 30, 2006
(Date of Event which Requires Filing of this Statement)
 
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o
 
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
 
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
 
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
 

     
CUSIP NO. 41145W109
  
Page 2 of 14 Pages

 
1. 
Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
   
Citadel Limited Partnership
 
2. 
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
X
   
(b)
 
 
3. 
SEC Use Only
 
4. 
Source of Funds (See Instructions) AF
 
5. 
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
 
6. 
Citizenship or Place of Organization Illinois
 
7. 
Sole Voting Power   0
8. 
Shared Voting Power   12,475,638 shares(1)
9. 
Sole Dispositive Power   0
10. 
Shared Dispositive Power   2,718,138 shares
 
11. 
Aggregate Amount Beneficially Owned by Each Reporting Person See Row 8 above.
 
12. 
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
 
13. 
Percent of Class Represented by Amount in Row (11)   64.6%(2)
 
14. 
Type of Reporting Person (See Instructions)   PN; HC
(1)
Includes 9,757,500 shares of the common stock of Issuer beneficially owned by Tianfu Yang, including 7,500 shares that Mr. Yang may acquire upon exercise of options within 60 days of the date hereof, over which the Reporting Persons may be deemed to have shared voting power pursuant to a Voting Agreement, dated as of August 30, 2006, among the Reporting Persons, the Issuer and Mr. Yang, under which Mr. Yang agrees to vote all shares of the common stock of the Issuer owned by him to ensure that nominees of the Reporting Persons are elected to the Board of Directors of Issuer. The Reporting Persons expressly disclaim beneficial ownership of the shares beneficially owned by Mr. Yang.
(2)
Based on 16,600,451 outstanding shares of the common stock of the Issuer, as set forth in the Purchase Agreement (as hereinafter defined).
 

     
CUSIP NO. 41145W109
  
Page 3 of 14 Pages
 
 
1. 
Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
   
Citadel Investment Group, L.L.C.
 
2. 
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
X
   
(b)
 
 
 
3. 
SEC Use Only
 
 
4. 
Source of Funds (See Instructions) AF
 
 
5. 
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
 
 
6. 
Citizenship or Place of Organization Delaware
 
 
7. 
Sole Voting Power   0
 
8. 
Shared Voting Power   12,475,638 shares(1)
 
9. 
Sole Dispositive Power   0
 
10. 
Shared Dispositive Power   2,718,138 shares
 
 
11. 
Aggregate Amount Beneficially Owned by Each Reporting Person See Row 8 above.
 
 
12. 
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
 
 
13. 
Percent of Class Represented by Amount in Row (11)   64.6%(2)
 
 
14. 
Type of Reporting Person (See Instructions) OO; HC
(1)
Includes 9,757,500 shares of the common stock of Issuer beneficially owned by Tianfu Yang, including 7,500 shares that Mr. Yang may acquire upon exercise of options within 60 days of the date hereof, over which the Reporting Persons may be deemed to have shared voting power pursuant to a Voting Agreement, dated as of August 30, 2006, among the Reporting Persons, the Issuer and Mr. Yang, under which Mr. Yang agrees to vote all shares of the common stock of the Issuer owned by him to ensure that nominees of the Reporting Persons are elected to the Board of Directors of Issuer. The Reporting Persons expressly disclaim beneficial ownership of the shares beneficially owned by Mr. Yang.
(2)
Based on 16,600,451 outstanding shares of the common stock of the Issuer, as set forth in the Purchase Agreement (as hereinafter defined).
 

     
CUSIP NO. 41145W109
  
Page 4 of 14 Pages
 
 
1. 
Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
   
Citadel Investment Group (Hong Kong) Limited
 
 
2. 
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
X
   
(b)
 
 
 
3. 
SEC Use Only
 
 
4. 
Source of Funds (See Instructions) AF
 
 
5. 
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
 
 
6. 
Citizenship or Place of Organization Hong Kong
 
 
7. 
Sole Voting Power   0
 
8. 
Shared Voting Power   12,475,638 shares(1)
 
9. 
Sole Dispositive Power   0
 
10. 
Shared Dispositive Power   2,718,138 shares
 
 
11. 
Aggregate Amount Beneficially Owned by Each Reporting Person See Row 8 above.
 
 
12. 
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
 
 
13. 
Percent of Class Represented by Amount in Row (11)   64.6%(2)
 
 
14. 
Type of Reporting Person (See Instructions)   CO
(1)
Includes 9,757,500 shares of the common stock of Issuer beneficially owned by Tianfu Yang, including 7,500 shares that Mr. Yang may acquire upon exercise of options within 60 days of the date hereof, over which the Reporting Persons may be deemed to have shared voting power pursuant to a Voting Agreement, dated as of August 30, 2006, among the Reporting Persons, the Issuer and Mr. Yang, under which Mr. Yang agrees to vote all shares of the common stock of the Issuer owned by him to ensure that nominees of the Reporting Persons are elected to the Board of Directors of Issuer. The Reporting Persons expressly disclaim beneficial ownership of the shares beneficially owned by Mr. Yang.
(2)
Based on 16,600,451 outstanding shares of the common stock of the Issuer, as set forth in the Purchase Agreement (as hereinafter defined).
 

     
CUSIP NO. 41145W109
  
Page 5 of 14 Pages
 
 
1. 
Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
   
Kenneth Griffin
 
 
2. 
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
X
   
(b)
 
 
 
3. 
SEC Use Only
 
 
4. 
Source of Funds (See Instructions) AF
 
 
5. 
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
 
 
6. 
Citizenship or Place of Organization United States
 
 
7. 
Sole Voting Power    0
 
8. 
Shared Voting Power    12,475,638 shares(1)
 
9. 
Sole Dispositive Power    0
 
10. 
Shared Dispositive Power    2,718,138 shares
 
 
11. 
Aggregate Amount Beneficially Owned by Each Reporting Person See Row 8 above.
 
 
12. 
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
 
 
13. 
Percent of Class Represented by Amount in Row (11)   64.6%(2)
 
 
14. 
Type of Reporting Person (See Instructions) IN; HC
(1)
Includes 9,757,500 shares of the common stock of Issuer beneficially owned by Tianfu Yang, including 7,500 shares that Mr. Yang may acquire upon exercise of options within 60 days of the date hereof, over which the Reporting Persons may be deemed to have shared voting power pursuant to a Voting Agreement, dated as of August 30, 2006, among the Reporting Persons, the Issuer and Mr. Yang, under which Mr. Yang agrees to vote all shares of the common stock of the Issuer owned by him to ensure that nominees of the Reporting Persons are elected to the Board of Directors of Issuer. The Reporting Persons expressly disclaim beneficial ownership of the shares beneficially owned by Mr. Yang.
(2)
Based on 16,600,451 outstanding shares of the common stock of the Issuer, as set forth in the Purchase Agreement (as hereinafter defined).
 

     
CUSIP NO. 41145W109
  
Page 6 of 14 Pages
 

 
1. 
Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
   
Citadel Wellington LLC
 
 
2. 
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
X
   
(b)
 
 
 
3. 
SEC Use Only
 
 
4. 
Source of Funds (See Instructions) AF
 
 
5. 
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
 
 
6. 
Citizenship or Place of Organization Delaware
 
 
7. 
Sole Voting Power    0
 
8. 
Shared Voting Power    12,475,638 shares(1)
 
9. 
Sole Dispositive Power    0
 
10. 
Shared Dispositive Power    2,718,138 shares
 
 
11. 
Aggregate Amount Beneficially Owned by Each Reporting Person See Row 8 above.
 
 
12. 
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
 
 
13. 
Percent of Class Represented by Amount in Row (11)    64.6%(2)
 
 
14. 
Type of Reporting Person (See Instructions) OO; HC
(1)
Includes 9,757,500 shares of the common stock of Issuer beneficially owned by Tianfu Yang, including 7,500 shares that Mr. Yang may acquire upon exercise of options within 60 days of the date hereof, over which the Reporting Persons may be deemed to have shared voting power pursuant to a Voting Agreement, dated as of August 30, 2006, among the Reporting Persons, the Issuer and Mr. Yang, under which Mr. Yang agrees to vote all shares of the common stock of the Issuer owned by him to ensure that nominees of the Reporting Persons are elected to the Board of Directors of Issuer. The Reporting Persons expressly disclaim beneficial ownership of the shares beneficially owned by Mr. Yang.
(2)
Based on 16,600,451 outstanding shares of the common stock of the Issuer, as set forth in the Purchase Agreement (as hereinafter defined).
 

     
CUSIP NO. 41145W109
  
Page 7 of 14 Pages
 
 
1. 
Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
   
Citadel Kensington Global Strategies Fund Ltd.
 
 
2. 
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
X
   
(b)
 
 
 
3. 
SEC Use Only
 
 
4. 
Source of Funds (See Instructions) AF
 
 
5. 
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
 
 
6. 
Citizenship or Place of Organization Bermuda
 
 
7. 
Sole Voting Power    0
 
8. 
Shared Voting Power    12,475,638 shares(1)
 
9. 
Sole Dispositive Power    0
 
10. 
Shared Dispositive Power    2,718,138 shares
 
 
11. 
Aggregate Amount Beneficially Owned by Each Reporting Person See Row 8 above.
 
 
12. 
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
 
 
13. 
Percent of Class Represented by Amount in Row (11)    64.6%(2)
 
 
14. 
Type of Reporting Person (See Instructions) CO; HC
(1)
Includes 9,757,500 shares of the common stock of Issuer beneficially owned by Tianfu Yang, including 7,500 shares that Mr. Yang may acquire upon exercise of options within 60 days of the date hereof, over which the Reporting Persons may be deemed to have shared voting power pursuant to a Voting Agreement, dated as of August 30, 2006, among the Reporting Persons, the Issuer and Mr. Yang, under which Mr. Yang agrees to vote all shares of the common stock of the Issuer owned by him to ensure that nominees of the Reporting Persons are elected to the Board of Directors of Issuer. The Reporting Persons expressly disclaim beneficial ownership of the shares beneficially owned by Mr. Yang.
(2)
Based on 16,600,451 outstanding shares of the common stock of the Issuer, as set forth in the Purchase Agreement (as hereinafter defined).
 

     
CUSIP NO. 41145W109
  
Page 8 of 14 Pages
 
 
1. 
Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
   
Citadel Equity Fund Ltd.
 
 
2. 
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
X
   
(b)
 
 
 
3. 
SEC Use Only
 
 
4. 
Source of Funds (See Instructions) WC
 
 
5. 
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
 
 
6. 
Citizenship or Place of Organization Cayman Islands
 
 
7. 
Sole Voting Power    0
 
8. 
Shared Voting Power    12,475,638 shares(1)
 
9. 
Sole Dispositive Power    0
 
10. 
Shared Dispositive Power    2,718,138 shares
 
 
11. 
Aggregate Amount Beneficially Owned by Each Reporting Person See Row 8 above.
 
 
12. 
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
 
 
13. 
Percent of Class Represented by Amount in Row (11) 64.6%(2)
 
 
14. 
Type of Reporting Person (See Instructions) CO
(1)
Includes 9,757,500 shares of the common stock of Issuer beneficially owned by Tianfu Yang, including 7,500 shares that Mr. Yang may acquire upon exercise of options within 60 days of the date hereof, over which the Reporting Persons may be deemed to have shared voting power pursuant to a Voting Agreement, dated as of August 30, 2006, among the Reporting Persons, the Issuer and Mr. Yang, under which Mr. Yang agrees to vote all shares of the common stock of the Issuer owned by him to ensure that nominees of the Reporting Persons are elected to the Board of Directors of Issuer. The Reporting Persons expressly disclaim beneficial ownership of the shares beneficially owned by Mr. Yang.
(2)
Based on 16,600,451 outstanding shares of the common stock of the Issuer, as set forth in the Purchase Agreement (as hereinafter defined).
 

     
CUSIP NO. 41145W109
  
Page 9 of 14 Pages

Item 1.
Security and Issuer
   
This Schedule 13D relates to the Common Stock, par value $0.00001 (the “Common Stock”), of Harbin Electric, Inc., a Nevada corporation (the “Issuer”). The principal executive offices of the Issuer are located at No. 9, Ha Ping Xi Lu, Ha Ping Lu Ji Zhong Qu, Harbin Kai Fa Qu, Harbin, 150060, China.
 
Item 2.
Identity and Background
   
The persons filing this Schedule 13D are Citadel Limited Partnership, an Illinois limited partnership (“CLP”), Citadel Investment Group, L.L.C., a Delaware limited liability company (“CIG”), Citadel Investment Group (Hong Kong) Limited, a Hong Kong company (“CIGHK”), Kenneth Griffin, a natural person (“Griffin”), Citadel Wellington LLC, a Delaware limited liability company (“CW”), Citadel Kensington Global Strategies Fund Ltd., a Bermuda company (“CKGSF”) and Citadel Equity Fund Ltd., a Cayman Islands company (“CEF,” and collectively, together with CLP, CIG, CIGHK, Griffin, CW and CKGSF, the “Reporting Persons”).
 
CLP provides investment advisory services to investment funds. CLP is the managing member of CW and the investment advisor for CKGSF and CEF and, in such capacities, makes all of the investment decisions for such entities.
 
CIG provides administrative and management services to its affiliated entities. CIG is the general partner of CLP. The name, residence or business address, present principal occupation or employment and citizenship of each director and executive officer of CIG is set forth on Schedule A attached hereto.
 
CIGHK provides investment advisory services to CLP with respect to Hong Kong-based investment activities. CIG owns 100% of CIGHK. The name, residence or business address, present principal occupation or employment and citizenship of each director and executive officer of CIGHK is set forth on Schedule A attached hereto.
 
Griffin is the President and Chief Executive Officer of CIG and owns a controlling interest in CIG. Griffin is a United States citizen.
 
CW and CKGSF each invest in investment funds for their own account. CW and CKGSF collectively own 100% of CEF. The name, residence or business address, present principal occupation or employment and citizenship of each director and executive officer of CKGSF is set forth on Schedule A attached hereto.
 
CEF purchases, holds and sells securities and other investment products. The name, residence or business address, present principal occupation or employment and citizenship of each director and executive officer of CEF is set forth on Schedule A attached hereto.
 
For each of the Reporting Persons, the principal business address is 131 S. Dearborn Street, 32nd Floor, Chicago, Illinois 60603.
 
During the last five years, none of the Reporting Persons, nor, to the best of each of the Reporting Persons’ knowledge, any of the persons listed on Schedule A attached hereto, has been convicted in any criminal proceedings.
 
During the last five years, none of the Reporting Persons, nor, to the best of each of the Reporting Persons’ knowledge, any of the persons listed on Schedule A attached hereto, has been a party to a civil proceeding of any judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding of any violation with respect to such laws.
 

     
CUSIP NO. 41145W109
  
Page 10 of 14 Pages
 
Item 3.
Source and Amount of Funds or Other Consideration
 
The Reporting Persons utilized available cash assets in the aggregate amount of $38,000,000 for the purchase of (i) $38.0 million of the principal amount of the Issuer’s Guaranteed Senior Secured Floating Rate Notes (“CEF Notes”) and (ii) fully detachable warrants to purchase an aggregate of 2,192,308 shares of Common Stock at an exercise price of $7.80 per share and 525,830 shares of Common Stock at an exercise price of $10.84 per share (“CEF Warrants”). The Reporting Persons will utilize available cash assets for the exercise of such warrants.
 
The 9,757,500 shares of Common Stock beneficially owned by Tianfu Yang, including 7,500 shares that Mr. Yang may acquire upon exercise of options within 60 days of the date hereof, were not purchased by the Reporting Persons, but are reported herein because the Reporting Persons may be deemed to share voting power over such shares pursuant to a Voting Agreement, dated as of August 30, 2006, among the Reporting Persons, the Issuer and Mr. Yang, under which Mr. Yang agrees to vote all shares of the common stock of the Issuer owned by him to ensure that nominees of the Reporting Persons are elected to the Board of Directors of Issuer.
 
Item 4.
Purpose of Transaction
   
The Reporting Persons purchased the CEF Notes and CEF Warrants to purchase shares of Common Stock of the Issuer, and will acquire shares of Common Stock of the Issuer upon exercise of the CEF Warrants, for investment purposes.
 
The Issuer, Mr. Tianfu Yang and CEF entered into a voting agreement, dated August 30, 2006 (the “Voting Agreement”), pursuant to which the Reporting Persons are entitled to appoint up to two (2) individuals to serve on the Issuer’s board of directors (the “Board”) for so long as CEF holds any Notes (as hereinafter defined). The Reporting Persons may exercise this right by providing written notice to the Issuer that informs the Issuer of its election to be represented on the Board and states the names of the individuals to be nominated to the Board (the “CEF Nominees”). Pursuant to the Voting Agreement, Mr. Tianfu Yang agrees to vote, or cause to be voted, all shares of Common Stock owned by him, or over which he has voting control, (i) to ensure that at each annual or special meeting of shareholders at which an election of directors is held or pursuant to any written consent of the shareholders, the CEF Nominees are duly elected to the Board, (ii) to ensure that the size of the Board is sufficient to permit the appointment and/or election of the CEF Nominees to the Board, and (iii) to ensure that the total size of the Board does not exceed ten (10) members at any time. A copy of the Voting Agreement is attached as Exhibit 10 to this filing.
 
Except as set forth herein, the Reporting Persons have no present plans or proposals that would result in or relate to any of the transactions or changes listed in Items 4(a) through 4(j) of Schedule 13D.
   
Item 5.
Interest in Securities of the Issuer
 
(a)  
        Number of     Percentage  
        Shares     of Shares
        12,475,638 shares(1)    64.6%(2)
 
(b)  Sole power to vote or direct the vote:   0
 
Shared power to vote or direct the vote:   12,475,638 shares(1)
 
Sole power to dispose or to direct the disposition:   0
 
Shared power to dispose or direct the disposition:   2,718,138 shares
 
 

     
CUSIP NO. 41145W109
  
Page 11 of 14 Pages
 
(c)  Not applicable.
 
(d)  Not applicable.
 
(e)  Not applicable.
 
(1)
Includes 9,757,500 shares of the common stock of Issuer beneficially owned by Tianfu Yang, including 7,500 shares that Mr. Yang may acquire upon exercise of options within 60 days of the date hereof, over which the Reporting Persons may be deemed to have shared voting power pursuant to a Voting Agreement, dated as of August 30, 2006, among the Reporting Persons, the Issuer and Mr. Yang, under which Mr. Yang agrees to vote all shares of the common stock of the Issuer owned by him to ensure that nominees of the Reporting Persons are elected to the Board of Directors of Issuer. The Reporting Persons expressly disclaim beneficial ownership of the shares beneficially owned by Mr. Yang.
 
(2)
Based on 16,600,451 outstanding shares of the common stock of the Issuer, as set forth in the Purchase Agreement (as hereinafter defined).
 
Item 6.
Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
   
The matters set forth in Item 4 are incorporated into this Item 6 by reference as if fully set forth herein.
 
On August 29, 2006, the Issuer, Advanced Electric Motors, Inc. (“Advanced Electric”), a wholly-owned subsidiary of the Issuer, CEF and Merrill Lynch International (“Merrill Lynch” and, together with CEF, the “Investors”) entered into a purchase agreement (the “Purchase Agreement”) pursuant to an indicative financing term sheet dated as of August 2, 2006 (the “Term Sheet”) by and between the Issuer and the Investors. The Purchase Agreement relates to the purchase and sale of (a) $50.0 million aggregate principal amount of the Issuer’s Guaranteed Senior Secured Floating Rate Notes (collectively, the “Notes”) and (b) fully detachable warrants (the “Warrants”) to purchase an aggregate of 3,487,368 shares of Common Stock. Of the $50.0 million aggregate principal amount of the Notes, CEF subscribed to $38.0 million of the principal amount of the Notes, which have a maturity date that is six years from the date of issue (the “CEF Notes”). Pursuant to the Purchase Agreement, CEF also acquired Warrants to purchase an aggregate of 2,718,138 shares of Common Stock. The Warrants issued to CEF include (i) six-year warrants to purchase an aggregate of 2,192,308 shares of Common Stock, at an exercise price of $7.80 per share (the “First Tranche 2012 Warrants”) and (ii) six-year warrants to purchase an aggregate of 525,830 shares of Common Stock at an exercise price of $10.84 per share warrants (the “Second Tranche 2012 Warrants” and, collectively with the First Tranche 2012 Warrants, the “CEF Warrants”). Each Warrant is exercisable at the option of the Warrant holder beginning on the date of issuance through the maturity date of such Warrant. The offer and sale of the Notes and Warrants were made in an offshore transaction pursuant to Regulation S under the Securities Act of 1933, as amended. Additionally, pursuant to the Purchase Agreement, the Issuer has agreed, with the written consent of CEF, to appoint a senior financial officer on a full-time basis that shall be knowledgeable with respect to the capital markets in the United States and shall be proficient in the English language within 120 days of the closing date. The transaction closed on August 30, 2006.

The Notes are governed by an indenture, dated August 30, 2006 (the “Indenture”), entered into among the Issuer, Advanced Electric, as guarantor, and The Bank of New York, as trustee for the Notes. The terms of the Indenture prohibit the Issuer from, among other things, (i) incurring any debt except for Permitted Debt (as defined in the Indenture), (ii) making, directly or indirectly, any Restricted Payments (as defined in the Indenture), (iii) incurring any liens other than Permitted Liens (as defined in the Indenture), (iv) consummating any asset sale if the fair market value of all asset sales in the calendar year of such proposed asset sale would exceed $4.5 million (v) permitting any of the Issuer’s Subsidiaries (as defined in the Indenture) to, directly or indirectly, create or cause any restriction on the right of any Subsidiary to make certain distributions or transfers, (vi) disposing of the capital stock of any of Issuer’s Subsidiaries or permitting any of its Subsidiaries from issuing or selling or otherwise disposing of any shares of such Subsidiary’s capital stock, and (vii) entering into any transaction or series of transactions with, or for the benefit of, any affiliate of the Issuer unless such transaction meets certain conditions.
 

     
CUSIP NO. 41145W109
  
Page 12 of 14 Pages
 
As security for the Notes, the Issuer and The Bank of New York, as collateral agent, entered into a share pledge agreement, dated as of August 30, 2006 (the “Share Pledge Agreement”), to guarantee the Notes with the shares of common stock of Advanced Electric held by the Issuer as collateral.
 
The Warrants are governed by a warrant agreement, dated as of August 30, 2006 (the “Warrant Agreement”), between the Issuer and The Bank of New York, as warrant agent.
 
In connection with the issuance of the Warrants, the Issuer and the Investors have entered into an equity registration rights agreement, dated as of August 30, 2006 (the “Registration Rights Agreement”), pursuant to which the Issuer has agreed to file a shelf registration statement covering the resale of the shares underlying the Warrants. Pursuant to the Registration Rights Agreement, if there is no effective registration statement for the shares underlying the Warrants by March 30, 2007, the Issuer must pay $250,000 in liquidated damages within 7 business days to the then current holders of the Warrants on a pro rata basis for each month during which the registration statement is not effective, subject to a cap of $2,000,000 (the “Liquidated Damages Cap”).
 
The Issuer and the Investors also entered into a letter agreement that serves as an addendum to the Registration Rights Agreement (the “Letter Agreement”), dated as of August 30, 2006. Pursuant to the Letter Agreement, the Company and the Investors agree that they will negotiate promptly and in good faith to agree upon a lower Liquidated Damages Cap that would not result in the Warrants being classified as a liability under EITF 00-19 (“Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”) or any related accounting pronouncement.
 
The Voting Agreement, dated as of August 30, 2006, by and among the Issuer, Tianfu Yang and CEF (the “Voting Agreement”), provides that the Reporting Persons are entitled to appoint up to two (2) individuals to serve on the Issuer’s Board for so long as CEF holds any Notes. The Reporting Persons may exercise this right by providing written notice to the Issuer that informs the Issuer of its election to be represented on the Board and states the names of the individuals to be nominated to the Board (the “CEF Nominees”). Pursuant to the Voting Agreement, Mr. Yang agrees to vote, or cause to be voted, all shares of Common Stock owned by him, or over which he has voting control, (i) to ensure that at each annual or special meeting of shareholders at which an election of directors is held or pursuant to any written consent of the shareholders, the CEF Nominees are duly elected to the Board, (ii) to ensure that the size of the Board is sufficient to permit the appointment and/or election of the CEF Nominees to the Board, and (iii) to ensure that the total size of the Board does not exceed ten (10) members at any time.
 
The Investors and Mr. Yang also entered into a noncompetition covenant and agreement, dated August 30, 2006, relating to Mr. Yang’s employment as the Issuer’s Chief Executive Officer and his ability to engage in a business that is competitive with the Issuer’s business for so long as any of the Notes remain outstanding.
 
The foregoing summaries of the terms of the Purchase Agreement, the CEF Notes, the CEF Warrants, the Indenture, the Share Pledge Agreement, the Warrant Agreement, the Registration Rights Agreement, the Letter Agreement and the Voting Agreement are qualified by reference to the full text of each of the Purchase Agreement, the CEF Notes, the CEF Warrants, the Indenture, the Share Pledge Agreement, the Warrant Agreement, the Registration Rights Agreement, the Letter Agreement and the Voting Agreement, each of which is incorporated by reference in Item 7 below.
 
Other than as described above and elsewhere in this filing, the Reporting Persons have no understandings, arrangements, relationships or contracts relating to the Issuer’s Common Stock that are required to be described hereunder.
 
 

     
CUSIP NO. 41145W109
  
Page 13 of 14 Pages
 
Item 7.
Material to Be Filed as Exhibits
 
1.
Purchase Agreement among the Issuer, Advanced Electric and the Investors dated August 29, 2006 (incorporated by reference to Exhibit 4.1 to the Issuer’s Form 8-K as filed with the Securities and Exchange Commission on September 1, 2006)
   
2.
CEF Global Note
   
3.
Global First Tranche 2012 Warrant
   
4.
Global Second Tranche 2012 Warrant
   
5.
Indenture among the Issuer, Advanced Electric and The Bank of New York, as trustee, dated August 30, 2006 (incorporated by reference to Exhibit 4.2 to the Issuer’s Form 8-K as filed with the Securities and Exchange Commission on September 1, 2006)
   
6.
Share Pledge Agreement between the Issuer and The Bank of New York, as collateral agent, dated August 30, 2006 (incorporated by reference to Exhibit 4.5 to the Issuer’s Form 8-K as filed with the Securities and Exchange Commission on September 1, 2006)
   
7.
Warrant Agreement between the Issuer and The Bank of New York, as warrant agent, dated August 30, 2006 (incorporated by reference to Exhibit 4.6 to the Issuer’s Form 8-K as filed with the Securities and Exchange Commission on September 1, 2006)
   
8.
Registration Rights Agreement between the Issuer and the Investors, dated August 30, 2006 (incorporated by reference to Exhibit 4.4 to the Issuer’s Form 8-K as filed with the Securities and Exchange Commission on September 1, 2006)
   
9.
Letter Agreement between the Issuer and the Investors, dated August 30, 2006.
   
10.
Voting Agreement among the Issuer, Tianfu Yang and CEF, dated August 30, 2006 (incorporated by reference to Exhibit 4.8 to the Issuer’s Form 8-K as filed with the Securities and Exchange Commission on September 1, 2006)
 

     
CUSIP NO. 41145W109
  
Page 14 of 14 Pages
 
Signature
 
After reasonable inquiry and to the best of its knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.
 
Dated this 11th day of September, 2006

KENNETH GRIFFIN
 
By: /s/ Matthew B. Hinerfeld
Matthew B. Hinerfeld, attorney-in-fact*
 
CITADEL INVESTMENT GROUP, L.L.C.
 
By: /s/ Matthew B. Hinerfeld
Matthew B. Hinerfeld, Managing
Director and General Counsel
 
CITADEL LIMITED PARTNERSHIP
 
By: Citadel Investment Group, L.L.C.,
its General Partner
 
By: /s/ Matthew B. Hinerfeld
Matthew B. Hinerfeld, Managing
Director and General Counsel
 
CITADEL INVESTMENT GROUP (HONG KONG) LIMITED
 
By: Citadel Investment Group, L.L.C.,
its Sole Shareholder
 
By: /s/ Matthew B. Hinerfeld
Matthew B. Hinerfeld, Managing
Director and General Counsel
CITADEL KENSINGTON GLOBAL
STRATEGIES FUND LTD.
 
By: Citadel Limited Partnership,
its Portfolio Manager
 
By: Citadel Investment Group, L.L.C.,
its General Partner
 
By: /s/ Matthew B. Hinerfeld
Matthew B. Hinerfeld, Managing
Director and General Counsel
 
CITADEL EQUITY FUND LTD.
 
By: Citadel Limited Partnership,
its Portfolio Manager
 
By: Citadel Investment Group, L.L.C.,
its General Partner
 
By: /s/ Matthew B. Hinerfeld
Matthew B. Hinerfeld, Managing
Director and General Counsel
 
CITADEL WELLINGTON LLC
 
By: Citadel Limited Partnership,
its Managing Member
 
By: Citadel Investment Group, L.L.C.,
its General Partner
 
By: /s/ Matthew B. Hinerfeld
Matthew B. Hinerfeld, Managing
Director and General Counsel
 
* Mathew B. Hinerfeld is signing on behalf of Kenneth Griffin as attorney-in-fact pursuant to a power of attorney previously filed with the Securities and Exchange Commission on February 4, 2005, and hereby incorporated by reference herein. The power of attorney was filed as an attachment to a filing by Citadel Limited Partnership on Schedule 13G/A for Komag, Incorporated.
 

SCHEDULE A

Directors And Executive Officers Of Citadel Investment Group, L.L.C.
 
The name, business address, title, present principal occupation or employment and citizenship of the sole executive officer of Citadel Investment Group, L.L.C. (“CIG”) is set forth below. The business address of such officer is 131 S. Dearborn Street, 32nd Floor, Chicago, Illinois 60603. CIG has no directors.
 
Name
 
Title and Present Principal Occupation
 
Citizenship
Kenneth Griffin
 
President and Chief Executive Officer of CIG
 
United States

Directors And Executive Officers Of Citadel Kensington Global Strategies Fund Ltd.
 
The name, title, present principal occupation or employment, residence or business address and citizenship of each of the directors and executive officers of Citadel Kensington Global Strategies Fund Ltd. (“CKGSF”) are set forth below.
 
Name and Citizenship
 
Title at CKGSF
 
Present Principal Occupation and Residence
or Business Address
(Principal Business of Employer)
Tonesan Amissah
 
Director
 
Partner
United Kingdom
 
 
 
Appleby, Spurling & Kempe
 
 
 
 
Canon’s Court
 
 
 
 
22 Victoria Street
 
 
 
 
Hamilton HM 12
 
 
 
 
Bermuda
 
 
 
 
(law firm)
         
Clarendon Hugh (“Hal”) Masters
 
Director, Chairman and President
 
Independent consultant
Bermuda
 
 
 
P.O. Box HM 203
 
 
 
 
Hamilton HM AX
 
 
 
 
Bermuda
         
Austin John O’Connor
 
Director, Vice Chairman and Vice President
 
Company director
United Kingdom
 
 
 
4 rue de l’eglise
 
 
 
 
Wormeldange, Luxembourg L-5481

Directors And Executive Officers Of Citadel Equity Fund Ltd.
 
The name, title, present principal occupation or employment, residence or business address and citizenship of each of the directors and executive officers of Citadel Equity Fund Ltd. (“CEF”) are set forth below.
 
Name and Citizenship
 
Title at CEF
 
Present Principal Occupation and Residence
or Business Address
(Principal Business of Employer)
Austin John O’Connor
 
Director and Vice President
 
Company director
United Kingdom
 
 
 
4 rue de l’eglise
 
 
 
 
Wormeldange, Luxembourg L-5481
         
Adam C. Cooper
United States
 
Director and Assistant Secretary
 
Senior Managing Director and General Counsel
 
 
 
 
Citadel Investment Group, L.L.C.
 
 
 
 
135 South Dearborn
 
 
 
 
Chicago, IL 60603
         
Robin Bedford
United Kingdom
 
Director, President and Secretary
 
President
Dundee Leeds Management Services Ltd.
 
 
 
 
129 Front Street
 
 
 
 
Hamilton HM 12
 
 
 
 
Bermuda
 
 
 
 
(business services)
 
Directors And Executive Officers Of Citadel Investment Group (Hong Kong) Limited
 
The name, title, present principal occupation or employment, residence or business address and citizenship of each of the directors and executive officers of Citadel Investment Group (Hong Kong) Limited (“CIGHK”) are set forth below.
 
Name and Citizenship
 
Title at CEF
 
Present Principal Occupation and Residence
or Business Address
(Principal Business of Employer)
Gerald A. Beeson
United States
 
Director
 
Chief Financial Officer
 
Citadel Investment Group, L.L.C.
135 South Dearborn
Chicago, IL 60603
 
 
 
 
  
 
 
 
 
  
         
Adam C. Cooper
United States
 
Director
 
Senior Managing Director and General Counsel
 
 
 
 
Citadel Investment Group, L.L.C.
 
 
 
 
135 South Dearborn
 
 
 
 
Chicago, IL 60603
         
Tim Throsby
Australia
 
Director
 
President of Citadel Investment Group (Asia) Ltd. and President of Citadel Investment Group (Hong Kong) Limited
 
Citadel Investment Group (Hong Kong) Limited
Chater House Suites 1801-10
18th Floor
8 Connaught Road
Central, Hong Kong
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
         
Linklaters Company Secretarial Services Limited
Hong Kong
  
Secretary
  
Law Firm
 
10th Floor, Alexandra House
18 Chater Road
Hong Kong
China
         
 

 
 EX-99.2 2 v052468_ex99-2.htm
GUARANTEED SENIOR SECURED FLOATING RATE NOTES
 
 
 ISIN: XS0265652940
   
 
 Common Code: 026565294
   
No. 1 
$38,000,000.00
 
HARBIN ELECTRIC INC.
 
promises to pay to The Bank of New York Depository (Nominees) Limited, or registered assigns, as common depository for Clearstream Banking, societe anonyme (“Clearstream”) and/or Euroclear Bank S.A./N.V. as operator of the Euroclear System, (“Euroclear”), or registered assigns, the principal sum of THIRTY EIGHT MILLION Dollars ($38,000,000.00) on September 1, 2012.
 
Interest Payment Dates: March 1 and September 1, commencing March 1, 2007.

Record Dates: February 15 and August 15.

Dated: August 30, 2006.


IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officer.
 
     
  HARBIN ELECTRIC, INC.
 
 		  
 		  
 
  By:    
 
Name:
  Title: 
 
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
 
THE BANK OF NEW YORK,
a New York banking corporation
as Trustee
       
     
 By:  
 		  
 		  
 
  Authorized Signatory     
   
Dated _____________, 20__  
 
-2-

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF EUROCLEAR BANK S.A./N.V., AS OPERATOR OF THE EUROCLEAR SYSTEM (“EUROCLEAR”),  OR  CLEARSTREAM  BANKING,  SOCIÉTÉ  ANONYME (“CLEARSTREAM”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF ITS AUTHORIZED NOMINEE OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF EUROCLEAR OR CLEARSTREAM (AND ANY PAYMENT IS MADE TO ITS AUTHORIZED NOMINEE, OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF EUROCLEAR OR CLEARSTREAM), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, ITS AUTHORIZED NOMINEE, HAS AN INTEREST HEREIN.
 
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF EUROCLEAR OR CLEARSTREAM OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
 
UNTIL 40 DAYS AFTER THE LATER OF THE DAY ON WHICH THE NOTES ARE FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S, AS DEFINED BELOW) AND THE DATE OF THE CLOSING OF THE OFFERING OF THE NOTES, AN OFFER OR SALE OF THE NOTES WITHIN THE UNITED STATES (AS DEFINED IN THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.
 
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OR OTHER SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT.
 
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT (“RULE 144A”)) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN “OFFSHORE TRANSACTION” PURSUANT TO RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT (“REGULATION S”), (2) AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS
40 DAYS AFTER THE LATER OF THE DATE OF THE COMMENCEMENT OF THE OFFERING AND THE DATE OF ORIGINAL ISSUANCE (OR OF ANY PREDECESSOR OF THIS NOTE) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE “RESALE RESTRICTION TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUER, (B) PURSUANT TO
 
-3-

A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE, THE REGISTRAR AND THE TRANSFER AGENT SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S OR PURSUANT TO CLAUSE (E) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO REQUIRE THAT AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY, THE TRUSTEE, THE REGISTRAR AND THE TRANSFER AGENT IS COMPLETED AND DELIVERED BY THE TRANSFEROR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S.”
 
THIS NOTE MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (II) OTHERWISE UNTIL 40 DAYS AFTER THE LATER OF THE DATE OF THE COMMENCEMENT OF THE OFFERING AND THE DATE OF ORIGINAL ISSUANCE, EXCEPT IN EITHER CASE IN ACCORDANCE WITH REGULATION S (OR RULE 144A, IF AVAILABLE) UNDER THE SECURITIES ACT.
 
-4-

(Reverse of Security)
 
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
 
1.  Interest. Harbin Electric, Inc., a Nevada corporation (the “Company”), promises to pay interest on the principal amount of this Note at the rate per annum, reset semi-annually, equal to LIBOR plus 3.350% as determined by the Calculation Agent from the Issue Date until maturity. The interest rate on the Notes is subject to increase pursuant to the provisions of the Indenture. The Company shall pay interest semi-annually in arrears on March 1 and September 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”). Interest shall accrue from the most recent date to which interest has been paid on the Notes (or one or more Predecessor Notes) or, if no interest has been paid, from the date of issuance; provided, however, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be March 1, 2007. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time at a rate that is 4% per annum in excess of the interest rate then in effect under the Indenture and this Note; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods), from time to time at the same rate to the extent lawful. Interest shall be computed on the basis of a 360-day year of twelve 30-day months for the actual number of days elapsed. The amount of interest for each day that the Notes are outstanding (the “Daily Interest Amount”) will be calculated by dividing the interest rate in effect for such day by 360 and multiplying the result by the principal amount of the Notes. The amount of interest to be paid on the Notes for each Interest Period will be calculated by adding the Daily Interest Amounts for each day in the Interest Period. All percentages resulting from any of the above calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point being rounded upwards and all dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent being rounded upwards). The interest rate on the Notes will in no event be higher than the maximum rate permitted by New York law as such rate may be modified by United States law of general application.
 
2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the February 15 or August 15 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes shall be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the Security Register; provided, however, that payment by wire transfer of immediately available funds shall be required with respect to principal of and interest and premium, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
 
3.  Paying Agent, Registrar and Calculation Agent. Initially, The Bank of New York, a New York banking corporation that is the Trustee under the Indenture, shall act as Paying Agent, Registrar and Calculation Agent. The Company may change any Paying Agent, Registrar or Calculation Agent without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity.
 
4. Indenture. The Company issued the Notes under an Indenture dated as of August 30, 2006 (“Indenture”) among the Company, the guarantors party thereto (the “Guarantors”) and the Trustee. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.
 
-5-

5. Optional Redemption.
 
(a)  The 2012 Notes shall not be redeemable at the option of the Company prior to September 1, 2007. Starting on that date, the Company may redeem all (but not less than all) of the 2012 Notes, after giving the notice required pursuant to Section 3.03 of the Indenture. The 2012 Notes may be redeemed at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest to but excluding the redemption date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the 12-month period commencing on September 1 of the years set forth below:

Year
    
Percentage
  
2007
    
106.0
%
2008
    
104.5
%
2009
    
103.0
%
2010
    
101.5
%
2011 and thereafter
    
100.0
%
 
Unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the 2012 Notes or portions thereof called for redemption on the applicable redemption date.
 
  (b)  Any prepayment pursuant to this paragraph shall be made pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture.
 
6. Mandatory Redemption.
 
(a)  The Company agrees that on the dates indicated in the following table, the Company will prepay and there shall become due and payable the corresponding principal amount (or such lesser principal amount as shall then be outstanding) in respect of the aggregate principal Debt evidenced by the 2012 Notes.

Date
  
Principal Amount
  
September 1, 2009
  
$
2,400,000
  
March 1, 2010
  
$
3,800,000
  
September 1, 2010
  
$
9,900,000
  
March 1, 2011
  
$
9,900,000
  
September 1, 2011
  
$
4,000,000
  
March 1, 2012
  
$
4,000,000
  

The entire remaining principal amount of the 2012 Notes shall become due and payable on September 1, 2012. Each required prepayment made pursuant to this paragraph 6 shall be made at 100% of principal amount and without payment of any premium and allocated among all of the 2012 Notes in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof. Upon any partial prepayment of the 2012 Notes pursuant to paragraph 5 or any repurchase of the 2012 Notes pursuant to paragraph 7, the principal amount of each required prepayment of the 2012 Notes becoming due under this paragraph 6 on and after the date of such prepayment or purchase shall be reduced in the same proportion as the aggregate unpaid principal amount of the 2012 Notes is reduced as a result of such prepayment or purchase.
 
(b)  In the case of each prepayment of Notes pursuant to this paragraph , the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

-6-

7. Repurchase at Option of Holder.
 
(a)  Upon the occurrence of a Change of Control, each Holder shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000) of such Holder’s Notes (a “Change of Control Offer”) at a purchase price in cash equal to 102.5% of the aggregate principal amount of the Notes repurchased, plus accrued and unpaid interest on the Notes repurchased to the purchase date (subject to the right of Holders of record on the relevant record date to receive interest to, but excluding, the Change of Control Payment Date).
 
 (b)  If the Company or one of its Subsidiaries consummates any Asset Sales, they shall not be required to apply any Net Available Cash in accordance with the Indenture until the aggregate Net Available Cash from all Asset Sales following the date the Notes are first issued exceeds $2.0 million. Thereafter, the Company shall, after application of the additional aggregate $2.0 million of Net Available Cash as provided in the second paragraph of Section 4.12 of the Indenture, commence an offer for Notes pursuant to the Indenture by applying the Net Available Cash (an “Asset Sale Offer”) pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Net Available Cash at an offer price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest to the date fixed for the closing of such offer in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the Net Available Cash, the Company (or such Subsidiary) may use such deficiency for any purpose not prohibited by the Indenture. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Net Available Cash, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase or Repurchase on the reverse of the Notes.
 
 (c)  Holders of 2012 Notes have the right from and after September 1, 2011 to require the Company to repurchase such holder’s 2012 Notes at a price of 100% of the principal amount thereof on the terms and conditions stated in the Indenture.
 
8.  Notice of Redemption. Notice of redemption shall be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption.
 
9.  Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. This Note shall represent the aggregate principal amount of outstanding Notes from time to time endorsed hereon and the aggregate principal amount of Notes represented hereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.
 
10.  Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes.
 
11.  Amendment, Supplement and Waiver. Subject to certain exceptions, the Company and the Trustee may amend or supplement the Indenture or the Notes with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 of the Indenture, any existing Default or Event of Default (except a continuing Default or Event of Default in the payment of principal, premium, if any, interest on the Notes) or compliance with any provision of the Indenture or the Notes (except for certain covenants and provisions of the Indenture which cannot be amended without the consent of each Holder) may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes, then outstanding voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes). Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency, to provide for the assumption by a successor corporation, partnership or limited liability company of the obligations of the Company under the Indenture, to provide for uncertificated Notes in addition to or in place of certificated Notes, to add additional Guarantees or additional obligors with respect to the Notes, to secure the Notes, to add to the covenants of the Company for the benefit of the Holders of the Notes or to surrender any right or power conferred upon the Company, or to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any such Holder.
 
-7-
 
12.  Defaults and Remedies. Each of the following is an Event of Default under the Indenture: (a) failure to make the payment of any interest on such Notes when the same becomes due and payable, and such failure continues for a period of 5 days; (b) failure to make the payment of any principal of, or premium, if any, on, any of such Notes when the same becomes due and payable at its Stated Maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise, including payment of Liquidated Damages; (c) failure to comply with Section 5.01; (d) failure to comply with any other covenant or agreement in such Notes or in this Indenture (other than a failure that is the subject of the foregoing clause (a), (b) or (c) and other than the failure to comply with Section 4.20, 4.25 or 4.27, for which payment of liquidated damages is provided for hereunder and is governed by Section 4.01), and such failure continues for 21 days after written notice is given to the Company by the Trustee or the holders of not less than 25% in aggregate principal amount of such Notes then outstanding specifying the default, demanding that it be remedied and stating that such notice is a “Notice of Default;” (e) a default under any Debt by the Company or any Subsidiary that results in acceleration of the maturity of such Debt, or failure to pay any such Debt at maturity, in an aggregate amount greater than $3.0 million or its foreign currency equivalent at the time; (f) any judgment or judgments for the payment of money in an aggregate amount in excess of $3.0 million (or its foreign currency equivalent at the time) that shall be rendered against the Company or any Subsidiary and that shall not be waived, satisfied or discharged for any period of 30 consecutive days during which a stay of enforcement shall not be in effect; (g) any Subsidiary Guarantee ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guarantee) or any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guarantee; certain events of bankruptcy, insolvency or reorganization affecting the Company or any of its Significant Subsidiaries.
 
If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency described in the Indenture, all outstanding Notes shall become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.
 
13.  Trustee Dealings with Company. Subject to certain limitations, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee.
 
14.  No Recourse Against Others. No past, present or future director, officer, employee, incorporator or stockholder of the Company or of any Guarantor, as such, shall have any liability for any obligations of the Company or any Guarantor under the Indenture, the Notes, the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability.
 
-8-
 
15.  Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
 
16.  Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
 
17.  Governing Law. The internal law of the State of New York shall govern and be used to construe this Note without giving effect to applicable principals of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.
 
-9-

Option of Holder to Elect Repurchase or Purchase
 
If you want to elect to have this Note repurchased or purchased by the Company pursuant to Section 3.10 or 4.12 or 4.17 of the Indenture, check the box below:

o
Section 3.10
Repurchase Date:
     
     
o
Section 4.12
 
     
o
Section 4.17
 
    
If you want to elect to have only part of the Note repurchased or purchased by the Company pursuant to Section 3.10 or 4.12 or Section 4.17 of the Indenture, state the amount you elect to have purchased: $_____________________
 
         
       
 
Date:
  
 		   Your Signature:    
 
    
 (Sign exactly as your name appears on the Note)
       
     
Tax Identification No.:
       
       
    SIGNATURE
GUARANTEE:
       
   
    Signatures must be guaranteed  by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP.
     
     
 
-10-

 Assignment Form
   
To assign this Note, fill in the form below:
  
   
   
(I) or (we) assign and transfer this Note to
  
   
   
    
(Insert assignee’s social security or other tax I.D. no.)
 
 
 
   
(Print or type assignee’s name, address and zip code)
   
and irrevocably appoint
      
as agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.
 
   
 
Date:
      
 
Your Signature:
    
 
(Sign exactly as your name appears on the face of this Note)
 
 
 
Signature Guarantee:
     
 
-11-

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
 
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
 
 
 
 
 
 
 
Principal Amount
 
 
 
 
Amount of
 
 
 
of this Global Note
 
Signature of
 
 
decrease in
 
Amount of increase
 
following such
 
authorized signatory
 
 
Principal Amount
 
in Principal Amount
 
decrease (or
 
of Trustee or
Date of Exchange
 
of this Global Note
 
of this Global Note
 
increase)
 
Note Custodian
                 
                 
 
-12-
 EX-99.3 3 v052468_ex99-3.htm
2012 Warrant Certificate
 
THIS GLOBAL WARRANT IS HELD BY THE COMMON DEPOSITARY (AS DEFINED IN THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (II) THIS GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (III) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 3.8 OF THE WARRANT AGREEMENT AND (IV) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR COMMON DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
 
THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND THE WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS BY OR ON BEHALF OF ANY U.S. PERSON, UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. IN ORDER TO TRANSFER OR EXERCISE ANY INTEREST IN THIS WARRANT, THE BENEFICIAL HOLDER MUST FURNISH TO THE COMPANY AND THE WARRANT REGISTRAR EITHER (A) A WRITTEN CERTIFICATION THAT IT IS NOT A U.S. PERSON AND THE WARRANT IS NOT BEING EXERCISED ON BEHALF OF A U.S. PERSON OR (B) A WRITTEN OPINION OF COUNSEL TO THE EFFECT THAT THE SECURITIES DELIVERED UPON EXERCISE OF THE WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR THAT THE DELIVERY OF SUCH SECURITIES IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. EACH BENEFICIAL HOLDER BY ACCEPTING AN INTEREST IN THIS WARRANT AGREES THAT ANY HEDGING TRANSACTION INVOLVING THIS WARRANT OR THE SECURITIES TO BE ISSUED UPON EXERCISE OF THIS WARRANT MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. TERMS IN THIS LEGEND HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.



2,192,308 Warrant Shares
 
No. 1
ISIN No. USU245151134
Common Code: 026615127
 
Warrant Certificate
HARBIN ELECTRIC, INC.
 
This Warrant Certificate certifies that The Bank of New York Depository (Nominees) Limited, or its registered assigns, as common depository for Clearstream Banking, societe anonyme (“Clearstream”) and/or Euroclear Bank S.A./N.V. as operator of the Euroclear System, (“Euroclear”), is the registered holder of the number set forth above of Warrants expiring August 30, 2012 (the “Warrants”) to purchase Common Stock, par value $.00001 (the “Common Stock”), of Harbin Electric, Inc., a Nevada corporation (the “Company”). Each Warrant entitles the registered holder upon exercise at any time from 9:00 a.m. on the date hereof until 5:00 p.m. New York City Time on August 30, 2012 to receive from the Company 2,192,308 fully paid and nonassessable shares of Common Stock (the “Warrant Shares”) at the initial exercise price (the “Exercise Price”) of $7.80 per share payable upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent, but only subject to the conditions set forth herein and in the Warrant Agreement referred to on the reverse hereof. The Exercise Price and number of Warrant Shares issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
 
No Warrant may be exercised after 5:00 p.m., New York City Time on August 30, 2012. To the extent not exercised by such time, any such Warrant shall become void.
 
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.
 
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
 
This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York.


2

IN WITNESS WHEREOF, Harbin Electric, Inc. has caused this Warrant Certificate to be signed below.
 
 
Dated: August 30, 2006
    
 
HARBIN ELECTRIC, INC.
 
 		  
 		  
 
 
 By:    
 
Name:
  Title:
 
     
Countersigned:
 
  
THE   BANKOFNEWYORK,
a New York banking corporation
 
as Warrant Agent 
  
 		  
 
     
By: ______________________________________
Authorized Signatory
  
 
 
 
 
 
 
 
 
 
 
 
 


3

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants expiring at 5:00 p.m. New York City time on August 30, 2012 entitling the holder on exercise to receive shares of Common Stock, and are issued or to be issued pursuant to a Warrant Agreement dated as of August 30, 2006 (the “WarrantAgreement”), duly executed and delivered by the Company to The Bank of New York, a New York banking corporation, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the registered holders or registered holder) of the Warrants. Capitalized terms used but not defined herein have the meaning ascribed to such terms in the Warrant Agreement. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company.
 
Warrants may be exercised at any time on or after the date hereof and on or before 5:00 p.m. New York City time on August 30, 2012. In order to exercise all or any of the Warrants represented by this Warrant Certificate, the holder must deliver to the Warrant Agent at its corporate trust office set forth in Section 15 of the Warrant Agreement this Warrant Certificate and the form of election to purchase on the reverse hereof duly completed and signed, which signature shall be medallion guaranteed by an institution which is a member of a Securities Transfer Association recognized signature guarantee program, and upon payment to the Warrant Agent for the account of the Company of the Exercise Price, for the number of Warrant Shares in respect of which such Warrants are then exercised. No adjustment shall be made for any dividends on any Common Stock issuable upon exercise of this Warrant.
 
The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price set forth on the face hereof may, subject to certain conditions, be adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides that the number of shares of Common Stock issuable upon the exercise of each Warrant shall be adjusted. No fractions of a share of Common Stock will be issued upon the exercise of any Warrant, but the Company will pay the cash value thereof determined as provided in the Warrant Agreement.
 
The Company has agreed pursuant to an Equity Registration Rights Agreement dated as of August 30, 2006 to, as promptly as practicable, file a registration statement on an appropriate form under the Securities Act of 1933 (the “Securities Act”) covering the resale of the Warrant Shares. The Company will use its reasonable best efforts to cause any such registration statement to be declared effective and to keep such registration statement continuously effective under the Securities Act in order to permit the resale of the Warrant Shares by the holders thereof until the Warrant Shares (i) have been sold pursuant thereto or (ii) may be sold without volume limitations pursuant to Rule 144(k).
 
Warrant Certificates, when surrendered at the corporate trust office of the Warrant Agent by the registered holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

4

Upon due presentation for registration of transfer of this Warrant Certificate at the corporate trust office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.
 
The Company and the Warrant Agent may deem and treat the registered holder(s) thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.
 
This Agreement and each Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be construed in accordance with the internal laws of said State.
 
The Company agrees that any suit, action or proceeding against it arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any State or U.S. federal court in The City of New York and County of New York, and waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding.
 
5

[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
 
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive _____________ shares of Common Stock and herewith tenders payment for such shares to the order of HARBIN ELECTRIC, INC., in the amount of [Warrants equal in fair market value] [Notes equal in principal amount] to $__________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares be registered in the name of _______________, whose address is __________________ and that such shares be delivered to ___________, whose address is ____________________________. If said number of shares is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of ______________________, whose address is ____________________, and that such Warrant Certificate be delivered to whose address is ____________________.
 
The undersigned hereby certifies that (i) it is not a U.S. person and the Warrant is not being exercised on behalf of a U.S. person, or (ii) the undersigned is providing herewith an opinion of counsel to the effect that the Warrant and the shares of Common Stock to be delivered upon exercise thereof have been registered under the Securities Act of 1933 or are exempt from registration thereunder.
     
   
 
 		  
 		  
 
      
 
Signature
 Date:   
   
   
Signature Guaranteed
   
   
 
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Warrant Agent, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Warrant Agent in addition to, or in substitution for, STAMP.
 
6

SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS
 
The following exchanges of a part of this Global Warrant have been made:
 
           
Number of
    
 
 
Amount of
 
Amount of
 
Warrants in this
 
 
 
 
decrease in
 
increase in
 
Global Warrant
 
 
 
 
Number of
 
Number of
 
following such
 
Signature of
 
 
warrants in this
 
Warrants in this
 
decrease or
 
authorized officer
Date of Exchange
 
Global Warrant
 
Global Warrant
 
increase
 
of Warrant Agent
                 

7




 EX-99.4 4 v052468_ex99-4.htm
2012 Warrant Certificate
 
THIS GLOBAL WARRANT IS HELD BY THE COMMON DEPOSITARY (AS DEFINED IN THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (II) THIS GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (III) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 3.8 OF THE WARRANT AGREEMENT AND (IV) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR COMMON DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
 
THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND THE WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS BY OR ON BEHALF OF ANY U.S. PERSON, UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. IN ORDER TO TRANSFER OR EXERCISE ANY INTEREST IN THIS WARRANT, THE BENEFICIAL HOLDER MUST FURNISH TO THE COMPANY AND THE WARRANT REGISTRAR EITHER (A) A WRITTEN CERTIFICATION THAT IT IS NOT A U.S. PERSON AND THE WARRANT IS NOT BEING EXERCISED ON BEHALF OF A U.S. PERSON OR (B) A WRITTEN OPINION OF COUNSEL TO THE EFFECT THAT THE SECURITIES DELIVERED UPON EXERCISE OF THE WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR THAT THE DELIVERY OF SUCH SECURITIES IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. EACH BENEFICIAL HOLDER BY ACCEPTING AN INTEREST IN THIS WARRANT AGREES THAT ANY HEDGING TRANSACTION INVOLVING THIS WARRANT OR THE SECURITIES TO BE ISSUED UPON EXERCISE OF THIS WARRANT MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. TERMS IN THIS LEGEND HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
 


525,830 Warrants
 
No. 1
ISIN No. USU245151399
Common Code: 026615194
 
Warrant Certificate
 
HARBIN ELECTRIC, INC.
 
This Warrant Certificate certifies that The Bank of New York Depository (Nominees) Limited, or its registered assigns, as common depository for Clearstream Banking, societe anonyme (“Clearstream”) and/or Euroclear Bank S.A./N.V. as operator of the Euroclear System, (“Euroclear”), is the registered holder of the number set forth above of Warrants expiring August 30, 2012 (the “Warrants”) to purchase Common Stock, par value $.00001 (the “Common Stock”), of Harbin Electric, Inc., a Nevada corporation (the “Company”). Each Warrant entitles the registered holder upon exercise at any time from 9:00 a.m. on the date hereof until 5:00 p.m. New York City Time on August 30, 2012 to receive from the Company 525,830 fully paid and nonassessable shares of Common Stock (the “Warrant Shares”) at the initial exercise price (the “Exercise Price”) of $10.84 per share payable upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent, but only subject to the conditions set forth herein and in the Warrant Agreement referred to on the reverse hereof. The Exercise Price and number of Warrant Shares issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
 
No Warrant may be exercised after 5:00 p.m., New York City Time on August 30, 2012. To the extent not exercised by such time, any such Warrant shall become void.
 
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.
 
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
 
This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York.
 
2

IN WITNESS WHEREOF, Harbin Electric, Inc. has caused this Warrant Certificate to be signed below.
 
Dated: August 30, 2006    
  HARBIN  ELECTRIC, INC. 
 
 		  
 		  
 
  By:    
 
Name:
  Title: 
   
Countersigned:  
   
THE BANK OF NEW YORK,
a New York banking corporation
 
   
as Warrant Agent  
   
By:_____________________________________  
Authorized Signatory  
 
3

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants expiring at 5:00 p.m. New York City time on August 30, 2012 entitling the holder on exercise to receive shares of Common Stock, and are issued or to be issued pursuant to a Warrant Agreement dated as of August 30, 2006 (the “Warrant   Agreement”), duly executed and delivered by the Company to The Bank of New York, a New York banking corporation, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the registered holders or registered holder) of the Warrants. Capitalized terms used but not defined herein have the meaning ascribed to such terms in the Warrant Agreement. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company.
 
Warrants may be exercised at any time on or after the date hereof and on or before 5:00 p.m. New York City time on August 30, 2012. In order to exercise all or any of the Warrants represented by this Warrant Certificate, the holder must deliver to the Warrant Agent at its corporate trust office set forth in Section 15 of the Warrant Agreement this Warrant Certificate and the form of election to purchase on the reverse hereof duly completed and signed, which signature shall be medallion guaranteed by an institution which is a member of a Securities Transfer Association recognized signature guarantee program, and upon payment to the Warrant Agent for the account of the Company of the Exercise Price, for the number of Warrant Shares in respect of which such Warrants are then exercised. No adjustment shall be made for any dividends on any Common Stock issuable upon exercise of this Warrant.
 
The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price set forth on the face hereof may, subject to certain conditions, be adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides that the number of shares of Common Stock issuable upon the exercise of each Warrant shall be adjusted. No fractions of a share of Common Stock will be issued upon the exercise of any Warrant, but the Company will pay the cash value thereof determined as provided in the Warrant Agreement.
 
The Company has agreed pursuant to an Equity Registration Rights Agreement dated as of August 30, 2006 to, as promptly as practicable, file a registration statement on an appropriate form under the Securities Act of 1933 (the “Securities Act”) covering the resale of the Warrant Shares. The Company will use its reasonable best efforts to cause any such registration statement to be declared effective and to keep such registration statement continuously effective under the Securities Act in order to permit the resale of the Warrant Shares by the holders thereof until the Warrant Shares (i) have been sold pursuant thereto or (ii) may be sold without volume limitations pursuant to Rule 144(k).
 
Warrant Certificates, when surrendered at the corporate trust office of the Warrant Agent by the registered holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.
 
4

Upon due presentation for registration of transfer of this Warrant Certificate at the corporate trust office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.
 
The Company and the Warrant Agent may deem and treat the registered holder(s) thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.
 
This Agreement and each Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be construed in accordance with the internal laws of said State.
 
The Company agrees that any suit, action or proceeding against it arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any State or U.S. federal court in The City of New York and County of New York, and waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding.
 
5

[Form of Election to Purchase]
 
(To Be Executed Upon Exercise Of Warrant)
 
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive _____________ shares of Common Stock and herewith tenders payment for such shares to the order of HARBIN ELECTRIC, INC., in the amount of [Warrants equal in fair market value] [Notes equal in principal amount] to $__________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares be registered in the name of _______________, whose address is __________________ and that such shares be delivered to ___________, whose address is ____________________________. If said number of shares is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of ______________________, whose address is ____________________, and that such Warrant Certificate be delivered to whose address is ____________________.
 
The undersigned hereby certifies that (i) it is not a U.S. person and the Warrant is not being exercised on behalf of a U.S. person, or (ii) the undersigned is providing herewith an opinion of counsel to the effect that the Warrant and the shares of Common Stock to be delivered upon exercise thereof have been registered under the Securities Act of 1933 or are exempt from registration thereunder.
     
   
 Signature 
   
Date:    
 
Signature Guaranteed
   
 
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Warrant Agent, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Warrant Agent in addition to, or in substitution for, STAMP.
 
6

SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS
 
The following exchanges of a part of this Global Warrant have been made:

           
Number of
    
 
  
Amount of
  
Amount of
  
Warrants in this
  
 
 
  
decrease in
  
increase in
  
Global Warrant
  
 
 
  
Number of
  
Number of
  
following such
  
Signature of
 
  
warrants in this
  
Warrants in this
  
decrease or
  
authorized officer
Date of Exchange
  
Global Warrant
  
Global Warrant
  
increase
  
of Warrant Agent
                 
                 
 
7
 
 EX-99.9 5 v052468_ex99-9.htm
August 30, 2006
 
Citadel Equity Fund Ltd.
c/o Citadel Investment Group (Hong Kong) Limited
Charter House, 18th Floor
8 Connaught Road
Central, Hong Kong
 
and
 
Merrill Lynch International
17/F ICBC Tower
3 Garden Road
Central, Hong Kong
 
Re:   Harbin Electric, Inc. —Reduction of Liquidated
 Damages under the Equity Registration Rights Agreement. 

 
Ladies and Gentlemen:
 
Ladies and Gentlemen:
 
This letter agreement will serve as an addendum to the Equity Registration Rights Agreement, dated August 30, 2006 (the “Registration Rights Agreement”) by and among Harbin Electric, Inc.(the “Company”), Citadel Equity Fund Ltd. (“Citadel”) and Merrill Lynch International (“ML”), and confirm our understandings with respect to the rights of the Citadel and ML to receive Liquidated Damages (as defined in the Registration Rights Agreement) under Section 4 of the Registration Rights Agreement. Terms used herein and not otherwise defined shall have the meaning ascribed to them in the Registration Rights Agreement.
 
In the event that the Staff of the Securities and Exchange Commission should take the position that the Liquidated Damages Cap under the Registration Rights Agreement is in excess of the maximum amount of liquidated damages that could be paid without the Company being required to classify the Warrants as a liability under EITF 00-19 (“Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock”) or any related accounting pronouncement, the parties agree that they will negotiate promptly and in good faith to agree upon a lower Liquidated Damages Cap that would not result in the Warrants being so classified, it being the parties intention that the Liquidated Damages Cap should be as close as possible to the maximum amount permissible under EITF 00-19 without triggering such reclassification. The parties further agree that, in the event that any payments made by the Company to the Holders pursuant to Section 4(a) of the Registration Rights Agreement should exceed the Liquidated Damages Cap (as it may be subsequently adjusted by agreement of the parties), such excess shall be refundable to the Company.

 
 
 
This letter agreement shall be governed by the laws of the state of New York, without regard to principles of conflicts of law. No party to this letter agreement shall be deemed to be the drafter of this letter agreement or any provision hereof for the purpose of construing this letter agreement against one party or another.
 
IN WITNESS WHEREOF, the parties have executed this letter agreement as of the date first written above.
 
HARBIN ELECTRIC, INC.



By:                  
Name:
Title:


ACCEPTED AND AGREED:

CITADEL EQUITY FUND LTD.

By: Citadel Limited Partnership, Portfolio Manager

By: Citadel Investment Group, L.L.C., its General Partner

By:_________________________________
Name:
Title: Authorized Signatory
 

 
Merrill Lynch International
 
By:_________________________________
Name:
Title:
 

 
2
 
 
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