Document:

PURCHASE
        AGREEMENT

       

      THIS
        PURCHASE AGREEMENT (“Agreement”)
        is
        made as of the 24th June, 2008 by and among Harbin Electric, Inc., a Nevada
        corporation (the “Company”),
        and
        the Investors set forth on the signature pages affixed hereto (each an
“Investor”
and
        collectively the “Investors”).

       

      Recitals

       

      A. The
        Company and the Investors are executing and delivering this Agreement in
        reliance upon the exemption from securities registration afforded by the
        provisions of Regulation D (“Regulation
        D”),
        as
        promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
        under
        the Securities Act of 1933, as amended; and

       

      B. The
        Investors wish to purchase from the Company, and the Company wishes to sell
        and
        issue to the Investors, upon the terms and conditions stated in this Agreement
        (the “Private
        Placement”),
        an
        aggregate of up to 3.5 million shares of the Company’s Common Stock, par value
        $0.00001 per share; and

       

      C. Contemporaneous
        with the closing of the Private Placement, the parties hereto will execute
        and
        deliver a Registration Rights Agreement, in the form attached hereto as Exhibit
        A (the “Registration
        Rights Agreement”),
        pursuant to which the Company will agree to provide certain registration
        rights
        under the Securities Act of 1933, as amended, and the rules and regulations
        promulgated thereunder, and applicable state securities laws.

       

      Agreement

       

      In
        consideration of the mutual promises made herein and for other good and valuable
        consideration, the receipt and sufficiency of which are hereby acknowledged,
        the
        parties hereto agree as follows:

       

      1.1 Definitions.
        In
        addition to those terms defined above and elsewhere in this Agreement, for
        the
        purposes of this Agreement, the following terms shall have the meanings set
        forth below:

       

      “Affiliate”
means,
        with respect to any Person, any other Person which directly or indirectly
        through one or more intermediaries Controls, is controlled by, or is under
        common control with, such Person.

       

      “Agreement”
has
        the
        meaning set forth in the Preamble.

       

      “Business
        Day”
means
        a
        day, other than a Saturday or Sunday, on which banks in New York City are
        open
        for the general transaction of business.

       

      “Closing”
has
        the
        meaning set forth in Section 2.1.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Closing
        Date”
has
        the
        meaning set forth in Section 3.1.

       

      “Common
        Stock”
means
        the common stock, par value $0.00001 per share, of the Company, and any
        securities into which the Common Stock may be reclassified.

       

      “Common
        Stock Equivalents”
means
        any securities of the Company or the Subsidiaries which would entitle the
        holder
        thereof to acquire at any time Common Stock, including without limitation,
        any
        debt, preferred stock, rights, options, warrants or other instrument that
        is at
        any time convertible into or exchangeable for, or otherwise entitles the
        holder
        thereof to receive, Common Stock.

       

      “Company”
has
        the
        meaning set forth in the Preamble.

       

      “Company’s
        Knowledge”
means
        the actual knowledge of the executive officers (as defined in Rule 405 under
        the
        1933 Act) of the Company, after due inquiry.

       

      “Confidential
        Information”
means
        trade secrets, confidential information and know-how (including but not limited
        to ideas, formulae, compositions, processes, procedures and techniques, research
        and development information, computer program code, performance specifications,
        support documentation, drawings, specifications, designs, business and marketing
        plans, and customer and supplier lists and related information).

       

      “Control”
        (including the terms “controlling”, “controlled by” or “under common control
        with”) means the possession, direct or indirect, of the power to direct or cause
        the direction of the management and policies of a Person, whether through
        the
        ownership of voting securities, by contract or otherwise.

       

      “Disclosure
        Schedules”
has
        the
        meaning set forth in Section 4.

       

      “Environmental
        Laws”
has
        the
        meaning set forth in Section 4.17.

       

      “Evaluation
        Date”
has
        the
        meaning set forth in Section 4.10.

       

      “Intellectual
        Property”
means
        all of the following: (i) patents, patent applications, patent disclosures
        and
        inventions (whether or not patentable and whether or not reduced to practice);
        (ii) trademarks, service marks, trade dress, trade names, corporate names,
        logos, slogans and Internet domain names, together with all goodwill associated
        with each of the foregoing; (iii) copyrights and copyrightable works; (iv)
        registrations, applications and renewals for any of the foregoing; and (v)
        proprietary computer software (including but not limited to data, data bases
        and
        documentation).

       

      “Indemnified
        Person”
has
        the
        meaning set forth in Section 8.3.

       

      “Investor”
and
        “Investors”
have
        the meaning set forth in the Preamble.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “Investment
        Representations”
has
        the
        meaning set forth in Section 6.2(a).

       

      “Losses”
has
        the
        meaning set forth in Section 8.2.

       

      “Material
        Adverse Effect”
means
        a
        material adverse effect on (i) the assets, liabilities, results of operations,
        condition (financial or otherwise), or business of the Company and its
        Subsidiaries taken as a whole, or (ii) the ability of the Company to perform
        its
        obligations under the Transaction Documents.

       

      “Note
        Purchase Agreement”
means
        the Purchase Agreement dated August 29, 2006, among the Note Purchasers and
        the
        Company in respect of Guaranteed Senior Secured Floating Rate Notes due 2012
        of
        the Company and Warrants to Purchase 2,718,138 Shares of Common Stock of
        the
        Company and Guaranteed Senior Secured Floating Rate Notes due 2010 of the
        Company and Warrants to Purchase 769,230 Shares of Common Stock of the
        Company.

       

      “Note
        Purchasers”
means
        Citadel Equity Fund Ltd and Merrill Lynch International.

       

      “Person”
means
        an individual, corporation, partnership, limited liability company, trust,
        business trust, association, joint stock company, joint venture, sole
        proprietorship, unincorporated organization, governmental authority or any
        other
        form of entity not specifically listed herein.

       

      “Placement
        Agent”
means
        each of William Blair & Co. LLC and ROTH Capital Partners, LLC.

       

      “Private
        Placement”
has
        the
        meaning set forth in Recital B.

       

      “Prohibited
        Transactions”
has
        the
        meaning set forth in Section 5.11.

       

      “Purchase
        Price”
has
        the
        meaning set forth in Section 2.2.

       

      “Registration
        Rights Agreement”
has
        the
        meaning set forth in Recital C.

       

      “Regulation
        D”
has
        the
        meaning set forth in Recital A.

       

      “Required
        Investors”
means
        Investors agreeing hereunder to purchase a majority of the Shares.

       

      “SEC”
has
        the
        meaning set forth in Recital A.

       

      “SEC
        Filings”
has
        the
        meaning set forth in Section 4.6

       

      “SEC
        Reports”
means
        all reports required to be filed by the Company under the 1933 Act and the
        1934
        Act since January 1, 2005.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      “Shares”
means
        the shares of Common Stock being purchased by the Investors
        hereunder.

       

      “Subsidiary”
of
        any
        Person means any “subsidiary” as defined in Rule 1-02(x) of Regulation S-X
        promulgated by the SEC under the 1934 Act of such Person.

       

      “Trading
        Affiliates”
has
        the
        meaning set forth in Section 5.11.

       

      “Transaction
        Documents”
means
        this Agreement and the Registration Rights Agreement.

       

      “10-K”
has
        the
        meaning set forth in Section 4.6.

       

      “1933
        Act”
means
        the Securities Act of 1933, as amended, or any successor statute, and the
        rules
        and regulations promulgated thereunder.

       

      “1934
        Act”
means
        the Securities Exchange Act of 1934, as amended, or any successor statute,
        and
        the rules and regulations promulgated thereunder.

       

      2. Purchase
        and Sale of the Shares.
        

       

      2.1 Subject
        to the terms and conditions of this Agreement, on the Closing Date, each
        of the
        Investors shall severally, and not jointly, purchase, and the Company shall
        sell
        and issue to the Investors, the Shares in the respective amounts set forth
        opposite the Investors’ names on the signature pages attached hereto in exchange
        for the Purchase Price as specified in Section 2.2 below (the “Closing”).

       

      2.2 Purchase
        Price.
        The
        purchase price for the Shares to be purchased by each Investor at the Closing
        shall be the amounts set forth opposite the Investors’ names on the signature
        pages attached hereto (the “Purchase
        Price”)
        which
        shall be equal to the amount of $14.13 per Share.

       

      3. Closing.

       

      3.1 Closing
        Date.
        The
        Closing shall occur on the Closing Date at the offices of Loeb & Loeb LLP.
        The date and time of the Closing (the “Closing
        Date”)
        shall
        be 4:30 p.m., New York City time, on the date hereof (or such other date
        and
        time as is mutually agreed to by the Company and each Investor). 

       

      3.2 Form
        of Payment.
        On the
        Closing Date, (i) each Investor shall pay its respective Purchase Price to
        the Company for the Shares to be issued and sold to such Investor at the
        Closing, by wire transfer of immediately available funds in accordance with
        the
        Company’s written wire instructions, and (ii) the Company shall deliver to
        each Investor, at the address set forth on the signature page attached hereto
        by
        such Investor, one or more stock certificates, free and clear of all restrictive
        and other legends (except as expressly provided in Section 5.7 hereof),
        evidencing the number of Shares such Investor is purchasing as is set forth
        opposite such Investor’s name on the signature pages attached hereto, duly
        executed on behalf of the Company and registered in the name of such Investor.
        

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      4. Representations
        and Warranties of the Company.
        The
        Company hereby represents and warrants to the Investors that, except as set
        forth in the schedules delivered herewith (collectively, the “Disclosure
        Schedules”):

       

      4.1 Organization,
        Good Standing and Qualification.
        Each of
        the Company and its Subsidiaries is a corporation duly organized, validly
        existing and in good standing under the laws of the jurisdiction of its
        incorporation and has all requisite corporate power and authority to carry
        on
        its business as now conducted and to own its properties. Each of the Company
        and
        its Subsidiaries is duly qualified to do business as a foreign corporation
        and
        is in good standing in each jurisdiction in which the conduct of its business
        or
        its ownership or leasing of property makes such qualification or leasing
        necessary unless the failure to so qualify has not and could not reasonably
        be
        expected to have a Material Adverse Effect. The Company’s Subsidiaries are
        reflected on Schedule
        4.1
        hereto.

       

      4.2 Authorization.
        The
        Company has full power and authority and has taken all requisite action on
        the
        part of the Company, its officers, directors and stockholders necessary for
        (i)
        the authorization, execution and delivery of the Transaction Documents, (ii)
        authorization of the performance of all obligations of the Company hereunder
        or
        thereunder, and (iii) the authorization, issuance (or reservation for issuance)
        and delivery of the Shares. The Transaction Documents constitute the legal,
        valid and binding obligations of the Company, enforceable against the Company
        in
        accordance with their terms, subject to bankruptcy, insolvency, fraudulent
        transfer, reorganization, moratorium and similar laws of general applicability,
        relating to or affecting creditors’ rights generally or by other equitable
        principles of general application.

       

      4.3 Capitalization.
        Schedule
        4.3
        sets
        forth as of the date of this Agreement (a) the authorized capital stock of
        the
        Company and each Subsidiary; (b) the number of shares of capital stock of
        the
        company and each Subsidiary issued and outstanding; (c) the number of shares
        of
        capital stock issuable pursuant to the Company’s or any Subsidiary’s stock
        plans; and (d) the number of shares of capital stock issuable and reserved
        for
        issuance pursuant to securities exercisable for, or convertible into or
        exchangeable for any shares of capital stock of the Company or any Subsidiary.
        All of the issued and outstanding shares of the Company’s capital stock have
        been duly authorized and validly issued and are fully paid, nonassessable
        and
        free of pre-emptive rights and were issued in full compliance with applicable
        state and federal securities law and any rights of third parties. Except
        as
        described on Schedule
        4.3,
        all of
        the issued and outstanding shares of capital stock of each Subsidiary have
        been
        duly authorized and validly issued and are fully paid, nonassessable and
        free of
        pre-emptive rights, were issued in full compliance with applicable state
        and
        federal securities law and any rights of third parties and are owned by the
        Company, beneficially and of record, subject to no lien, encumbrance or other
        adverse claim. Except as described on Schedule
        4.3
        or in
        the SEC Reports, no Person is entitled to pre-emptive or similar statutory
        or
        contractual rights with respect to any securities of the Company or any
        Subsidiary. Except as described on Schedule
        4.3
        or in
        the SEC Reports, there are no outstanding warrants, options, convertible
        securities or other rights, agreements or arrangements of any character under
        which the Company or any of its Subsidiaries is or may be obligated to issue
        any
        equity securities of any kind and except as contemplated by this Agreement,
        neither the Company nor any of its Subsidiaries is currently in negotiations
        for
        the issuance of any equity securities of any kind. Except as described on
        Schedule
        4.3
        or in
        the SEC Reports and except for the Registration Rights Agreement, there are
        no
        voting agreements, buy-sell agreements, option or right of first purchase
        agreements or other similar agreements of any kind among the Company and
        any of
        the securityholders of the Company relating to the securities of the Company
        held by them. Except as described on Schedule
        4.3
        or in
        the SEC Reports, no Person has the right to require the Company to register
        any
        securities of the Company under the 1933 Act, whether on a demand basis or
        in
        connection with the registration of securities of the Company for its own
        account or for the account of any other Person. Except as described on
Schedule
        4.3
        or in
        the SEC Reports, all of the issued and outstanding shares of capital stock
        or
        other equity ownership interests of each Subsidiary are owned by the Company,
        directly or indirectly, free and clear of any material liens, pledges, charges
        and security interests and similar encumbrances. The Common Stock is registered
        pursuant to Section 12(b) of the Securities Exchange Act of 1934 (“Exchange
        Act”), as amended, and the Company has taken no action designed to, or which
        to
        its knowledge is likely to have the effect of, terminating the registration
        of
        the Common Stock under the Exchange Act, nor has the Company received any
        notification that the SEC is contemplating terminating such registration.
        The
        Company has not, in the 12 months preceding the date hereof, received notice
        from any stock exchange or market on which its Common Stock is traded to
        the
        effect that the Company is not in compliance with the requirements of such
        exchange or market. The Company is, and expects to be, in compliance with
        all of
        the listing requirements of such exchange or market in the foreseeable future
        

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      Except
        as
        described on Schedule
        4.3,
        the
        issuance and sale of the Shares hereunder will not obligate the Company to
        issue
        shares of Common Stock or other securities to any other Person (other than
        the
        Investors) and will not result in the adjustment of the exercise, conversion,
        exchange or reset price of any outstanding security.

       

      Except
        as
        described on Schedule
        4.3,
        the
        Company does not have outstanding stockholder purchase rights or “poison pill”
or any similar arrangement in effect giving any Person the right to purchase
        any
        equity interest in the Company upon the occurrence of certain
        events.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      4.4 Valid
        Issuance.
        The
        Shares have been duly and validly authorized and, when issued and paid for
        pursuant to this Agreement, will be validly issued, fully paid and
        nonassessable, and shall be free and clear of all encumbrances and restrictions
        (other than those created by the Investors), except for restrictions on transfer
        set forth in the Transaction Documents or imposed by applicable securities
        laws.

       

      4.5 Consents.
        Except
        as disclosed on Schedule 4.5, the execution, delivery and performance by
        the
        Company of the Transaction Documents and the offer, issuance and sale of
        the
        Shares require no consent of, action by or in respect of, or filing with,
        any
        Person, governmental body, agency, or official other than filings that have
        been
        made pursuant to applicable state securities laws and post-sale filings pursuant
        to applicable state and federal securities laws which the Company undertakes
        to
        file within the applicable time periods. Subject to the accuracy of the
        representations and warranties of each Investor set forth in Section 5 hereof,
        the Company has taken all action necessary to exempt (i) the issuance and
        sale
        of the Shares and (ii) the other transactions contemplated by the Transaction
        Documents from the provisions of any shareholder rights plan or other “poison
        pill” arrangement, any anti-takeover, business combination or control share law
        or statute binding on the Company or to which the Company or any of its assets
        and properties may be subject and any provision of the Company’s Articles of
        Incorporation or By-laws that is or could reasonably be expected to become
        applicable to the Investors as a result of the transactions contemplated
        hereby,
        including without limitation, the issuance of the Share and the ownership,
        disposition or voting of the Shares by the Investors or the exercise of any
        right granted to the Investors pursuant to this Agreement or the other
        Transaction Documents.

       

      4.6 Delivery
        of SEC Filings; Business.
        The
        Company has made available to the Investors through the EDGAR system, true
        and
        complete copies of the Company’s most recent Annual Report on Form 10-KSB for
        the fiscal year ended December 31, 2007 (the “10-K”),
        and
        all other reports filed by the Company pursuant to the 1934 Act since the
        filing
        of the 10-K and prior to the date hereof (collectively, the “SEC
        Filings”).
        The
        SEC Filings are the only filings required of the Company pursuant to the
        1934
        Act for such period. The Company and its Subsidiaries are engaged in all
        material respects only in the business described in the SEC Filings and the
        SEC
        Filings contain a complete and accurate description in all material respects
        of
        the business of the Company and its Subsidiaries, taken as a whole.

       

      4.7 Use
        of
        Proceeds.
        The net
        proceeds of the sale of the Shares hereunder shall be used by the Company
        to
        repay debt, for working capital and general corporate purposes, including
        to
        finance potential acquisitions.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      4.8 No
        Material Adverse Change.
        Since
        December 31, 2007, except as identified and described in the SEC Filings
        or as
        described on Schedule
        4.8,
        there
        has not been:

       

      (i) any
        change in the consolidated assets, liabilities, financial condition or operating
        results of the Company from that reflected in the financial statements included
        in the 10-K, except for changes in the ordinary course of business which
        have
        not and could not reasonably be expected to have a Material Adverse Effect,
        individually or in the aggregate;

       

      (ii) any
        declaration or payment of any dividend, or any authorization or payment of
        any
        distribution, on any of the capital stock of the Company, or any redemption
        or
        repurchase of any securities of the Company or any agreement to do any of
        the
        foregoing ;

       

      (iii) any
        material damage, destruction or loss, whether or not covered by insurance
        to any
        assets or properties of the Company or its Subsidiaries;

       

      (iv) any
        waiver, not in the ordinary course of business, by the Company or any Subsidiary
        of a material right or of a material debt owed to it;

       

      (v) any
        satisfaction or discharge of any lien, claim or encumbrance or payment of
        any
        obligation by the Company or a Subsidiary, except in the ordinary course
        of
        business and which is not material to the assets, properties, financial
        condition, operating results or business of the Company and its Subsidiaries
        taken as a whole (as such business is presently conducted and as it is proposed
        to be conducted);

       

      (vi) any
        change or amendment to the Company’s Articles of Incorporation or by-laws, or
        material change to any material contract or arrangement by which the Company
        or
        any Subsidiary is bound or to which any of their respective assets or properties
        is subject, except for changes in the ordinary course of business which have
        not
        and could not reasonably be expected to have a Material Adverse Effect,
        individually or in the aggregate;

       

      (vii) any
        material labor difficulties or labor union organizing activities with respect
        to
        employees of the Company or any Subsidiary;

       

      (viii) any
        material transaction entered into by the Company or a Subsidiary other than
        in
        the ordinary course of business;

       

      (ix) the
        loss
        of the services of any key employee, or material change in the composition
        or
        duties of the senior management of the Company or any Subsidiary; 

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (x) the
        loss
        or threatened loss of any customer which has had or could reasonably be expected
        to have a Material Adverse Effect; or

       

      (xi) any
        change to the Company’s current method of accounting.

       

      4.9 SEC
        Filings.

       

      (a) At
        the
        time of filing thereof, the SEC Filings complied as to form in all material
        respects with the requirements of the 1934 Act and did not contain any untrue
        statement of a material fact or omit to state any material fact necessary
        in
        order to make the statements made therein, in the light of the circumstances
        under which they were made, not misleading.

       

      (b) Each
        registration statement and any amendment thereto filed by the Company since
        January 1, 2006 pursuant to the 1933 Act and the rules and regulations
        thereunder, as of the date such registration statement or amendment became
        effective, complied as to form in all material respects with the 1933 Act
        and
        did not contain any untrue statement of a material fact or omit to state
        any
        material fact required to be stated therein or necessary in order to make
        the
        statements made therein not misleading; and each prospectus filed pursuant
        to
        Rule 424(b) under the 1933 Act, as of its issue date and as of the closing
        of
        any sale of securities pursuant thereto did not contain any untrue statement
        of
        a material fact or omit to state any material fact required to be stated
        therein
        or necessary in order to make the statements made therein, in the light of
        the
        circumstances under which they were made, not misleading.

       

      4.10 Internal
        Controls.
        The
        Company and the Subsidiaries maintain a system of internal accounting controls
        sufficient to provide reasonable assurance that (i) transactions are executed
        in
        accordance with management’s general or specific authorizations, (ii)
        transactions are recorded as necessary to permit preparation of financial
        statements in conformity with generally accepted accounting principles and
        to
        maintain asset accountability, (iii) access to assets is permitted only in
        accordance with management’s general or specific authorization, and (iv) the
        recorded accountability for assets is compared with the existing assets at
        reasonable intervals and appropriate action is taken with respect to any
        differences. The Company has established disclosure controls and procedures
        (as
        defined in 1934 Act Rules 13a-14 and 15d-14) for the Company and designed
        such
        disclosure controls and procedures to ensure that material information relating
        to the Company, including the Subsidiaries, is made known to the certifying
        officers by others within those entities, particularly during the period
        in
        which the Company’s most recently filed period report under the 1934 Act, as the
        case may be, is being prepared. The Company’s certifying officers have evaluated
        the effectiveness of the Company’s controls and procedures as of a date within
        90 days prior to the filing date of the most recently filed periodic report
        under the 1934 Act (such date, the “Evaluation
        Date”).
        The
        Company presented in its most recently filed periodic report under the 1934
        Act
        the conclusions of the certifying officers about the effectiveness of the
        disclosure controls and procedures based on their evaluations as of the
        Evaluation Date. Since the Evaluation Date, there have been no significant
        changes in the Company’s internal controls (as such term is defined in Item
        307(b) of Regulation S-K) or, to the Company’s Knowledge, in other factors that
        could significantly affect the Company’s internal controls. The Company
        maintains and will continue to maintain a standard system of accounting
        established and administered in accordance with generally accepted accounting
        principles in the United States (“GAAP”) and the applicable requirements of the
        1934 Act. During the past 12 months prior to the date hereof, the Company
        has
        not received any notice of correspondence from any accountant and/or auditor
        relating to any potential material weakness in any part of the system of
        internal accounting controls of the Company.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      4.11 No
        Conflict, Breach, Violation or Default.
        The
        execution, delivery and performance of the Transaction Documents by the Company
        and the issuance and sale of the Shares will not conflict with or result
        in a
        breach or violation of any of the terms and provisions of, or constitute
        a
        default under (i) the Company’s Articles of Incorporation or the Company’s
        Bylaws, both as in effect on the date hereof (true and complete copies of
        which
        have been made available to the Investors through the EDGAR system), or (ii)(a)
        any statute, rule, regulation or order of any governmental agency or body
        or any
        court, domestic or foreign, having jurisdiction over the Company, any Subsidiary
        or any of their respective material assets or properties, or (b) any agreement
        or instrument to which the Company or any Subsidiary is a party or by which
        the
        Company or a Subsidiary is bound or to which any of their respective assets
        or
        properties is subject, except, in the case of clauses (a) and (b) only, for
        such
        conflicts, breaches or violations as have not and could not reasonably be
        expected to result in a Material Adverse Effect, individually or in the
        aggregate.

       

      4.12 Tax
        Matters.
        The
        Company and each Subsidiary has timely prepared and filed all tax returns
        required to have been filed by the Company or such Subsidiary with all
        appropriate governmental agencies and timely paid all taxes shown thereon
        or
        otherwise owed by it and all such returns are true, complete and correct
        in all
        material respects . The charges, accruals and reserves on the books of the
        Company in respect of taxes for all fiscal periods are adequate in all material
        respects, and there are no material unpaid assessments against the Company
        or
        any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of
        any additional taxes, penalties or interest for any fiscal period or audits
        by
        any federal, state or local taxing authority except for any assessment which
        is
        not material to the Company and its Subsidiaries, taken as a whole. All taxes
        and other assessments and levies that the Company or any Subsidiary is required
        to withhold or to collect for payment have been duly withheld and collected
        and
        paid to the proper governmental entity or third party when due. There are
        no tax
        liens or claims pending or, to the Company’s Knowledge, threatened against the
        Company or any Subsidiary or any of their respective assets or property.
        Except
        as described on Schedule
        4.12,
        there
        are no outstanding tax sharing agreements or other such arrangements between
        the
        Company and any Subsidiary or other corporation or entity.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      4.13 Title
        to Properties.
        Except
        as disclosed in the SEC Filings or as described on Schedule
        4.13,
        the
        Company and each Subsidiary has good and marketable title to all real properties
        and all other properties and assets owned by it, in each case free from liens,
        encumbrances and defects that would materially affect the value thereof or
        materially interfere with the use made or currently planned to be made thereof
        by them; and except as disclosed in the SEC Filings, the Company and each
        Subsidiary holds any leased real or personal property under valid and
        enforceable leases with no exceptions that would materially interfere with
        the
        use made or currently planned to be made thereof by them.

       

      4.14 Certificates,
        Authorities and Permits.
        The
        Company and each Subsidiary possess adequate certificates, authorities or
        permits issued by appropriate governmental agencies or bodies necessary to
        conduct the business now operated by it except where the failure to so possess
        has not had and could not reasonably be expected to have a Material Adverse
        Effect, individually or in aggregate, and neither the Company nor any Subsidiary
        has received any notice of proceedings relating to the revocation or
        modification of any such certificate, authority or permit that, if determined
        adversely to the Company or such Subsidiary, could reasonably be expected
        to
        have a Material Adverse Effect, individually or in the aggregate.

       

      4.15 No
        Labor Disputes.
        No
        material labor dispute with the employees of the Company or any Subsidiary
        exists or, to the Company’s Knowledge, is imminent. There is no employment
        related charge, complaint, grievance, investigation, unfair labor practice
        claim
        or inquiry of any kind, pending against the Company that could, individually
        or
        in the aggregate, have a Material Adverse Effect. 

       

      4.16 Intellectual
        Property.
        The
        Company or its Subsidiaries own or have valid rights to use all patent,
        copyright, trade secret, trademark or other proprietary rights that are used
        in
        the business of the Company and are material to the Company and its Subsidiaries
        taken as a whole (collectively, “Intellectual
        Property”).
        Schedule
        4.16
        sets for
        a list of all of the Intellectual Property used by the Company and its
        Subsidiaries. 

       

      All
        material licenses or other material agreements under which (i) the Company
        or any Subsidiary is granted rights in Intellectual Property and (ii) the
        Company or any Subsidiary has granted rights to others in Intellectual Property
        owned or licensed by the Company or any Subsidiary, are in full force and
        effect
        and there is no material default by the Company or any Subsidiary
        thereto.

       

      No
        proceedings have been instituted or are pending which challenge in a material
        manner the rights of the Company or any Subsidiary in respect to the Company
        or
        any Subsidiary’s right to the use of the Intellectual Property. The Company and
        each Subsidiary has the right to use, free and clear of material claims or
        rights of other persons, all of its customer lists, designs, computer software,
        systems, data compilations, and other information that are required for its
        products or its business as presently conducted.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      To
        the
        Company’s Knowledge, the present business, activities and products of the
        Company and each Subsidiary do not infringe any intellectual property of
        any
        other person, except where such infringement would not have a Material Adverse
        Effect. No material proceeding charging the Company or any Subsidiary with
        infringement of any adversely held Intellectual Property has been filed.
        The
        Company has not received notice of or is not otherwise aware of any infringement
        of or conflict with asserted rights of others with respect to any Intellectual
        Property or of any facts or circumstances which would render any Intellectual
        Property invalid or inadequate to protect the interests of the Company or
        any
        Subsidiary, and which infringement or conflict (if the subject of any
        unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
        or
        in the aggregate, would result in a Material Adverse Effect. To the Company’s
        knowledge, there exists no third party unexpired patent or patent application
        which includes claims that would be infringed by, or otherwise have a Material
        Adverse Effect on the Company. To the Company’s Knowledge, the Company is not
        making unauthorized use of any material confidential information or trade
        secrets of any third party. To the Company’s Knowledge, the activities of the
        Company or any Subsidiary or any employee on behalf of the Company or any
        Subsidiary do not violate any material agreements or arrangements known to
        the
        Company which any such employees have with other persons, if any.

       

      4.17 Environmental
        Matters.
        Neither
        the Company nor any Subsidiary is in violation of any statute, rule, regulation,
        decision or order of any governmental agency or body or any court, domestic
        or
        foreign, relating to the use, disposal or release of hazardous or toxic
        substances or relating to the protection or restoration of the environment
        or
        human exposure to hazardous or toxic substances (collectively, “Environmental
        Laws”),
        owns
        or operates any real property contaminated with any substance that is subject
        to
        any Environmental Laws, is liable for any off-site disposal or contamination
        pursuant to any Environmental Laws, and is subject to any claim relating
        to any
        Environmental Laws, which violation, contamination, liability or claim has
        had
        or could reasonably be expected to have a Material Adverse Effect, individually
        or in the aggregate; and there is no pending or, to the Company’s Knowledge,
        threatened investigation that might lead to such a claim.

       

      4.18 Litigation.
        Except
        as described on Schedule
        4.18
        or in
        the SEC Reports, there are no pending actions, suits or proceedings against
        or
        affecting the Company, its Subsidiaries or any of its or their properties;
        and
        to the Company’s Knowledge, no such actions, suits or proceedings have been
        threatened in writing.

       

      4.19 Financial
        Statements.
        The
        Company is in material compliance with all provisions of the Sarbanes-Oxley
        Act
        of 2002 which are applicable to it as of the Closing Date. The Company maintains
        disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
        under the Exchange Act) that are effective in ensuring that information required
        to be disclosed by the Company in the reports that it files or submits under
        the
        Exchange Act is recorded, processed, summarized and reported, within the
        time
        periods specified in the rules and forms of the SEC, including, without
        limitation, controls and procedures designed in to ensure that information
        required to be disclosed by the Company in the reports that it files or submits
        under the Exchange Act is accumulated and communicated to the Company's
        management, including its principal executive officer or officers and its
        principal financial officer or officers, as appropriate, to allow timely
        decisions regarding required disclosure. The financial statements included
        in
        each SEC Filing present fairly, in all material respects, the consolidated
        financial position of the Company as of the dates shown and its consolidated
        results of operations and cash flows for the periods shown, and such financial
        statements have been prepared in conformity with United States generally
        accepted accounting principles applied on a consistent basis (except as may
        be
        disclosed therein or in the notes thereto, and, in the case of quarterly
        financial statements, as permitted by Form 10-Q under the 1934 Act). Except
        as
        set forth in the financial statements of the Company included in the SEC
        Filings
        filed prior to the date hereof or as described on Schedule
        4.19,
        neither
        the Company nor any of its Subsidiaries has incurred any liabilities, contingent
        or otherwise, except those incurred in the ordinary course of business,
        consistent (as to amount and nature) with past practices since the date of
        such
        financial statements, none of which, individually or in the aggregate, have
        had
        or could reasonably be expected to have a Material Adverse Effect. 

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      4.20 Insurance
        Coverage.
        The
        Company and each Subsidiary maintains in full force and effect insurance
        coverage that is customary for comparably situated companies for the business
        being conducted and properties owned or leased by the Company and each
        Subsidiary, and the Company reasonably believes such insurance coverage to
        be
        adequate against all liabilities, claims and risks against which it is customary
        for comparably situated companies to insure. There are not any claims that
        any
        insurance company is currently denying or defending under a reservation of
        rights clause. 

       

      4.21 Brokers
        and Finders.
        No
        Person will have, as a result of the transactions contemplated by the
        Transaction Documents, any valid right, interest or claim against or upon
        the
        Company, any Subsidiary or an Investor for any commission, fee or other
        compensation pursuant to any agreement, arrangement or understanding entered
        into by or on behalf of the Company, other than the Placement Agents.
        Notwithstanding the foregoing, no Investor shall have any obligation with
        respect to any fees or with respect to any claims made by or on behalf of
        other
        Persons for fees of a type contemplated in this Section that may be due in
        connection with the transactions contemplated by this Agreement or any agreement
        relating thereto as a result of any action taken by the Company. 

       

      4.22 No
        General Solicitation.
        Neither
        the Company nor, to the Company's Knowledge, any Person acting on its behalf
        has
        conducted any general solicitation or general advertising (as those terms
        are
        used in Regulation D) in connection with the offer or sale of any of the
        Shares.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      4.23 No
        Integrated Offering.
        Neither
        the Company nor any of its Affiliates, nor any Person acting on its or their
        behalf has, directly or indirectly, made any offers or sales of any Company
        security or solicited any offers to buy any security, under circumstances
        that
        would adversely affect reliance by the Company on Section 4(2) for the exemption
        from registration for the transactions contemplated hereby or would require
        registration of the Shares under the 1933 Act or that would require shareholder
        approval of any securities exchange on which the Common Stock of the Company
        is
        listed or designated.

       

      4.24 Private
        Placement.
        Subject
        to the accuracy of the representations and warranties of the Investors contained
        in Section 5, the offer and sale of the Shares to the Investors as contemplated
        hereby is exempt from the registration requirements of the 1933
        Act.

       

      4.25 Questionable
        Payments.
        Neither
        the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of
        their respective current or former stockholders, directors, officers, employees,
        agents or other Persons acting on behalf of the Company or any Subsidiary,
        has
        on behalf of the Company or any Subsidiary or in connection with their
        respective businesses: (a) used any corporate funds for unlawful contributions,
        gifts, entertainment or other unlawful expenses relating to political activity;
        (b) made any direct or indirect unlawful payments to any governmental officials
        or employees from corporate funds; (c) established or maintained any unlawful
        or
        unrecorded fund of corporate monies or other assets; (d) made any false or
        fictitious entries on the books and records of the Company or any Subsidiary;
        or
        (e) made any unlawful bribe, rebate, payoff, influence payment, kickback
        or
        other unlawful payment of any nature.

       

      4.26 Transactions
        with Affiliates.
        Except
        as disclosed in the SEC Filings, none of the officers or directors of the
        Company and, to the Company’s Knowledge, none of the employees of the Company is
        presently a party to any transaction with the Company or any Subsidiary (other
        than as holders of stock options and/or warrants, and for services as employees,
        officers and directors), including any contract, agreement or other arrangement
        providing for the furnishing of services to or by, providing for rental of
        real
        or personal property to or from, or otherwise requiring payments to or from
        any
        officer, director or such employee or, to the Company’s Knowledge, any entity in
        which any officer, director, or any such employee has a substantial interest
        or
        is an officer, director, trustee or partner.

       

      4.27 Material,
        Non-Public Information.
        The
        Company confirms that neither it nor, to the Company’s Knowledge, any of its
        officers or directors nor any other Person acting on its or their behalf
        has
        provided, and it has not authorized any placement agent to provide any Investor
        or its respective agents or counsel, and it will not provide, without the
        prior
        written consent of any Investor, with any information that it believes
        constitutes or could reasonably be expected to constitute material, non-public
        information except insofar as the existence, provisions and terms of the
        Transaction Documents and the proposed transactions hereunder may constitute
        such information, all of which will be disclosed by the Company in the press
        release and Current Report on Form 8-K as contemplated by Section 9.7 hereof.
        The Company understands and confirms that the Investors will rely on the
        foregoing representations in effecting transactions in securities of the
        Company. No event or circumstance has occurred or information exists with
        respect to the Company or any of its Subsidiaries or its or their business,
        properties, operations or financial conditions, which, under applicable law,
        rule or regulation, requires public disclosure or announcement by the Company
        but which has not been so publicly announced or disclosed (assuming for this
        purpose that the Company’s reports filed under the Exchange Act are being
        incorporated into an effective registration statement filed by the Company
        under
        the Securities Act), except for the announcement of this Agreement and related
        transactions.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      4.28 Manipulation
        of Price.
        The
        Company has not, and to the Company’s Knowledge no one acting on its behalf has
        taken, directly or indirectly, any action designed to cause or to result
        in the
        stabilization or manipulation of the price of any security of the Company
        to
        facilitate the sale or resale of any of the Shares. 

       

      4.29 Acknowledgment
        Regarding Investors’ Purchase of Securities.
        The
        Company acknowledges and agrees that each of the Investors is acting solely
        in
        the capacity of an arm’s length purchaser with respect to the Transaction
        Documents and the transactions contemplated hereby and thereby. The Company
        further acknowledges that no Investor is acting as a financial advisor or
        fiduciary of the Company (or in any similar capacity) with respect to the
        Transaction Documents and the transactions contemplated thereby and any advice
        given by any Investor or any of their respective representatives or agents
        in
        connection with the Transaction Documents and the transactions contemplated
        thereby is merely incidental to the Investors’ purchase of the Shares.

       

      4.30 Investment
        Company.
        The
        Company is not, and as a result of the offer and sale of the Shares contemplated
        herein will not be, required to register as an “investment company” under, and
        as such term is defined in, the U.S. Investment Company Act of 1940, as amended,
        in connection with or as a result of the offer and sale of the Shares.

       

      4.31 Off
        Balance Sheet Arrangements.
        There
        is no transaction, arrangement, or other relationship between the Company
        and an
        unconsolidated or other off balance sheet entity that is required to be
        disclosed by the Company in its Exchange Act filings and is not so disclosed
        or
        that otherwise would be reasonably likely to have a Material Adverse Effect.
        

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      5. Representations
        and Warranties of the Investors.
        Each of
        the Investors hereby severally, and not jointly, represents and warrants
        to the
        Company that:

       

      5.1 Organization
        and Existence.
        The
        Investor is a validly existing corporation, limited partnership or limited
        liability company and has all requisite corporate, partnership or limited
        liability company power and authority to invest in the Shares pursuant to
        this
        Agreement. Such Investor (if not an individual) has not been formed for the
        specific purpose of acquiring the Shares. Such Investor has provided the
        Company
        with its jurisdiction of organization and its principal place of
        business.

       

      5.2 Authorization;
        Non-contravention.
        The
        execution, delivery and performance by the Investor of the Transaction Documents
        to which such Investor is a party have been duly authorized and will each
        constitute the valid and legally binding obligation of the Investor, enforceable
        against the Investor in accordance with their respective terms, subject to
        bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
        similar laws of general applicability, relating to or affecting creditors’
rights generally. The execution, delivery and performance of this Agreement
        by
        such Investor, and the consummation by such Investor of the transactions
        contemplated hereby, do not (i) contravene or conflict with the organizational
        documents of such Investor; nor (ii) constitute a violation of any provision
        of
        any federal, state, local or foreign law, rule, regulation, order or decree
        applicable to such Investor.

       

      5.3 Purchase
        Entirely for Own Account.
        The
        Shares to be received by the Investor hereunder will be acquired for the
        Investor’s own account, not as nominee or agent, and not with a view to the
        resale or distribution of any part thereof in violation of the 1933 Act,
        and the
        Investor has no present intention of selling, granting any participation
        in, or
        otherwise distributing the same in violation of the 1933 Act. Such Investor
        does
        not have any agreement or understanding, whether or not legally binding,
        direct
        or indirect, with any other Person to sell or otherwise distribute the Shares.
        The Investor is not a broker dealer registered with the SEC under the 1934
        or an
        entity engaged in a business that would require it to be so
        registered.

       

      5.4 Investment
        Experience.
        The
        Investor acknowledges that it can bear the economic risk and complete loss
        of
        its investment in the Shares and has such knowledge and experience in financial
        or business matters that it is capable of evaluating the merits and risks
        of the
        investment contemplated hereby. Such Investor understands that the purchase
        of
        the Shares involves substantial risk.

       

      5.5 Disclosure
        of Information.
        The
        Investor has had an opportunity to receive all additional information related
        to
        the Company requested by it and to ask questions of and receive answers from
        the
        Company regarding the terms and conditions of the issuance and sale of the
        Shares and the business, properties, prospects and financial condition of
        the
        Company and to obtain any additional information requested and has received
        and
        considered all information such Investor deems relevant to make an informed
        decision to purchase the Shares. The
        Investor acknowledges that it has access to the SEC Reports, including the
        SEC
        Filings, through the EDGAR system.
        Neither
        such inquiries nor any other due diligence investigation conducted by the
        Investor shall modify, amend or affect the Investor’s right to rely on the
        Company’s representations and warranties contained in this
        Agreement.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      5.6 Restricted
        Securities.
        The
        Investor understands that the Shares are characterized as “restricted
        securities” under the U.S. federal securities laws inasmuch as they are being
        acquired from the Company in a transaction not involving a public offering
        and
        that under such laws and applicable regulations such securities may be resold
        without registration under the 1933 Act only in certain limited
        circumstances.

       

      5.7 Legends.
        It is
        understood that, except as provided below, certificates evidencing the Shares
        may bear the following or any similar legend:

       

      (a) “The
        securities represented hereby have not been registered with the Securities
        and
        Exchange Commission or the securities commission of any state in reliance
        upon
        an exemption from registration under the Securities Act of 1933, as amended
        (the
“Securities Act”) and accordingly may not be transferred unless (i) such
        securities have been registered for sale pursuant to the Securities Act,
        (ii)
        such securities may be sold pursuant to Rule 144 without regard to the volume
        limitations contained in Rule 144(e), or (iii) the Company has received an
        opinion of counsel reasonably satisfactory to it that such transfer may lawfully
        be made without registration under the Securities Act or qualification under
        applicable state securities laws.”

       

      (b) If
        required by the authorities of any state in connection with the issuance
        of sale
        of the Shares, the legend required by such state authority.

       

      5.8 Accredited
        Investor.
        The
        Investor is an accredited investor as defined in Rule 501(a) of Regulation
        D, as
        amended, under the 1933 Act.

       

      5.9 No
        General Solicitation.
        The
        Investor did not learn of the investment in the Shares by means of any form
        of
        general or public solicitation or general advertising, or publicly disseminated
        advertisements or sales literature, including (i) any advertisement, article,
        notice or other communication published in any newspaper, magazine, or similar
        media, or broadcast over television or radio, or (ii) any seminar or meeting
        to
        which such Investor was invited by any of the foregoing means of
        communications.

       

      5.10 Brokers
        and Finders.
        No
        Person will have, as a result of the transactions contemplated by the
        Transaction Documents, any valid right, interest or claim against or upon
        the
        Company, any Subsidiary or an Investor for any commission, fee or other
        compensation pursuant to any agreement, arrangement or understanding entered
        into by or on behalf of the Investor.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

    

    5.11 Prohibited
      Transactions.
      Since
      the time the Investor learned of the Private Placement, neither the Investor
      nor
      any Affiliate of such Investor that (i) has or had knowledge of the transactions
      contemplated hereby, (ii) has or shares discretion relating to such Investor’s
      investments or trading or information concerning such Investor’s investments,
      including in respect of the Securities, or (iii) is subject to such Investor’s
      review or input concerning such Affiliate’s investments or trading
      (collectively, “Trading
      Affiliates”),
      directly or indirectly, effected or agreed to effect any short sale, whether
      or
      not against the box, established any “put equivalent position” (as defined in
      Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted
      any
      other right (including, without limitation, any put or call option) with respect
      to the Common Stock or with respect to any security that includes, relates
      to or
      derived any significant part of its value from the Common Stock or otherwise
      sought to hedge its position in the Shares (each, a “Prohibited
      Transaction”).
      Such
      Investor shall not, and shall cause its Trading Affiliates not to, engage,
      directly or indirectly, in a Prohibited Transaction during the period from
      the
      date hereof until such time as (i) the transactions contemplated by this
      Agreement are first publicly announced or (ii) this Agreement is terminated
      pursuant to Section
      6.3
      hereof.
      Such Investor acknowledges that the representations and warranties contained
      in
      this Section 5.11 are being made for the benefit of all Investors as well as
      the
      Company and that each of the other Investors shall have an independent right
      to
      assert any claims against any Investor arising out of any breach or violation
      of
      the provisions of this Section 5.11.

     

    6. Conditions
      to Closing.

     

    6.1 Conditions
      to the Investors’ Obligations.
      The
      obligation of the Investors to purchase the Shares at the Closing is subject
      to
      the fulfillment to the Investors’ satisfaction, on or prior to the Closing Date,
      of the following conditions, any of which may be waived by an Investor (as
      to
      itself only):

     

    (a) The
      representations and warranties made by the Company in Section 4 hereof qualified
      as to materiality shall be true and correct at all times prior to and on the
      Closing Date, except to the extent any such representation or warranty expressly
      speaks as of an earlier date, in which case such representation or warranty
      shall be true and correct as of such earlier date, and, the representations
      and
      warranties made by the Company in Section 4 hereof not qualified as to
      materiality shall be true and correct in all material respects at all times
      prior to and on the Closing Date, except to the extent any such representation
      or warranty expressly speaks as of an earlier date, in which case such
      representation or warranty shall be true and correct in all material respects
      as
      of such earlier date. The Company shall have performed in all material respects
      all obligations and conditions herein required to be performed or observed
      by it
      on or prior to the Closing Date.

     

    (b) The
      Company shall have obtained any and all consents, permits, approvals,
      registrations and waivers necessary for consummation of the purchase and sale
      of
      the Shares and the consummation of the other transactions contemplated by the
      Transaction Documents, all of which shall be in full force and
      effect.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (c) The
      Company shall have executed and delivered the Registration Rights
      Agreement.

     

    (d) No
      judgment, writ, order, injunction, award or decree of or by any court, or judge,
      justice or magistrate, including any bankruptcy court or judge, or any order
      of
      or by any governmental authority, shall have been issued, and no action or
      proceeding shall have been instituted by any governmental authority, enjoining
      or preventing the consummation of the transactions contemplated hereby or in
      the
      other Transaction Documents.

     

    (e) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Chief Executive Officer or its Chief Financial Officer, dated as of the
      Closing Date, certifying to the fulfillment of the conditions specified in
      subsections (a), (b) and (d) of this Section 6.1.

     

    (f) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Secretary, dated as of the Closing Date, certifying the resolutions adopted
      by the Board of Directors of the Company approving the transactions contemplated
      by this Agreement and the other Transaction Documents and the issuance of the
      Shares, certifying the current versions of the Articles of Incorporation and
      Bylaws of the Company and certifying as to the signatures and authority of
      persons signing the Transaction Documents and related documents on behalf of
      the
      Company.

     

    (g) The
      Placement Agents shall have received a comfort letter from Moore Stephens Wurth
      Frazer and Torbet LLP, the independent auditors of the Company, dated as of
      the
      Closing Date, in form and substance reasonably acceptable to the Placement
      Agents and addressing financial statements included in SEC Filings since January
      1, 2008.

     

    (h) The
      Investors shall have received opinions from Loeb & Loeb LLP, the Company’s
      securities counsel, Lionel Sawyer & Collins, the Company’s Nevada counsel
      and Jingtian & Gongcheng, the Company’s PRC counsel, each dated as of the
      Closing Date, in the form set forth in Exhibit A hereto.

     

    (i) No
      stop
      order or suspension of trading shall have been imposed by the SEC or any other
      governmental or regulatory body with respect to public trading in the Common
      Stock.

     

    (j) No
      statute, rule, regulation, executive order, decree, ruling, injunction, action,
      proceeding or interpretation shall have been enacted, entered, promulgated,
      endorsed or adopted by any court or governmental authority of competent
      jurisdiction or any self-regulatory organization or trading market or the staff
      of any of the foregoing, having authority over the matters contemplated hereby
      which questions the validity of, or challenges or prohibits the consummation
      of,
      any of the transactions contemplated by this Agreement.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    6.2 Conditions
      to Obligations of the Company.
      The
      Company’s obligation to sell and issue the Shares at the Closing is subject to
      the fulfillment to the satisfaction of the Company as of the Closing Date of
      the
      following conditions, any of which may be waived by the Company:

     

    (a) The
      representations and warranties made by the Investors in Section 5 hereof, other
      than the representations and warranties contained in Sections 5.3, 5.4, 5.5,
      5.6, 5.7, 5.8 and 5.9 (the “Investment
      Representations”),
      shall
      be true and correct in all material respects when made, and shall be true and
      correct in all material respects on the Closing Date with the same force and
      effect as if they had been made on and as of said date. The Investment
      Representations shall be true and correct in all respects when made, and shall
      be true and correct in all respects on the Closing Date with the same force
      and
      effect as if they had been made on and as of said date. The Investors shall
      have
      performed in all material respects all obligations and conditions herein
      required to be performed or observed by them on or prior to the Closing
      Date.

     

    (b) The
      Investors shall have executed and delivered the Registration Rights
      Agreement.

     

    (c) The
      Investors shall have delivered the Purchase Price to the Company.

     

    (d) No
      statute, rule, regulation, executive order, decree, ruling, injunction, action,
      proceeding or interpretation shall have been enacted, entered, promulgated,
      endorsed or adopted by any court or governmental authority of competent
      jurisdiction or any self-regulatory organization or trading market or the staff
      of any of the foregoing, having authority over the matters contemplated hereby
      which questions the validity of, or challenges or prohibits the consummation
      of,
      any of the transactions contemplated by this Agreement.

     

    (e) Either
      (i) the closing price as quoted on the Nasdaq market on the Closing Date shall
      be no greater than $15.70 or (ii) the Company shall have received a written
      waiver or written confirmation from the Note Purchasers in respect of the Right
      of First Offer arising under the Note Purchase Agreement.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    6.3 Termination
      of Obligations to Effect Closing; Effects.

     

    (a) The
      obligations of the Company, on the one hand, and the Investors, on the other
      hand, to effect the Closing shall terminate as follows:

     

    (i) Upon
      the
      mutual written consent of the Company and the Investors;

     

    (ii) By
      the
      Company if any of the conditions set forth in Section 6.2 shall have become
      incapable of fulfillment, and shall not have been waived by the
      Company;

     

    (iii) By
      an
      Investor (with respect to itself only) if any of the conditions set forth in
      Section 6.1 shall have become incapable of fulfillment, and shall not have
      been
      waived by the Investor; or

     

    (iv) By
      either
      the Company or any Investor (with respect to itself only) if the Closing has
      not
      occurred on or prior to June 30, 2008;

     

    provided,
      however, that, except in the case of clause (i) above, the party seeking to
      terminate its obligation to effect the Closing shall not then be in breach
      of
      any of its representations, warranties, covenants or agreements contained in
      this Agreement or the other Transaction Documents if such breach has resulted
      in
      the circumstances giving rise to such party’s seeking to terminate its
      obligation to effect the Closing.

     

    (b) In
      the
      event of termination by the Company or any Investor of its obligations to effect
      the Closing pursuant to this Section 6.3, written notice thereof shall forthwith
      be given to the other Investors and the other Investors shall have the right
      to
      terminate their obligations to effect the Closing upon written notice to the
      Company and the other Investors. Nothing in this Section 6.3 shall be deemed
      to
      release any party from any liability for any breach by such party of the terms
      and provisions of this Agreement or the other Transaction Documents or to impair
      the right of any party to compel specific performance by any other party of
      its
      obligations under this Agreement or the other Transaction
      Documents.

     

    7. Covenants
      and Agreements of the Company.

     

    7.1 Reports.
      The
      Company will furnish to such Investors and/or their assignees such information
      relating to the Company and its Subsidiaries as from time to time may reasonably
      be requested by such Investors and/or their assignees; provided, however, that
      the Company shall not disclose material nonpublic information to the Investors,
      or to advisors to or representatives of the Investors, unless prior to
      disclosure of such information the Company identifies such information as being
      material nonpublic information and provides the Investors, such advisors and
      representatives with the opportunity to accept or refuse to accept such material
      nonpublic information for review and any Investor wishing to obtain such
      information enters into an appropriate confidentiality agreement with the
      Company with respect thereto.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    7.2 No
      Conflicting Agreements.
      The
      Company will not take any action, enter into any agreement or make any
      commitment that would conflict or interfere in any material respect with the
      Company’s obligations to the Investors under the Transaction
      Documents.

     

    7.3 Compliance
      with Laws.
      The
      Company will comply in all material respects with all applicable laws, rules,
      regulations, orders and decrees of all governmental authorities, except for
      any
      noncompliance that does not have a Material Adverse Effect.

     

    7.4 Listing
      of Shares and Related Matters.
      The
      Company shall list the Shares on any stock exchange or market (other than any
      OTC market) on which its Common Stock is traded within 30 days of the date
      on
      which the initial registration statement to be filed by the Company in
      accordance with the terms of the Registration Rights Agreement has been declared
      effective by the SEC. 

     

    7.5 Termination
      of Covenants.
      The
      provisions of Sections 7.1 through 7.3 shall terminate and be of no further
      force and effect on the date on which the Company’s obligations under the
      Registration Rights Agreement to register or maintain the effectiveness of
      any
      registration covering the Registrable Securities (as such term is defined in
      the
      Registration Rights Agreement) shall terminate.

     

    7.6 Removal
      of Legends.
      Upon
      the earlier of (i) the resale of the Shares pursuant to an effective
      registration statement under the 1933 Act or (ii) the date the Shares may be
      sold pursuant to Rule 144 without regard to the volume limitations contained
      in
      Rule 144(e), the Company shall, upon an Investor’s written request, promptly
      cause certificates evidencing the Investor’s Shares to be replaced with
      certificates which do not bear such restrictive legends. When the Company is
      required to cause unlegended certificates to replace previously issued legended
      certificates, if unlegended certificates are not delivered to an Investor within
      five (5) Business Days of submission by that Investor of legended certificate(s)
      to the Company’s transfer agent together with a representation letter in
      customary form, the Company shall be liable to the Investor for liquidated
      damages in an amount equal to 1% of the aggregate purchase price of the Shares
      evidenced by such certificate(s) for each thirty (30) day period (or
pro
      rata
      for any
      portion thereof) beyond such five (5) Business Day that the unlegended
      certificates have not been so delivered.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    8. Survival
      and Indemnification.

     

    8.1 Survival.
      The
      representations, warranties, covenants and agreements contained in this
      Agreement shall survive the Closing of the transactions contemplated by this
      Agreement for a period of two years after the Closing.

     

    8.2 Indemnification.
      The
      Company agrees to indemnify and hold harmless each Investor and its Affiliates
      and their respective directors, officers, employees and agents from and against
      any and all losses, claims, damages, liabilities and expenses (including without
      limitation reasonable attorney fees and disbursements and other expenses
      incurred in connection with investigating, preparing or defending any action,
      claim or proceeding, pending or threatened and the costs of enforcement thereof)
      (collectively, “Losses”)
      to
      which such Person may become subject as a result of any breach of
      representation, warranty, covenant or agreement made by or to be performed
      on
      the part of the Company under the Transaction Documents, and will reimburse
      any
      such Person for all such amounts as they are incurred by such
      Person.

     

    8.3 Conduct
      of Indemnification Proceedings.
      Promptly after receipt by any Person (the “Indemnified
      Person”)
      of
      notice of any demand, claim or circumstances which would or might give rise
      to a
      claim or the commencement of any action, proceeding or investigation in respect
      of which indemnity may be sought pursuant to Section 8.2, such Indemnified
      Person shall promptly notify the Company in writing and the Company shall assume
      the defense thereof, including the employment of counsel reasonably satisfactory
      to such Indemnified Person, and shall assume the payment of all fees and
      expenses; provided,
      however,
      that
      the failure of any Indemnified Person so to notify the Company shall not relieve
      the Company of its obligations hereunder except to the extent that the Company
      is materially prejudiced by such failure to notify. In any such proceeding,
      any
      Indemnified Person shall have the right to retain its own counsel, but the
      fees
      and expenses of such counsel shall be at the expense of such Indemnified Person
      unless: (i) the Company and the Indemnified Person shall have mutually agreed
      to
      the retention of such counsel; or (ii) in the reasonable judgment of counsel
      to
      such Indemnified Person representation of both parties by the same counsel
      would
      be inappropriate due to actual or potential differing interests between them.
      The Company shall not be liable for any settlement of any proceeding effected
      without its written consent, which consent shall not be unreasonably withheld,
      but if settled with such consent, or if there be a final judgment for the
      plaintiff, the Company shall indemnify and hold harmless such Indemnified Person
      from and against any loss or liability (to the extent stated above) by reason
      of
      such settlement or judgment. Without the prior written consent of the
      Indemnified Person, which consent shall not be unreasonably withheld, the
      Company shall not effect any settlement of any pending or threatened proceeding
      in respect of which any Indemnified Person is or could have been a party and
      indemnity could have been sought hereunder by such Indemnified Party, unless
      such settlement includes an unconditional release of such Indemnified Person
      from all liability arising out of such proceeding.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    9. Miscellaneous.

     

    9.1 Successors
      and Assigns.
      This
      Agreement may not be assigned by any Investor without the prior written consent
      of the Company provided, however, that an Investor may assign its rights and
      delegate its duties hereunder in whole or in part to an Affiliate or to a third
      party acquiring some or all of its Shares in a private transaction without
      the
      prior written consent of the Company or the other Investors; provided, that
      such
      transferee agrees in writing to be bound by the terms, provisions and conditions
      of this Agreement, and such transfer is in compliance with all of the terms
      and
      provisions of this Agreement and permitted by federal and state securities
      laws;
      and, provided, further, that no such assignment or obligation shall affect
      the
      obligations of such Investor hereunder. The provisions of this Agreement shall
      inure to the benefit of and be binding upon the respective permitted successors
      and assigns of the parties. Nothing in this Agreement, express or implied,
      is
      intended to confer upon any party other than the parties hereto or their
      respective successors and assigns any rights, remedies, obligations, or
      liabilities under or by reason of this Agreement, except as expressly provided
      in this Agreement.

     

    9.2 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.

     

    9.3 Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

     

    9.4 Notices.
      Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given as hereinafter
      described (i) if given by personal delivery, then such notice shall be deemed
      given upon such delivery, (ii) if given by telex or telecopier or electronic
      mail, then such notice shall be deemed given upon receipt of confirmation of
      complete transmittal, (iii) if given by mail, then such notice shall be deemed
      given upon the earlier of (A) receipt of such notice by the recipient or (B)
      three days after such notice is deposited in first class mail, postage prepaid,
      and (iv) if given by an internationally recognized overnight air courier, then
      such notice shall be deemed given one business day after delivery to such
      carrier. All notices shall be addressed to the party to be notified at the
      address as follows, or at such other address as such party may designate by
      ten
      days’ advance written notice to the other party:

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    If
      to the
      Company:

     

    Harbin
      Electric, Inc.

    No.
      9, Ha
      Ping Xi Lu, Ha Ping Lu Ji Zhong Qu

    Harbin
      Kai Fa Qu, Harbin, China 150060

    Fax:
      86
      451 8611-6769

    Email:
      cshue@harbinelectric.com

    Attention:
      Christy Shue

    

    with
      a
      copy to:

    

    Loeb
      & Loeb LLP

    345
      Park
      Avenue 

    New
      York,
      New York 10154

    Fax:
      (212) 407-4990

    Email:
      adowd@loeb.com

    Attention:
      Angela M. Dowd, Esq.

    

    If
      to the
      Investors:

     

    to
      the
      addresses set forth on the signature pages hereto.

     

    9.5 Expenses.
      The
      parties hereto shall pay their own costs and expenses in connection
      herewith.

     

    9.6 Amendments
      and Waivers.
      Any
      term of this Agreement may be amended and the observance of any term of this
      Agreement may be waived (either generally or in a particular instance and either
      retroactively or prospectively), only with the written consent of the Company
      and the Required Investors. Any amendment or waiver effected in accordance
      with
      this paragraph shall be binding upon each holder of any Shares purchased under
      this Agreement at the time outstanding, each future holder of all such Shares,
      and the Company.

     

    9.7 Publicity.
      By 8:30
      a.m. (New York City time) on the trading day immediately following the Closing
      Date, the Company shall issue a press release disclosing the consummation of
      the
      transactions contemplated by this Agreement. No later than the third trading
      day
      following the Closing Date, the Company will file a Current Report on Form
      8-K
      attaching the press release described in the foregoing sentence as well as
      copies of the Transaction Documents. In addition, the Company will make such
      other filings and notices in the manner and time required by the SEC.
      Notwithstanding the foregoing, the Company shall not publicly disclose the
      name
      of any Investor, or include the name of any Investor in any filing with the
      SEC
      (other than the Registration Statement and any exhibits to filings made in
      respect of this transaction or in accordance with periodic filing requirements
      under the 1934 Act) or any regulatory agency, without the prior written consent
      of such Investor, except to the extent that the Company reasonably determines
      that such disclosure is required by law or trading market regulations, in which
      case the Company shall provide the Investors with prior notice of such
      disclosure.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    9.8 Severability.
      Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof but shall be interpreted as if it were written so as to be
      enforceable to the maximum extent permitted by applicable law, and any such
      prohibition or unenforceability in any jurisdiction shall not invalidate or
      render unenforceable such provision in any other jurisdiction. To the extent
      permitted by applicable law, the parties hereby waive any provision of law
      which
      renders any provision hereof prohibited or unenforceable in any
      respect.

     

    9.9 Entire
      Agreement.
      This
      Agreement, including the Exhibits and the Disclosure Schedules, and the other
      Transaction Documents constitute the entire agreement among the parties hereof
      with respect to the subject matter hereof and thereof and supersede all prior
      agreements and understandings, both oral and written, between the parties with
      respect to the subject matter hereof and thereof

     

    9.10 Third
      Party Beneficiary.
      Each of
      the Investors and the Company agree that each Placement Agent is an express
      third party beneficiary of the representations, warranties, covenants and
      agreements of the Company and the Investors in this Agreement. Each Placement
      Agent shall be entitled to rely on such representations, warranties, covenants
      and agreements and recover its damages for any breach hereof.

     

    9.11 Further
      Assurances.
      The
      parties shall execute and deliver all such further instruments and documents
      and
      take all such other actions as may reasonably be required to carry out the
      transactions contemplated hereby and to evidence the fulfillment of the
      agreements herein contained.

     

    9.12 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.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    9.13 Independent
      Nature of Investors’ Obligations and Rights.
      The
      obligations of each Investor under any Transaction Document are several and
      not
      joint with the obligations of any other Investor, and no Investor shall be
      responsible in any way for the performance of the obligations of any other
      Investor under any Transaction Document. The decision of each Investor to
      purchase Shares pursuant to the Transaction Documents has been made by such
      Investor independently of any other Investor. Nothing contained herein or in
      any
      Transaction Document, and no action taken by any Investor pursuant thereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      Each
      Investor acknowledges that no other Investor has acted as agent for such
      Investor in connection with making its investment hereunder and that no Investor
      will be acting as agent of such Investor in connection with monitoring its
      investment in the Shares or enforcing its rights under the Transaction
      Documents. Each Investor shall be entitled to independently protect and enforce
      its rights, including, without limitation, the rights arising out of this
      Agreement or out of the other Transaction Documents, and it shall not be
      necessary for any other Investor to be joined as an additional party in any
      proceeding for such purpose. The Company acknowledges that each of the Investors
      has been provided with the same Transaction Documents for the purpose of closing
      a transaction with multiple Investors and not because it was required or
      requested to do so by any Investor.

     

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

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement or caused their duly
      authorized officers to execute this Agreement as of the date first above
      written.

     

    
      	
              The
                Company:

            	
              HARBIN
                ELECTRIC, INC.

            
	 	 	 
	 	
              By:

            	 

	 	
              Name:

            	 
	 	
              Title:

            	 

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	
              The
                Investors:

            	
            	[ 	
              ]

            
	 	 	 	 
	 	 	
              By:

            	 

	 	 	
              Name:

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	
              Aggregate
                Purchase Price: $______________

            	 	 	 
	
              Number
                of Shares: _____________________

            	 	 	 
	 	 	 	 
	 	 	 
	 	 	 

	 	 	 

	 	 	
              Fax:
                

            	 

	 	 	
              Email:
                

            	 
	 	 	 	 
	 	 	
              with
                a copy to:

            
	 	 	 
	 	 	 
	 	 	 
	 	 	
              Attn:
                _________________________________________, Esq.

            
	 	 	
              Telephone:

            	 

	 	 	
              Facsimile:

            	 

	 	 	
              Email:

            	 

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
       

      
        	 	
              	[ 	
                ]

              
	 	 	 	 
	 	 	
                By:

              	 

	 	 	
                Name:

              	 
	 	 	
                Title:

              	 
	 	 	 	 
	
                Aggregate
                  Purchase Price: $______________

              	 	 	 
	
                Number
                  of Shares: _____________________

              	 	 	 
	 	 	 	 
	 	 	 
	 	 	 

	 	 	 

	 	 	
                Fax:
                  

              	 

	 	 	
                Email:
                  

              	 
	 	 	 	 
	 	 	
                with
                  a copy to:

              
	 	 	 
	 	 	 
	 	 	 
	 	 	
                
                  Attn:
                    _________________________________________, Esq.

                

              
	 	 	
                Telephone:

              	 

	 	 	
                Facsimile:

              	 

	 	 	
                Email:

              	 

      

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      
         

        
          	 	
                	[ 	
                  ]

                
	 	 	 	 
	 	 	
                  By:

                	 

	 	 	
                  Name:

                	 
	 	 	
                  Title:

                	 
	 	 	 	 
	
                  Aggregate
                    Purchase Price: $______________

                	 	 	 
	
                  Number
                    of Shares: _____________________

                	 	 	 
	 	 	 	 
	 	 	 
	 	 	 

	 	 	 

	 	 	
                  Fax:
                    

                	 

	 	 	
                  Email:
                    

                	 
	 	 	 	 
	 	 	
                  with
                    a copy to:

                
	 	 	 
	 	 	 
	 	 	 
	 	 	
                  
                    Attn:
                      _________________________________________, Esq.

                  

                
	 	 	
                  Telephone:

                	 

	 	 	
                  Facsimile:

                	 

	 	 	
                  Email:

                	 

        

        
          
            
            

          

          
            31

            
              

            

          

          
            
            

          

        

        
           

          
            	 	
                  	[ 	
                    ]

                  
	 	 	 	 
	 	 	
                    By:

                  	 

	 	 	
                    Name:

                  	 
	 	 	
                    Title:

                  	 
	 	 	 	 
	
                    Aggregate
                      Purchase Price: $______________

                  	 	 	 
	
                    Number
                      of Shares: _____________________

                  	 	 	 
	 	 	 	 
	 	 	 
	 	 	 

	 	 	 

	 	 	
                    Fax:
                      

                  	 

	 	 	
                    Email:
                      

                  	 
	 	 	 	 
	 	 	
                    with
                      a copy to:

                  
	 	 	 
	 	 	 
	 	 	 
	 	 	
                    
                      Attn:
                        _________________________________________, Esq.

                    

                  
	 	 	
                    Telephone:

                  	 

	 	 	
                    Facsimile:

                  	 

	 	 	
                    Email:

                  	 

          

          
            
              
              

            

            
              32

              
                

              

            

            
              
              

            

          

           

        

      

    

    Exhibit
      A
– Form of Legal Opinions

    
      
        
        

      

      
        33REGISTRATION
      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).

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “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. 

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (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.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (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.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (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.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (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).

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]