REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of June 24, 2008, among Harbin Electric, Inc, a Nevada
      corporation (the “Company”),
      and
      the purchasers identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser,”
and
      collectively, the “Purchasers”).

     

    R
      E C
      I T A L S

     

    WHEREAS,
      the Company proposes to sell to the Purchasers an aggregate of up to 3.5 million
      shares of the Company’s Common Stock, par value $0.00001 per share (the
“Common
      Stock”)
      pursuant to that certain Purchase Agreement (the “Purchase
      Agreement”)
      dated
      as of even date herewith by and among the Company and the Purchasers;
      and

     

    WHEREAS,
      the Company wishes to enter into this Registration Rights Agreement with the
      Purchasers, and confer upon the Purchasers the benefits provided hereunder,
      as
      an inducement to the Purchasers to enter into the Purchase Agreement and
      consummate the transactions thereunder.

     

    A
      G R
      E E M E N T

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and the Purchasers agree as
      follows:

     

    1. Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Purchase Agreement shall have the meanings given such terms in the Purchase
      Agreement. As used in this Agreement, the following terms shall have the
      following meanings:

     

    “Advice”
shall
      have the meaning set forth in Section 7(c).

     

    “Allowable
      Grace Period”
shall
      have the meaning set forth in Section 3(j).

     

    “Effective
      Date”
means
      the date that the Registration Statement is declared effective by the
      Commission.

     

    “Effectiveness
      Deadline”
means,
      with respect to the initial Registration Statement required hereunder, (i)
      in
      the event that the Registration Statement is not subject to a review by the
      Commission, the earlier of (x) the 5th Business Day following the date on which
      the Company is notified by the Commission that the Registration Statement will
      not be reviewed or is no longer subject to further review and comments, and
      (y)
      the date that is 60 calendar days after the Filing Deadline, or (ii) in the
      event that the Registration Statement is subject to a review by the Commission,
      the date that is 120 calendar days after the Filing Deadline.

     

    “Effectiveness
      Failure”
shall
      have the meaning set forth in Section 2(b).


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “Effectiveness
      Period”
means
      with respect to any Registrable Securities under any Registration Statement,
      the
      period commencing with the Effective Date of the Registration Statement and
      ending upon the disposition of all Registrable Securities under such
      Registration Statement.

     

    “Filing
      Date”
means,
      with respect to the initial Registration Statement required hereunder, the
      date
      the Registration Statement is filed with the Commission.

     

    “Filing
      Deadline”
means,
      with respect to the initial Registration Statement required hereunder, 30
      calendar days after the Closing Date.

     

    “Filing
      Failure”
shall
      have the meaning set forth in Section 2(b). 

     

    “Grace
      Period”
shall
      have the meaning set forth in Section 3(j).

     

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

     

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5(c).

     

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5(c). 

     

    “Losses”
shall
      have the meaning set forth in Section 5(a).

     

    “Plan
      of Distribution”
shall
      have the meaning set forth in Section 2(a).

     

    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    “Registrable
      Securities”
means
      all of (i) the Shares, and (ii) any shares of Common Stock issued or issuable
      upon any stock split, dividend or other distribution, recapitalization or
      similar event of the Company affecting the Shares; provided, however, a security
      shall no longer be a Registrable Security once it has been sold pursuant to
      Rule
      144 under the Securities Act, or may be sold, without regard to the volume
      limitations contained in Rule 144(e) under the Securities Act or sold pursuant
      to a Registration Statement.

     

    “Registration
      Delay Payments”
shall
      have the meaning set forth in Section 2(b).


    
      
        
        

      

      
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    “Registration
      Statement”
means
      the registration statements required to be filed hereunder, including (in each
      case) the Prospectus, amendments and supplements to such registration statement
      or Prospectus, including pre- and post-effective amendments, all exhibits
      thereto, and all material incorporated by reference or deemed to be incorporated
      by reference in such registration statement.

     

    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same purpose and
      effect as such Rule.

     

    “Rule
      424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same purpose and
      effect as such Rule.

     

    “Selling
      Shareholder Questionnaire”
shall
      have the meaning set forth in Section 3(a).

     

    2. Shelf
      Registration.

     

    (a) On
      or
      prior to the Filing Deadline, and subject to the availability of Rule 415,
      the
      Company shall prepare and file with the Commission a “Shelf” Registration
      Statement covering the resale of the Registrable Securities for an offering
      to
      be made on a continuous basis pursuant to Rule 415. The Registration Statement
      shall be on Form S-3 (except if the Company is not then eligible to register
      for
      resale the Registrable Securities on Form S-3, in which case such registration
      shall be on another appropriate form in accordance herewith) and shall contain
      substantially the “Plan
      of Distribution”
      attached hereto as Annex
      A,
      as
      modified by the Company as necessary to conform to comments from the Commission.
      Subject to the terms of this Agreement, the Company shall use its best efforts
      to cause the Registration Statement to be declared effective under the
      Securities Act as promptly as possible after the filing thereof, but in any
      event not later than the Effectiveness Deadline, and after the Effective Date,
      shall use its best efforts to keep such Registration Statement continuously
      effective under the Securities Act until all Registrable Securities covered
      by
      such Registration Statement have been sold, subject, however, to any Allowable
      Grace Period. The Company agrees to request the Commission for acceleration
      of
      effectiveness at 4:00 p.m. Eastern Standard Time on the Effective Date, and
      by
      12:00 p.m. Eastern Standard Time on the Trading Day following the Effective
      Date, by filing a final Prospectus with the Commission pursuant to Rule 424
      and
      notifying the Holders via facsimile of effectiveness of the Registration
      Statement. 


    
      
        
        

      

      
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    (b) If
      (i)
      the initial Registration Statement required to be filed by the Company pursuant
      to this Agreement that covers all of the Registrable Securities is (A) not
      filed
      with the Commission on or before the Filing Deadline (if the Company files
      a
      Registration Statement without affording the Holders the opportunity to review
      and comment on the same as required by Section 3(a) hereof, the Company shall
      not be deemed to have satisfied this clause) (a “Filing
      Failure”)
      or (B)
      not declared effective by the Commission on or before the Effectiveness Deadline
      (an “Effectiveness
      Failure”)
      or
      (ii) on any day during the Effectiveness Period sales of all of the Registrable
      Securities cannot be made (other than during an Allowable Grace Period (as
      defined in Section 3(j)) pursuant to such Registration Statement (including,
      without limitation, because of a failure to keep such Registration Statement
      effective, to disclose such information as is necessary for sales to be made
      pursuant to such Registration Statement, or to register all of the Registrable
      Securities) (a “Maintenance
      Failure”)
      then,
      as partial relief for the damages to any Holder by reason of any such delay
      in
      or reduction of its ability to sell the underlying shares of Common Stock (which
      remedy shall not be exclusive of any other remedies available at law or in
      equity), the Company shall pay to each Holder of Registrable Securities an
      amount in cash, as partial liquidated damages, equal to one percent (1%) of
      the
      aggregate Purchase Price that has actually been paid by such Holder in respect
      of its Registrable Securities on each of the following dates: (i) on every
      thirtieth day after the day of a Filing Failure (pro rated for periods totaling
      less than thirty days) until such Filing Failure is cured; (ii) on every
      thirtieth day after the day of an Effectiveness Failure (pro rated for periods
      totaling less than thirty days) until such Effectiveness Failure is cured,
      subject to adjustment as provided herein; and (iii) on every thirtieth day
      after
      the initial day of a Maintenance Failure (pro rated for periods totaling less
      than thirty days) until such Maintenance Failure is cured; provided, however,
      that the Company shall not be liable to a Holder for any such payments in excess
      of 10% of the aggregate Purchase Price that has actually been paid by such
      Holder in respect of its Registrable Securities. The payments to which a holder
      shall be entitled pursuant to this Section 2(b) are referred to herein as
“Registration
      Delay Payments.”
      Registration Delay Payments shall be paid on the earlier of (I) the dates set
      forth above and (II) the third Business Day after the event or failure giving
      rise to the Registration Delay Payments is cured.

     

    (c) In
      the
      event the number of shares available under a Registration Statement filed
      pursuant to Section 2(a) when declared effective or at any time thereafter
      is
      insufficient to cover all of the Registrable Securities required to be covered
      by such Registration Statement, the Company shall amend the applicable
      Registration Statement, or file a new Registration Statement (on the short
      form
      available therefor, if applicable), or both, so as to cover all of the
      Registrable Securities as of the Trading Day immediately preceding the date
      of
      the filing of such amendment or new Registration Statement, in each case, as
      soon as practicable, but in any event not later than the later of: (i) sixty
      (60) days after the date substantially all of the Registrable Securities
      previously included in the initial Registration Statement have been sold; or
      (ii) the date that is six (6) months after the Effective Date. The Company
      shall
      use its best efforts to cause such amendment and/or new Registration Statement
      to become effective as soon as practicable following the filing
      thereof.

     

    (d) For
      the
      avoidance of doubt and notwithstanding anything contained herein to the
      contrary, no Registration Delay Payment is payable by the Company to any
      particular Holder if any such Filing Failure, Effectiveness Failure, or
      Maintenance Failure, as the case may be, in relation to such Holder’s
      Registrable Securities included in such Registration Statement is caused by
      the
      default of the obligations of the relevant Holder under this Agreement
      (including, without limitation, the obligations of the Holder as set forth
      in
      Section 3(a) below). In addition, notwithstanding anything contained herein
      to
      the contrary, in the event that the Company is delinquent in filing the
      Registration Statement by a period of time such that the Effectiveness Deadline
      has passed and an Effectiveness Failure has occurred, so that a Registration
      Delay Payment is triggered for both the Filing Failure and the Effectiveness
      Failure concurrently, then the Company shall only be obligated to pay one
      Registration Delay Payment for the concurrent failures, for whichever failure
      results in a greater Registration Delay Payment.


    
      
        
        

      

      
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    3. Registration
      Procedures.

     

    At
      such
      time as the Company is obligated to file a Registration Statement with the
      SEC
      pursuant to Section 2, the Company will use its best efforts to effect the
      registration of the Registrable Securities in accordance with the intended
      method of distribution thereof and, pursuant thereto, the Company shall have
      the
      following obligations:

     

    (a) The
      Company shall not file a Registration Statement, any Prospectus, or any
      amendments or supplements thereto in which the “Selling Stockholder” section
      thereof differs from the disclosure received from a Holder in its Selling
      Shareholder Questionnaire (as amended and supplemented). Each Holder agrees
      to
      be named in the Registration Statement and to carry out the offer and sale
      of
      Registrable Securities held by such Holder in a conformance with the Plan of
      Distribution attached hereto as Annex
      A,
      as
      modified by the Company as necessary to conform to comments from the Commission.
      Each Holder agrees to furnish to the Company a completed Questionnaire in the
      form attached to this Agreement as Annex
      B
      (a
“Selling
      Shareholder Questionnaire”)
      by the
      end of the fifth Trading Day following the date on which such Holder receives
      the Selling Shareholder Questionnaire. The Company shall ensure that each
      Registration Statement (including any amendments or supplements thereto and
      prospectuses contained therein) shall not contain any untrue statement of a
      material fact or omit to state a material fact required to be stated therein,
      or
      necessary to make the statements therein (in the case of prospectuses, in the
      light of the circumstances in which they were made) not misleading, except
      to
      the extent, but only to the extent, that (i) such untrue statements or omissions
      are based solely upon information regarding such Holder furnished in writing
      to
      the Company by such Holder, its directors, authorized officers or attorneys
      expressly for use therein, or to the extent that such information relates to
      such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder
      its
      directors, authorized officers or attorneys expressly for use in a Registration
      Statement, such Prospectus or such form of Prospectus or in any amendment or
      supplement thereto. Each Holder shall ensure that its Selling Shareholder
      Questionnaire furnished to the Company shall not contain any untrue statement
      of
      a material fact or omit to state a material fact required to be stated therein,
      or necessary to make the statements therein not misleading.

     

    (b) Not
      less
      than four Trading Days prior to the filing of each Registration Statement and
      not less than two Trading Days prior to the filing of any related amendment
      or
      supplement thereto, the Company shall permit the Holders to review and comment
      upon the Registration Statement and any amendments and supplements to all
      Registration Statements (except for Annual Reports on Form 10-K, Quarterly
      Reports on Form 10-Q, Current Reports on Form 8-K and any similar or successor
      reports), and not file any Registration Statement or amendment or supplement
      thereto in a form to which the Holders or their legal counsel reasonably
      objects, provided that the Holders or their legal counsel shall provide the
      Company with any comments within two (2) Trading Days of the receipt of the
      Registration Statement and shall provide the Company with any comments within
      one (1) Trading Day of the receipt of any related amendment or supplement
      thereto. The Company shall furnish to the Holder, without charge, upon the
      request of such Holder (i) copies of any correspondence from the Commission
      or
      the staff of the Commission to the Company or its representatives relating
      to
      any Registration Statement, (ii) promptly after the same is prepared and filed
      with the Commission, one copy of any Registration Statement and any amendment(s)
      thereto, including financial statements and schedules, all documents
      incorporated therein by reference, if requested by a Holder and not otherwise
      available on the EDGAR system, and all exhibits and (iii) upon the effectiveness
      of any Registration Statement, one copy of the prospectus included in such
      Registration Statement and all amendments and supplements
      thereto.


    
      
        
        

      

      
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    (c) 
      (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period, except for periods based on events described in Section 3(d), (ii)
      cause
      the related Prospectus to be amended or supplemented by any required Prospectus
      supplement (subject to the terms of this Agreement), and as so supplemented
      or
      amended to be filed pursuant to Rule 424; (iii) respond promptly to any comments
      received from the Commission with respect to a Registration Statement or any
      amendment thereto; and (iv) comply in all material respects with the provisions
      of the Securities Act and the Exchange Act applicable to the Company with
      respect to the disposition of all Registrable Securities covered by a
      Registration Statement during the applicable period in accordance with the
      intended methods of disposition by the Holders thereof set forth in such
      Registration Statement as so amended or in such Prospectus as so
      supplemented.

     

    (d) Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (ii) through (iv) hereof, be accompanied by an instruction to suspend
      the use of the Prospectus until the requisite changes have been made) as
      promptly as reasonably possible, and in any event within three (3) Trading
      Days
      after the occurrence of the event requiring notice herein, (i) with respect
      to a
      Registration Statement or any post-effective amendment, when the same has become
      effective; (ii) of the issuance by the Commission or any other federal or state
      governmental authority of any stop order suspending the effectiveness of a
      Registration Statement covering any or all of the Registrable Securities; (iii)
      of the receipt by the Company of any notification with respect to the suspension
      of the qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction; (iv) of the occurrence of any event
      or
      passage of time that makes the financial statements included in a Registration
      Statement ineligible for inclusion therein or any statement made in a
      Registration Statement or Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading; or (v) when the Commission notifies the Company whether
      there will be a review of such Registration Statement and whenever the
      Commission comments in writing on such Registration Statement (the Company
      shall
      provide true and complete copies thereof and all written responses thereto
      to
      each of the Holders that pertain to the Holders as a Selling Stockholder or
      to
      the Plan of Distribution, but not information which the Company believes would
      constitute material and non-public information). Any and all of such information
      contemplated by subparagraphs (i) through (v) shall remain confidential to
      each
      Holder until such information otherwise becomes public, unless disclosure by
      a
      Holder is required by law.


    
      
        
        

      

      
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    (e) Use
      its
      reasonable best efforts to avoid the issuance of, or, if issued, obtain the
      withdrawal of (i) any order suspending the effectiveness of a Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

     

    (f) Furnish
      to each Holder whose Registrable Securities are included in any Registration
      Statement, without charge, if not otherwise available on the EDGAR system (i)
      promptly after the same is prepared and filed with the Commission, at least
      one
      copy of such Registration Statement and any amendment(s) thereto, including
      financial statements and schedules, all documents incorporated therein by
      reference, if requested by a Holder, all exhibits and each preliminary
      prospectus, (ii) upon the effectiveness of any Registration Statement, ten
      (10)
      copies of the prospectus included in such Registration Statement and all
      amendments and supplements thereto (or such other number of copies as such
      Holder may reasonably request) and (iii) such other documents, including copies
      of any preliminary or final prospectus, as such Holder may reasonably request
      from time to time in order to facilitate the disposition of the Registrable
      Securities owned by such Holder.

     

    (g) Subject
      to the terms of this Agreement, the Company hereby consents to the use of each
      Prospectus and each amendment or supplement thereto, provided by the Company
      pursuant to subpart (f) above, by each of the selling Holders in connection
      with
      the offering and sale of the Registrable Securities covered by such Prospectus
      and any amendment or supplement thereto, except after the giving of any notice
      pursuant to Section 3(d).

     

    (h) Prior
      to
      any resale of Registrable Securities by a Holder, register or qualify or
      cooperate with the selling Holders in connection with the registration or
      qualification (or exemption from the Registration or qualification) of such
      Registrable Securities for the resale by the Holder under the securities or
      Blue
      Sky laws of such jurisdictions within the United States as any Holder reasonably
      requests in writing, to keep each registration or qualification (or exemption
      therefrom) effective during the Effectiveness Period and to do any and all
      other
      acts or things reasonably necessary to enable the disposition in such
      jurisdictions of the Registrable Securities covered by each Registration
      Statement; provided, that the Company shall not be required to qualify generally
      to do business in any jurisdiction where it is not then so qualified, subject
      the Company to any material tax in any such jurisdiction where it is not then
      so
      subject or file a general consent to service of process in any such
      jurisdiction.


    
      
        
        

      

      
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    (i) Within
      two (2) Trading Days after a Registration Statement which covers Registrable
      Securities is ordered effective by the Commission, deliver, or cause legal
      counsel for the Company to deliver, to the transfer agent for such Registrable
      Securities (with copies to the Holders whose Registrable Securities are included
      in such Registration Statement) confirmation that such Registration Statement
      has been declared effective by the Commission. The Company shall cooperate
      with
      the Holders to facilitate the timely preparation and delivery of certificates
      representing Registrable Securities to be delivered to a transferee pursuant
      to
      the Registration Statement, which certificates shall be free, to the extent
      permitted by the Securities Act, of all restrictive legends, and to enable
      such
      Registrable Securities to be in such denominations and registered in such names
      as any such Holders may reasonably request.

     

    (j) Upon
      the
      occurrence of any event contemplated by this Section 3, as promptly as
      reasonably possible under the circumstances taking into account the Company’s
      good faith assessment of any adverse consequences to the Company and its
      stockholders of the premature disclosure of such event, prepare a supplement
      or
      amendment, including a post-effective amendment, to a Registration Statement
      or
      a supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither a Registration Statement nor such
      Prospectus will contain an untrue statement of a material fact or omit to state
      a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If the Company notifies the Holders in accordance with clauses
      (ii) through (iv) of Section 3(d) above to suspend the use of any Prospectus
      until the requisite changes to such Prospectus have been made, then the Company
      will use its best efforts to ensure that the use of the Prospectus may be
      resumed as promptly as is practicable. The Company shall be entitled to exercise
      its right under this Section 3(j) to suspend the availability of a Registration
      Statement and Prospectus, provided that each period (each, a “Grace
      Period”)
      shall
      not exceed fifteen (15) consecutive days and during any three hundred sixty
      five
      (365) day period such Grace Periods shall not exceed an aggregate of thirty
      (30)
      days and the first day of any Grace Period must be at least five (5) trading
      days after the last day of any prior Grace Period (each, an “Allowable
      Grace Period”).
      The
      Company shall notify the Holders in writing of the date on which any Grace
      Period ends. For the purpose of determining the length of a Grace Period above,
      the Grace Period shall begin on and include the date the Holders receive the
      notice referred to above and shall end on the date the Holders receive the
      notice referred to in the preceding sentence.

     

    (k) Comply
      with all applicable rules and regulations of the Commission.

     

    (l) Prior
      to
      the effectiveness of the Registration Statement and all other amendments and
      supplements to the Prospectus, the Company may require each selling Holder
      to
      furnish to the Company a certified statement as to (i) the number of shares
      of
      Common Stock beneficially owned by such Holder, (ii) the natural persons thereof
      that have voting and dispositive control over the shares of Common Stock, and
      (iii) any affiliation between the Holder and either the Company’s independent
      accountants or any member of the FINRA, The Financial Industry Regulatory
      Authority (formerly NASD).


    
      
        
        

      

      
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    (m) The
      Company shall use its best efforts either to cause all of the Registrable
      Securities covered by a Registration Statement to be listed on the primary
      securities exchange or stock market on which securities of the same class or
      series issued by the Company are then listed, if any, if the listing of such
      Registrable Securities is then permitted under the rules of such exchange or
      stock market.

     

    (n) The
      Company agrees not to name or describe a Holder as an underwriter in the
      Registration Statement, except if Holder provided its express written consent
      to
      such disclosure to the Company, or if such Holder is required under applicable
      securities law to be described in the Registration Statement as an underwriter
      or pursuant to the Commission’s comments, in which case the Company shall notify
      such Holder and provide such Holder the opportunity to provide input and
      response in connection with the disclosure.

     

    (o) If
      requested by a Holder, the Company shall as soon as practicable (i) incorporate
      in a prospectus supplement or post-effective amendment such information as
      a
      Holder reasonably requests to be included therein relating to the sale and
      distribution of Registrable Securities, including, without limitation,
      information with respect to the number of Registrable Securities being offered
      or sold, the purchase price being paid therefor and any other terms of the
      offering of the Registrable Securities to be sold in such offering; (ii) make
      all required filings of such prospectus supplement or post-effective amendment
      after being notified of the matters to be incorporated in such prospectus
      supplement or post-effective amendment; and (iii) supplement or make amendments
      to any Registration Statement if reasonably requested by a Holder holding any
      Registrable Securities.

     

    (p) Notwithstanding
      anything contained in this Agreement, the right of any Holder to demand or
      request inclusion in any registration statement hereunder shall terminate as
      to
      Registrable Securities held by such Holder that may be immediately sold under
      Rule 144(e). 

     

    4. Registration
      Expenses.
      All
      fees and expenses incidental to the performance of or compliance with this
      Agreement by the Company shall be borne by the Company whether or not any
      Registrable Securities are sold pursuant to a Registration Statement. The fees
      and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses (A) with respect to filings required to be made with any
      securities exchange or stock market on which the Common Stock is then listed
      for
      trading, and (B) in compliance with applicable state securities or Blue Sky
      laws
      reasonably agreed to by the Company in writing), (ii) printing expenses incurred
      by the Company (including, without limitation, expenses of printing certificates
      for Registrable Securities), (iii) messenger, telephone and delivery expenses
      incurred by the Company, (iv) fees and disbursements of counsel for the Company,
      (v) Securities Act liability insurance incurred by the Company, if the Company
      so desires such insurance, and (vi) fees and expenses of all other Persons
      retained by the Company in connection with the consummation of the transactions
      contemplated by this Agreement. In addition, the Company shall be responsible
      for all of its internal expenses incurred in connection with the consummation
      of
      the transactions contemplated by this Agreement (including, without limitation,
      all salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit and the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder. In no event shall the Company be
      responsible for any broker or similar commissions of any Holder or, except
      to
      the extent provided for in the Transaction Documents, any legal fees or other
      costs of the Holders. The Company shall also reimburse the Holders for the
      fees
      and disbursements of one legal counsel for all Holders in connection with the
      registrations, filings, and qualifications made pursuant to this Agreement,
      which amount shall be limited to $5,000 for each Registration Statement filed
      hereunder.


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    5. Indemnification.

     

    (a) Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, agents, investment advisors,
      members, partners, and employees of each of them, each Person who controls
      any
      such Holder (within the meaning of Section 15 of the Securities Act or Section
      20 of the Exchange Act) and the officers, directors, members, shareholders,
      partners, and employees of each such controlling Person, to the fullest extent
      permitted by applicable law, from and against any and all losses, claims,
      damages, liabilities, costs (including, without limitation, reasonable
      attorneys’ fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to (1) any untrue statement of a material
      fact contained in a Registration Statement, any Prospectus or any form of
      prospectus or in any amendment or supplement thereto or in any preliminary
      prospectus, or arising out of or relating to any omission of a material fact
      required to be stated therein or necessary to make the statements therein (in
      the case of any Prospectus or form of prospectus or supplement thereto, in
      light
      of the circumstances under which they were made) not misleading, (2) any
      violation by the Company of the Securities Act, Exchange Act or any state
      securities law, or any rule or regulation thereunder, in connection with the
      performance of its obligations under this Agreement, except to the extent,
      but
      only to the extent, that (i) such untrue statements or omissions are based
      solely upon information regarding such Holder furnished in writing to the
      Company by such Holder, its directors, authorized officers, or attorneys
      expressly for use therein, or to the extent that such information relates to
      such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder,
      its directors, authorized officers, or attorneys expressly for use in a
      Registration Statement, such Prospectus or such form of Prospectus or in any
      amendment or supplement thereto (it being understood that the Holder has
      approved Annex
      A
      hereto
      for this purpose), (ii) in the case of an occurrence of an event of the type
      specified in Section 3(d)(ii)-(iv), the use by such Holder of an outdated or
      defective Prospectus after the Company has notified such Holder in writing
      that
      the Prospectus is outdated or defective and prior to the receipt by such Holder
      of the Advice contemplated in Section 7(c), or (iii) any such untrue statement,
      omission or violation is directly related to and primarily the result of a
      material breach of this Agreement or violation of law by Holder; or (3) any
      material breach of this Agreement by the Company.


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    (b) Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents, attorneys and employees, each Person
      who controls the Company (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, agents,
      attorneys or employees of such controlling Persons, to the fullest extent
      permitted by applicable law, from and against all Losses, as incurred, to the
      extent arising out of or based solely upon: (x) such Holder’s failure to comply
      with the prospectus delivery requirements of the Securities Act, (y) a material
      breach of this Agreement or violation of law by Holder, or (z) any untrue or
      alleged untrue statement of a material fact contained in any Registration
      Statement, any Prospectus, or any form of prospectus, or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required to
      be
      stated therein or necessary to make the statements therein not misleading (i)
      to
      the extent, but only to the extent, that such untrue statement or omission
      is
      contained in any information so furnished in writing by such Holder, its
      directors, authorized officers, or attorneys to the Company specifically for
      inclusion in such Registration Statement or such Prospectus or (ii) to the
      extent that such information relates to such Holder’s proposed method of
      distribution of Registrable Securities and was reviewed and expressly approved
      in writing by such Holder, its directors, authorized officers, or attorneys
      expressly for use in a Registration Statement (it being understood that the
      Holder has approved Annex
      A
      hereto
      for this purpose), such Prospectus or such form of Prospectus or in any
      amendment or supplement thereto or (iii) in the case of an occurrence of an
      event of the type specified in Section 3(d)(ii)-(iv), the use by such Holder
      of
      an outdated or defective Prospectus after the Company has notified such Holder
      in writing that the Prospectus is outdated or defective and prior to the receipt
      by such Holder of the Advice contemplated in Section 7(c). In no event shall
      the
      liability of any selling Holder hereunder be greater in amount than the dollar
      amount of the net proceeds received by such Holder upon the sale of the
      Registrable Securities giving rise to such indemnification
      obligation.

     

    (c) Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall have the right to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided, that the failure of any Indemnified
      Party to give such notice shall not relieve the Indemnifying Party of its
      obligations or liabilities pursuant to this Agreement, except (and only) to
      the
      extent that such failure shall have prejudiced the Indemnifying
      Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; (2) the Indemnifying Party shall have failed promptly to assume the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and a material conflict of interest is likely to
      exist if the same counsel were to represent such Indemnified Party and the
      Indemnifying Party, in which case, if such Indemnified Party notifies the
      Indemnifying Party in writing that it elects to employ separate counsel at
      the
      expense of the Indemnifying Party, the Indemnifying Party shall not have the
      right to assume the defense thereof and the reasonable fees and expenses of
      no
      more than one separate counsel shall be at the expense of the Indemnifying
      Party. The Indemnifying Party shall not be liable for any settlement of any
      such
      Proceeding effected without its written consent, which consent shall not be
      unreasonably withheld or delayed. No Indemnifying Party shall, without the
      prior
      written consent of the Indemnified Party, effect any settlement of any pending
      Proceeding in respect of which any Indemnified Party is a party, unless such
      settlement includes an unconditional release of such Indemnified Party from
      all
      liability on claims that are the subject matter of such Proceeding.



    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party owing under this Section 5 (including reasonable fees and
      expenses to the extent incurred in connection with investigating or preparing
      to
      defend such Proceeding in a manner not inconsistent with this Section) shall
      be
      paid to the Indemnified Party.

     

    (d) Contribution.
      If the
      indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
      Party or insufficient to hold an Indemnified Party harmless for any Losses,
      then
      each Indemnifying Party shall contribute to the amount paid or payable by such
      Indemnified Party, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue statement of a
      material fact or omission of a material fact, has been taken or made by, or
      relates to information supplied by, such Indemnifying Party or Indemnified
      Party, and the parties’ relative intent, knowledge, access to information and
      opportunity to correct or prevent such action, statement or omission. The amount
      paid or payable by a party as a result of any Losses shall be deemed to include,
      subject to the limitations set forth in this Agreement, any reasonable
      attorneys’ or other fees or expenses incurred by such party in connection with
      any Proceeding to the extent such party would have been indemnified for such
      fees or expenses if the indemnification provided for in this Section was
      available to such party in accordance with its terms.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 5(d), no Holder shall be required
      to contribute, in the aggregate, any amount in excess of the amount by which
      the
      proceeds actually received by such Holder from the sale of the Registrable
      Securities subject to the Proceeding exceeds the amount of any damages that
      such
      Holder has otherwise been required to pay by reason of such untrue or alleged
      untrue statement or omission or alleged omission, except in the case of fraud
      by
      such Holder. 

     

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    6. Reports
      Under the Exchange Act.

     

    With
      a
      view to making available to the Holders the benefits of Rule 144 promulgated
      under the Securities Act or any other similar rule or regulation of the
      Commission that may at any time permit the Holders to sell securities of the
      Company to the public without registration (“Rule
      144”),
      the
      Company agrees to, so long as any Holder owns any Shares :

     

    (a) make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144;

     

    (b) file
      with
      the Commission in a timely manner all reports and other documents required
      of
      the Company under the Securities Act and the Exchange Act so long as the Company
      remains subject to such requirements and the filing of such reports and other
      documents is required for the applicable provisions of Rule 144;
      and

     

    (c) furnish
      to each Holder so long as such Holder owns Registrable Securities, promptly
      upon
      request, (i) a written statement by the Company, if true, that it has complied
      with the reporting requirements of Rule 144, the Securities Act and the Exchange
      Act, (ii) a copy of the most recent annual or quarterly report of the Company
      and such other reports and documents so filed by the Company, if such reports
      are not available on the SEC’s EDGAR filing system and (iii) such other
      information as may be reasonably requested to permit the Holders to sell such
      securities pursuant to Rule 144 without registration.

     

    7. Miscellaneous.

     

    (a) Other
      Registration Rights.
      Except
      for any registration statements filed or to be filed in respect of the holders
      of registration rights as set forth in Schedule 3.2(v) of the Disclosure
      Schedules, the Company agrees and covenants that it will not register the shares
      of any other holder of its securities prior to registering the Shares until
      after such time that all Registrable Shares are registered pursuant to one
      or
      more Registration Statements and the prospectuses forming a portion of such
      Registration Statements is available for the resale of all Registrable Shares.
      The Company and its security holders (other than the Holders in such capacity
      pursuant hereto) designated by the Company may include securities of the Company
      in the Registration Statement in addition to the Registrable Securities;
      provided, however, Company agrees to limit the inclusion of, or otherwise
      exclude, such securities in the Registration Statement to the extent necessary
      in order to satisfy its obligations pursuant to Section 2 above or to the extent
      necessary to register of all Registrable Securities as promptly as
      possible.

     

    (b) Compliance.
      Each
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable or an exemption therefrom
      to it
      in connection with sales of Registrable Securities pursuant to a Registration
      Statement.


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    (c) Discontinued
      Disposition.
      Each
      Holder agrees by its acquisition of Registrable Securities that, upon receipt
      of
      a notice from the Company of the occurrence of any event of the kind described
      in Section 3(d), such Holder will forthwith discontinue disposition of such
      Registrable Securities under a Registration Statement until it is advised in
      writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus (as it may have been
      supplemented or amended) may be resumed. The Company will use its best efforts
      to ensure that the use of the Prospectus may be resumed as promptly as
      possible.

     

    (d) Amendments
      and Waivers.
      No
      provision of this Agreement may be amended or waived except in a written
      instrument signed by the Company and the Holders holding not less than two
      thirds of the Registrable Securities; provided,
      however,
      that if
      any amendment or waiver operates in a manner that treats any Holder differently
      from the other Holders, the consent of such Holder shall also be required for
      such amendment or waiver. No waiver of any default with respect to any
      provision, condition or requirement of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of any party to exercise any right hereunder in any manner
      impair the exercise of any such right.

     

    (e) Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be delivered as set forth in the Purchase
      Agreement.

     

    (f) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. The Company may not assign its rights or obligations hereunder without
      the prior written consent of each Holder. The rights under this Agreement shall
      be automatically assignable by any Holder to any transferee of such Holder’s
      Registrable Securities if: (i) such Holder agrees in writing with the transferee
      or assignee to assign such rights and a copy of such agreement is furnished
      to
      the Company promptly after such assignment; (ii) the Company is, promptly after
      such transfer or assignment, furnished with written notice of (a) the name
      and
      address of such transferee or assignee and (b) the securities with respect
      to
      which such registration rights are being transferred or assigned; (iii)
      immediately following such transfer or assignment the further disposition of
      such securities by the transferee or assignee is restricted under the Securities
      Act and applicable state securities laws; (iv) at or before the time the Company
      receives the written notice contemplated by clause (ii) of this sentence the
      transferee or assignee agrees in writing with the Company to be bound by all
      of
      the provisions contained herein; and (v) such transfer shall have been made
      in
      accordance with the applicable requirements of the Purchase
      Agreement.

     

    (g) No
      Inconsistent Agreements.
      Neither
      the Company nor any of its Subsidiaries has entered, as of the date hereof,
      nor
      shall the Company or any of its Subsidiaries, on or after the date of this
      Agreement, enter into any agreement with respect to its securities, that would
      have the effect of impairing the rights granted to the Holders in this Agreement
      or otherwise conflicts with the provisions hereof.


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    (h) Execution
      and Counterparts.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof.

     

    (i) Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof. Each of the parties hereto irrevocably submits to the exclusive
      jurisdiction of the courts of the State of New York located in New York County
      and the United States District Court for the Southern District of New York
      for
      the purpose of any suit, action, proceeding or judgment relating to or arising
      out of this Agreement and the transactions contemplated hereby. Service of
      process in connection with any such suit, action or proceeding may be served
      on
      each party hereto anywhere in the world by the same methods as are specified
      for
      the giving of notices under this Agreement. Each of the parties hereto
      irrevocably consents to the jurisdiction of any such court in any such suit,
      action or proceeding and to the laying of venue in such court. Each party hereto
      irrevocably waives any objection to the laying of venue of any such suit, action
      or proceeding brought in such courts and irrevocably waives any claim that
      any
      such suit, action or proceeding brought in any such court has been brought
      in an
      inconvenient forum. EACH
      OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
      LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
      CONSULTED SPECIFICALLY AS TO THIS WAIVER.

     

    (j) Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any other remedies
      provided by law.

     

    (k) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

     

    (l) Headings.
      The
      headings in this Agreement are for convenience only, do not constitute a part
      of
      this Agreement, and shall not be deemed to limit or affect any of the provisions
      hereof.


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    (m) Independent
      Nature of Purchasers’ Obligations and Rights.
      The
      obligations of each Purchaser under this Agreement are several and not joint
      with the obligations of each other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser under this Agreement. Nothing contained herein or in any Transaction
      Document, and no action taken by any Purchaser pursuant thereto, shall be deemed
      to constitute the Purchasers as a partnership, an association, a joint venture
      or any other kind of entity, or create a presumption that the Purchasers are
      in
      any way acting in concert or as a group with respect to such obligations or
      the
      transactions contemplated by this Agreement or any other Transaction Document.
      Each Purchaser acknowledges that no other Purchaser will be acting as agent
      of
      such Purchaser in enforcing its rights under this Agreement. Each Purchaser
      shall be entitled to independently protect and enforce its rights, including
      without limitation the rights arising out of this Agreement, and it shall not
      be
      necessary for any other Purchaser to be joined as an additional party in any
      proceeding for such purpose.

     

    (n) Limitation
      of Liability. Notwithstanding anything herein to the contrary, the Company
      acknowledges and agrees that the liability of a Purchaser arising directly
      or
      indirectly, under any Transaction Document of any and every nature whatsoever
      shall be satisfied solely out of the assets of such Purchaser, and that no
      trustee, officer, other investment vehicle or any other Affiliate of such
      Purchaser or any investor, shareholder or holder of shares of beneficial
      interest of such a Purchaser shall be personally liable for any liabilities
      of
      such Purchaser .

     

    [Signature
      Page Follows]


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

     

    
      	
              HARBIN
                ELECTRIC, INC.

            
	 	 
	
              By:

            	            
              
	 	
              Name:
                Tianfu Yang

            
	 	
              Title:
                Chief Executive Officer

            


    


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

     

    
      	
              PURCHASER

            
	 
	               
              
	
              Name
                of Purchaser

            
	 
	                 
              
	
              Signature
                of Purchaser or by Authorized Person executing for
                Purchaser

            
	 	 
	
              Printed Name: 

            	                     
              
	
              Title:

            	                    
              
	
              Its:

            	                               
              
	 	
              (Printed
                Name of Authorized Person and Title
                for Person executing for
                Purchaser)

            


    


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    ANNEX
      A

     

    Plan
      of Distribution

     

    The
      selling stockholders may, from time to time, sell any or all of their shares
      of
      common stock on any stock exchange, market or trading facility on which the
      shares are traded or in private transactions. These sales may be at fixed
      prices, at prevailing market prices at the time of the sale, at varying prices
      determined at the time of sale, or at negotiated prices. The selling
      stockholders may use any one or more of the following methods when selling
      shares:

     

    
      	 	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            


    

     

    
      	 	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            


    

     

    
      	 	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            


    

     

    
      	 	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            


    

     

    
      	 	
              ·

            	
              privately
                negotiated transactions;

            


    

     

    
      	 	
              ·

            	
              short
                sales;

            


    

     

    
      	 	
              ·

            	
              broker-dealers
                may agree with the selling stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            


    

     

    
      	 	
              ·

            	
              a
                combination of any such methods of sale;
                and

            


    

     

    
      	 	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            


    

     

    The
      selling stockholders may also sell shares under Rule 144 under the Securities
      Act, if available, rather than under this prospectus.

     

    The
      selling stockholders may also engage in puts and calls and other transactions
      in
      our securities or derivatives of our securities and may sell or deliver shares
      in connection with these trades.

     

    Broker-dealers
      engaged by the selling stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the selling stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated. The
      selling stockholders do not expect these commissions and discounts to exceed
      what is customary in the types of transactions involved. Any profits on the
      resale of shares of common stock by a broker-dealer acting as principal might
      be
      deemed to be underwriting discounts or commissions under the Securities Act.
      Discounts, concessions, commissions and similar selling expenses, if any,
      attributable to the sale of shares will be borne by a selling stockholder.
      The
      selling stockholders may agree to indemnify any agent, dealer or broker-dealer
      that participates in transactions involving sales of the shares if liabilities
      are imposed on that person under the Securities Act. In connection with sales
      of
      the shares of common stock or otherwise, the selling stockholders may enter
      into
      hedging transactions with broker-dealers, which may in turn engage in short
      sales of the shares of common stock in the course of hedging in positions they
      assume. The selling stockholders may also sell shares of common stock short
      and
      deliver shares of common stock covered by this prospectus to close out short
      positions and to return borrowed shares in connection with such short sales.
      The
      selling stockholders may also loan or pledge shares of common stock to
      broker-dealers that in turn may sell such shares.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    The
      selling stockholders may from time to time pledge or grant a security interest
      in some or all of the shares of common stock owned by them and, if they default
      in the performance of their secured obligations, the pledgees or secured parties
      may offer and sell the shares of common stock from time to time under this
      prospectus after we have filed a supplement to this prospectus under Rule
      424(b)(3) or other applicable provision of the Securities Act of 1933 amending
      the list of selling stockholders to include the pledgee, transferee or other
      successors in interest as selling stockholders under this
      prospectus.

     

    The
      selling stockholders also may transfer the shares of common stock in other
      circumstances, in which case the transferees, pledgees or other successors
      in
      interest will be the selling beneficial owners for purposes of this prospectus
      and may sell the shares of common stock from time to time under this prospectus
      after we have filed a supplement to this prospectus under Rule 424(b)(3) or
      other applicable provision of the Securities Act of 1933 amending the list
      of
      selling stockholders to include the pledgee, transferee or other successors
      in
      interest as selling stockholders under this prospectus.

     

    The
      selling stockholders and any broker-dealers or agents that are involved in
      selling the shares of common stock may be deemed to be “underwriters” within the
      meaning of the Securities Act in connection with such sales. In such event,
      any
      commissions received by such broker-dealers or agents and any profit on the
      resale of the shares of common stock purchased by them may be deemed to be
      underwriting commissions or discounts under the Securities Act.

     

    We
      are
      required to pay all fees and expenses incident to the registration of the shares
      of common stock. We have agreed to indemnify the selling stockholders against
      certain claims, damages and liabilities, including liabilities under the
      Securities Act.

     

    The
      selling stockholders have advised us that they have not entered into any
      agreements, understandings or arrangements with any underwriters or
      broker-dealers regarding the sale of their shares of common stock, nor is there
      an underwriter or coordinating broker acting in connection with a proposed
      sale
      of shares of common stock by any selling stockholder. If we are notified by
      any
      selling stockholder that any material arrangement has been entered into with
      a
      broker-dealer for the sale of shares of common stock, if required, we will
      file
      a supplement to this prospectus. If the selling stockholders use this prospectus
      for any sale of the shares of common stock, they will be subject to the
      prospectus delivery requirements of the Securities Act.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    Under
      the
      securities laws of some states, the shares of common stock may be sold in such
      states only through registered or licensed brokers or dealers. In addition,
      in
      some states the shares of common stock may not be sold unless such shares have
      been registered or qualified for sale in such state or an exemption from
      registration or qualification is available and is complied with.

     

    There
      can
      be no assurance that any selling stockholder will sell any or all of the shares
      of common stock registered pursuant to the shelf registration statement, of
      which this prospectus forms a part.

     

    The
      selling stockholders and any other person participating in such distribution
      will be subject to applicable provisions of the Securities Exchange Act of
      1934,
      as amended, and the rules and regulations thereunder, including, without
      limitation, Regulation M of the Exchange Act, which may limit the timing of
      purchases and sales of any of the shares of common stock by the selling
      stockholders and any other participating person. Regulation M may also restrict
      the ability of any person engaged in the distribution of the shares of common
      stock to engage in market-making activities with respect to the shares of common
      stock. All of the foregoing may affect the marketability of the shares of common
      stock and the ability of any person or entity to engage in market-making
      activities with respect to the shares of common stock.

     

    Once
      sold
      under the shelf registration statement, of which this prospectus forms a part,
      the shares of common stock will be freely tradable in the hands of persons
      other
      than our affiliates.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    ANNEX
      B

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock, par value $0.00001 per share
      (the
“Common
      Stock”),
      of
      Harbin Electric, Inc., a Nevada corporation (the “Company”),
      (the
“Registrable
      Securities”)
      understands that the Company has filed or intends to file with the Securities
      and Exchange Commission (the “Commission”)
      a
      registration statement on Form S-3 (the “Registration
      Statement”)
      for
      the registration and resale under Rule 415 of the Securities Act of 1933, as
      amended (the “Securities
      Act”),
      of
      the Registrable Securities, in accordance with the terms of the Registration
      Rights Agreement, dated as of June 24, 2008 (the “Registration
      Rights Agreement”),
      among
      the Company and the Holders named therein. A copy of the Registration Rights
      Agreement is available from the Company upon request at the address set forth
      below. All capitalized terms not otherwise defined herein shall have the
      meanings ascribed thereto in the Registration Rights Agreement.

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus. Accordingly, holders and
      beneficial owners of Registrable Securities are advised to consult their own
      securities law counsel regarding the consequences of being named or not being
      named as a selling securityholder in the Registration Statement and the related
      prospectus.

     

    NOTICE

     

    The
      undersigned
      beneficial owner (the “Selling
      Securityholder”)
      of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it and listed below in Item 3 (unless otherwise specified under such Item
      3)
      in the Registration Statement.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    1. Name.

     

    
      	
            	(a)	
              Full
                Legal Name of Selling
                Securityholder

            


    

     

    
      	                                              
              


    

     

    
      	 	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities Listed in Item 3 below are
                held:

            


    

     

    
      	                                           
              
	 


    

     

    
      	 	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by the
                questionnaire):

            


    

     

    
      	                                                   
              
	 


    

     

    
      	
              2.

            	
              Address
                for Notices to Selling
                Securityholder:

            


      	 	 


    

    
      	                                                       
              
	 
	                                   
              
	 
	                                      
              


    

    

      
        	
                Telephone:

              	                                                       
                
	
                Fax:

              	                                   
                              
                
	
                Contact Person:

              	                               
                       



      

    

     

    
      	
              3.

            	
              Beneficial
                Ownership of Registrable
                Securities:

            


    

     

    
      	
            	(a)	
              Type
                and Number of Registrable Securities beneficially
                owned:

            


    

    

      
        	                                               
                
	 
	                                             
                
	 
	                                                    
                


      

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	
              4.

            	
              Broker-Dealer
                Status:

            


    

     

    
      	 	
              (a)

            	
              Are
                you a broker-dealer?

            


    

     

    Yes
o   No
o

     

    
      	 	
              (b)

            	
              If
                “yes” to Section 4(a), did you receive your Registrable Securities as
                compensation for investment banking services to the
                Company.

            


    

     

    Yes
o   No
o

     

    
      	 	
              Note:

            	
              If
                no, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            


    

     

    
      	 	
              (c)

            	
              Are
                you an affiliate of a
                broker-dealer?

            


    

     

    Yes
o   No
o

     

    
      	 	
              (d)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                bought
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            


    

     

    Yes
o   No
o

     

    
      	 	
              Note:

            	
              If
                no, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            


    

     

    
      	
              5.

            	
              Beneficial
                Ownership of Other Securities of the Company Owned by the Selling
                Securityholder.

            


    

     

    Except
      as set forth below in this Item 5, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the Registrable
      Securities listed above in Item 3.

     

    
      	 	
              (a)

            	
              Type
                and Amount of Other Securities beneficially owned by the Selling
                Securityholder:

            


    

     

    
      	                                              
              
	 
	                                                
              


    


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	
              6.

            	
              Relationships
                with the Company:

            


    

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    State
      any
      exceptions here:

     

    
      	                                             
              
	 
	                                                   
              


    

     

    
      	
              7.

            	
              Relationships
                with the Company’s Independent
                Accountant:

            


    

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company’s independent accountants, Moore
      Stephens Wurth Frazer and Torbet, LLP (or its predecessors or affiliates) during
      the past three years.

     

    State
      any
      exceptions here:

     

    
      	                                                
              
	 
	                                                            
              


    

     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 7 and the inclusion of such
      information in the Registration Statement and the related prospectus and any
      amendments or supplements thereto. The undersigned understands that such
      information will be relied upon by the Company in connection with the
      preparation or amendment of the Registration Statement and the related
      prospectus.


    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    
      	
              Dated:

            	
              Beneficial Owner:

            	                  
              
	 	 	 
	 	
              By:

            	                    
              
	 	
              Name:

            	                       
              
	 	
              Title:

            	                         
              


    

    


    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

    


    Lili
      Taheri, Esq.

    Loeb
      & Loeb LLP

    345
      Park
      Avenue

    New
      York,
      NY 10154

    


    Fax:
      (212) 407-4990


    
      
        
        

      

      
        26