Document:

Exhibit
      10.3

    

    THIS
      SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES
      FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR
      OTHERWISE TRANSFERRED ONLY PURSUANT TO AN EXEMPTION FROM REGISTRATION IN
      ACCORDANCE WITH RULE 144 (IF AVAILABLE) UNDER THE SECURITIES ACT, OR PURSUANT
      TO
      AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE
      IN
      ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
      STATES.

    

    No.
      W-____

    

    Warrant
      to Purchase 375,000 Shares of 

    Common
      Stock (subject to adjustment)

     

    WARRANT
      TO PURCHASE COMMON STOCK

    

    of

    

    MDU
      COMMUNICATIONS INTERNATIONAL, INC.

    

    This
      Warrant (the “Warrant”)
      is
      issued to __________________ or
      his,
      her or its permitted assigns (“Holder”)
      by MDU
      COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation (the “Company”),
      on
      June 30, 2008 (the “Warrant
      Issue Date”)
      for
      agreed upon consideration, receipt of which is hereby acknowledged.

    

    This
      Warrant is one of one or more Warrants of the same form and having the same
      terms as this Warrant entitling the holders initially to purchase up to an
      aggregate of 375,000 shares of Common Stock. In order to induce the Holder
      and
      the other Lenders to enter into that certain Amended and Restated Loan and
      Security Agreement dated as of June 30, 2008 by and among MDU Communications
      (USA) Inc. and the Lenders (including all annexes, exhibits and schedules
      thereto and as from time to time amended, restated, supplemented or otherwise
      modified the “Loan Agreement”). The Holder is entitled to certain benefits as
      set forth therein.

     

    1.  Purchase
      Shares.
      Subject
      to the terms and conditions hereinafter set forth, the Holder is entitled,
      upon
      surrender of this Warrant at the principal office of the Company (or at such
      other place as the Company shall notify the holder hereof in writing), to
      purchase from the Company up to 375,000 shares of common stock, par value $0.001
      per share (“Common
      Stock”),
      of
      the Company (the “ Warrant
      Share”)
      at the
      Exercise Price (defined below), subject to adjustment as provided in Section
      8
      hereof. 

     

    2.  Exercise
      Price.
      The
      purchase price for the Warrant Share shall be $0.60 per Warrant Share, as
      adjusted from time to time pursuant to Section 8 hereof (the “Exercise
      Price”).
      

     

    3.  Exercise
      Period.
      This
      Warrant may be exercised at any time after the date hereof until 5:00 p.m.,
      New
      York City time, June 30, 2013.

     

    4.
       Company's Obligation to Make Payments
      

    

    (a) The
      Company shall not declare, make or pay any dividend or other distribution,
      whether in cash, securities or other property, with respect to its Common Stock
      (a "Distribution") unless it concurrently makes a cash payment to the holder
      of
      this Warrant equal to the product of (1) the amount of cash plus the Fair Value
      of any property or securities distributed with respect to each outstanding
      share
      of Common Stock multiplied by (2) the number of shares of Common Stock then
      issuable upon exercise of this Warrant.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Tag-Along Rights.
      Each
      holder of a Warrant shall have the right to tag along in the sale of any Common
      Stock by the Company, in accordance with the letter agreement addressed to
      each
      holder, and any assignee, transferee or successor, a copy of which is attached
      hereto and made a part hereof.

    

    (c) "Fair
      Value"
      for the
      purposes hereunder means the fair value of the appropriate security, property,
      assets, business or entity (taking into account the value to such business
      or
      entity of any covenant not to compete in favor thereof) as determined by an
      opinion of an independent investment banking firm of national reputation (which
      may be the firm regularly retained by the Company) selected by the Company
      and
      reasonably acceptable to the holder(s) of this Warrant or, (who, if more than
      one, shall agree among themselves by a two-thirds majority). In the case of
      any
      event which gives rise to a requirement to determine "Fair Value" pursuant
      to
      this Warrant, the Company shall be responsible for initiating the process by
      which Fair Value shall be determined as promptly as practicable, but in any
      event within thirty (30) days, following such event. Such investment banking
      firm shall determine the fair value of the security, property, assets, business
      or entity, as the case may be, in question and deliver its opinion in writing
      to
      the Company and to each such holder. The determination so made shall be
      conclusive and binding on the Company and such holders. The fees and expenses
      of
      any such determination made by such investment banking firm shall be borne
      by
      the Company. In determining Fair Value, no discount shall be imposed by reason
      of a minority ownership interest or the illiquidity of the stock interest being
      valued. The Fair Value of the Warrant Shares shall be determined (a) without
      regard to the fact that the Warrant Shares may constitute a minority ownership
      interest in a closely held corporation and (b) without taking into account
      any
      obligation of the Company to repurchase the Warrant or the Warrant Shares
      pursuant to the terms of this Warrant. Notwithstanding the foregoing, if the
      Company shall have effected a public offering of Common Stock and the Common
      Stock is traded on a public market, Fair Value means, with reference to the
      Warrant Shares, the Current Market Price (as defined below) of the Common Stock
      as of any date of determination. 

    

    5.  Method
      of Exercise.
      While
      this Warrant remains outstanding and exercisable in accordance with Section
      3
      above, the Holder may exercise, in whole or in part, the purchase rights
      evidenced hereby. Such exercise shall be effected by:

     

    (a)  the
      surrender of the Warrant, together with a duly executed copy of the form of
      Notice of Exercise attached hereto, to the Secretary of the Company at its
      principal offices set forth on the signature page hereof; and 

    

    (b)  the
      payment in the form of a certified or bank cashier’s check payable to the order
      of the Company in an amount equal to the Exercise Price multiplied by the number
      of Warrant Shares for which this Warrant is being exercised. At the option
      of
      such holder, payment of the Exercise Price may be made by deduction from the
      number of shares delivered upon exercise of the Warrant of a number of shares
      which has an aggregate Current Market Price on the date of exercise equal to
      the
      aggregate Exercise Price for all shares to be purchased pursuant to this
      Warrant. 

    

    (c)
       "Current Market Price"
      as to
      any security on any date specified herein means the average of the daily closing
      prices for the thirty (30) consecutive trading days before such date excluding
      any trades which are not bona fide arm's length transactions. Unless otherwise
      requested by the holder hereof, this Warrant shall be deemed to have been
      exercised and such certificate or certificates shall be deemed to have been
      issued, and the holder or transferee so designated in the Notice of Exercise
      shall be deemed to have become the holder of record of such shares for all
      purposes, as of the close of business on the date on which each of the Notice
      of
      Exercise, payment of the Exercise Price (unless a cashless exercise is being
      effected) and this Warrant are received by the Company.

     

    6.  Certificates
      for Shares.
      Upon
      the exercise of the purchase rights evidenced by this Warrant, one or more
      certificates for the number of Warrant Shares so purchased shall be issued
      as
      soon as practicable thereafter (with appropriate restrictive legends, if
      applicable), and in any event within six (6) business days of the delivery
      of
      the Notice of Exercise.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7.  Issuance
      of Shares.
      The
      Company covenants that the Warrant Shares, when issued pursuant to the exercise
      of this Warrant, will be duly and validly issued, fully paid and nonassessable
      and free from all taxes, liens, and charges with respect to the issuance
      thereof.

     

    8.  Adjustment
      of Exercise Price and Kind and Number of Shares.
      The
      number and kind of securities purchasable upon exercise of this Warrant and
      the
      Exercise Price shall be subject to adjustment from time to time as
      follows:

     

    (a)  Subdivisions,
      Combinations and Other Issuances.
      If the
      Company shall at any time prior to the expiration of this Warrant (i) subdivide
      its Common Stock, by split-up or otherwise, or combine its Common Stock, or
      (ii)
      issue additional shares of its Common Stock or other equity securities as a
      dividend with respect to any shares of its Common Stock; the number of shares
      of
      Common Stock issuable on the exercise of this Warrant shall forthwith be
      proportionately increased in the case of a subdivision (by stock split, stock
      dividend or otherwise), or proportionately decreased in the case of a
      combination. Appropriate adjustments shall also be made to the Exercise Price
      payable per share, but the aggregate Exercise Price payable for the total number
      of Warrant Shares purchasable under this Warrant (as adjusted) shall remain
      the
      same. Any adjustment under this Section 8(a) shall become effective at the
      close
      of business on the date the subdivision or combination becomes effective, or
      as
      of the record date of such dividend, or in the event that no record date is
      fixed, upon the making of such dividend. In the event of a Dilutive Transaction
      (as defined below), the number of Warrant Shares thereafter purchasable upon
      exercise of each Warrant shall be determined by multiplying the number of shares
      of Common Stock theretofore purchasable upon exercise of such Warrant by a
      fraction, the numerator of which is shall be the fully-diluted number of shares
      of Common Stock outstanding immediately after such sale or issuance and the
      denominator of which shall be the fully-diluted number of shares of Common
      Stock
      outstanding immediately prior to such sale or issuance plus the number of shares
      of Common Stock which the aggregate consideration received for such sale or
      issuance would purchase at the greater of (i) the Exercise Price per share
      then
      in effect or (ii) the then Fair Value per share. “Aggregate consideration
      received” shall include the premium or other consideration to be paid upon the
      exercise or conversion of any security convertible into Common Stock.
      "Dilutive
      Transaction"
      shall
      mean any issuance by the Company (exclusive of issuances and transactions with
      current employees) after the Closing Date of shares of Common Stock (or Stock
      Purchase Rights or Convertible Securities that would permit the purchase of
      Common Stock) for a consideration less than the greater of (i) the Exercise
      Price per share then in effect or (ii) the then Fair Value per share. Within
      twenty (20) days after the receipt of such a notice, (i) the Company shall
      issue
      to the holder of this Warrant, for no additional consideration, additional
      warrants to acquire, at an exercise price equal to the proposed sale price
      of
      the shares being issued, a number of shares of Common Stock equal to the number
      of shares then being issued by the Company multiplied by such holder's
      percentage of the then total number of outstanding shares of Common Stock
      represented by the then outstanding Warrant and (ii) the holder of issued
      Warrant Shares shall have the right (but not the obligation) to inform the
      Company in writing that such holder elects to have issued to it, at the price
      equal to the proposed sale price of the other shares then being issued, a number
      of shares of Common Stock equal to the number of other shares then being issued
      multiplied by the percentage of the total number of outstanding shares of Common
      Stock represented by the issued warrant shares then held by the
      holder.

     

    (b)  Reclassification,
      Reorganization and Consolidation.
      In case
      of any reclassification, capital reorganization, or change in the Common Stock
      of the Company (other than as a result of a subdivision, combination, or stock
      dividend provided for in Section 8(a) above), then, as a condition of such
      reclassification, reorganization, or change, lawful provision shall be made,
      and
      duly executed documents evidencing the same from the Company or its successor
      shall be delivered to the Holder, so that the Holder shall have the right at
      any
      time prior to the expiration of this Warrant to purchase, at a total price
      equal
      to that payable upon the exercise of this Warrant (subject to adjustment of
      the
      Exercise Price as provided in Section 8), the kind and amount of shares of
      stock
      and other securities and property receivable in connection with such
      reclassification, reorganization, or change by a holder of the same number
      of
      shares of Common Stock as were purchasable by the Holder immediately prior
      to
      such reclassification, reorganization, or change. In any such case appropriate
      provisions shall be made with respect to the rights and interest of the Holder
      so that the provisions hereof shall thereafter be applicable with respect to
      any
      shares of stock or other securities and property deliverable upon exercise
      hereof, and appropriate adjustments shall be made to the purchase price per
      share payable hereunder, provided the aggregate Exercise Price shall remain
      the
      same.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  Fundamental
      Transactions.
      If, at
      any time while this Warrant is outstanding, (1) the Company effects any merger
      or consolidation of the Company with or into another person or entity, (2)
      the
      Company effects any sale of all or substantially all of its assets in one or
      a
      series of related transactions, (3) any tender offer or exchange offer (whether
      by the Company or another person or entity) is completed pursuant to which
      holders of Common Stock are permitted to tender or exchange their shares for
      other securities, cash or property, or (4) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property (in any such case, a “Fundamental
      Transaction”),
      then
      the Holder shall have the right to purchase and receive upon the basis and
      upon
      the terms and conditions herein specified and in lieu of the Warrant Shares
      immediately theretofore issuable upon exercise of the Warrant, such shares
      of
      stock, securities or assets (including cash) as would have been issuable or
      payable with respect to or in exchange for a number of Warrant Shares equal
      to
      the number of Warrant Shares immediately theretofore issuable upon exercise
      of
      the Warrant, had such Fundamental Transaction not taken place. 

     

    (d)  Notice
      of Adjustment.
      When
      any adjustment is required to be made in the number or kind of shares
      purchasable upon exercise of the Warrant, or in the Exercise Price, the Company
      shall promptly notify the holder of such event and of the number of shares
      of
      Common Stock or other securities or property thereafter purchasable upon
      exercise of this Warrant.

     

    (e)  Issuance
      of New Warrant.
      Upon
      the occurrence of any of the events listed in this Section 8 that results in
      an
      adjustment of the type, number or exercise price of the securities underlying
      this Warrant, the Holder shall have the right to receive a new warrant
      reflecting such adjustment upon the Holder tendering this Warrant in exchange.
      The new warrant shall otherwise have terms identical to this
      Warrant.

     

    9.  Covenants
      and Conditions.
      

     

    (a)  No
      Impairment.
      Pursuant to the terms and conditions of this Warrant, Company shall: (i) reserve
      an appropriate number of shares of Company’s Common Stock to facilitate the
      issuance of shares to Holder pursuant to this Warrant, (ii) not take any action
      that would materially impair Company’s ability to comply with the terms of the
      Warrant, and (iii) provide Holder with at least ten (10) days prior written
      notice of the record date for any proposed dividend or distribution by the
      Company.

      

    (b)  Registration
      Rights Agreement.
      The
      Company and the Holder shall enter into a Registration Rights Agreement (the
      “Registration
      Rights Agreement”)
      simultaneously with the execution of the Warrant on terms mutually agreeable
      to
      both parties.

     

    10.  No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant, but in lieu of such fractional shares the Company
      shall make a cash payment therefor on the basis of the Exercise Price then
      in
      effect, unless such cash payment is less than one dollar ($1.00). 

     

    11.  No
      Stockholder Rights.
      Prior
      to exercise of this Warrant, the Holder shall not be entitled to any rights
      of a
      stockholder with respect to the shares of Common Stock issuable on the exercise
      hereof, including (without limitation) the right to vote such shares of Common
      Stock, receive dividends or other distributions thereon, exercise preemptive
      rights or be notified of stockholder meetings, and such holder shall not be
      entitled to any notice or other communication concerning the business or affairs
      of the Company. However, nothing in this Section 11 shall limit the right of
      the
      Holder to be provided the notices required under this Warrant.

     

    12.  Successors
      and Assigns.
      The
      terms and provisions of this Warrant shall inure to the benefit of, and be
      binding upon, the Company and the Holder and their respective successors and
      assigns.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.  Amendments
      and Waivers.
      Any
      term of this Warrant may be amended and the observance of any term of this
      Warrant may be waived (either generally or in a particular instance and either
      retroactively or prospectively), with the written consent of the Company and
      the
      Holder. Any waiver or amendment effected in accordance with this Section 13
      shall be binding upon each holder of any shares of Common Stock purchased under
      this Warrant at the time outstanding (including securities into which such
      shares have been converted), each future holder of all such Shares, and the
      Company.

     

    14.  Notices.
      Any
      notice, demand or other communication which any party hereto may be required,
      or
      may elect, to give to anyone interested hereunder shall be sufficiently given
      if
      delivered via fax, personally or by nationally recognized overnight courier
      service or sent by registered or certified mail, return receipt requested,
      addressed to such address as may be given herein, and, except as otherwise
      noted
      herein, must be addressed as follows:

     

        if
      to the Company, to:

     

        MDU
      Communications International, Inc.

        60-D
      Commerce Way

        Totowa,
      New Jersey 07512

        Attn:
      Sheldon Nelson

        Facsimile:
      (973) 237-9499

     

    if
      to the
      Holder, to the Holder’s address as set forth on the Holder's signature page to
      the Purchase Agreement, marked for attention as there indicated,

     

    or
      to
      such other address as the party to whom notice is to be given may have furnished
      to the other parties in writing in accordance with the provisions of this
      Section 14. Any such notice or communication will be deemed to have been
      received: (A) in the case of facsimile, e-mail or personal delivery, on the
      date
      of such delivery; (B) in the case of nationally-recognized overnight courier,
      on
      the next business day after the date sent; and (C) if by registered or certified
      mail, on the third business day following the date postmarked.

     

    15.  Attorneys’
      Fees.
      If any
      action of law or equity is necessary to enforce or interpret the terms of this
      Warrant, the prevailing party shall be entitled to its reasonable attorneys’
fees, costs and disbursements in addition to any other relief to which it may
      be
      entitled.

     

    16.  Captions.
      The
      section and subsection headings of this Warrant are inserted for convenience
      only and shall not constitute a part of this Warrant in construing or
      interpreting any provision hereof.

     

    17.  Governing
      Law.
      This
      Warrant shall be governed by the laws of the State of New York, without regard
      to the provisions thereof relating to conflict of laws.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, MDU Communications International, Inc. caused this Warrant
      to be executed by an officer thereunto duly authorized.

    

    
      	
               

            	 	
              MDU
                COMMUNICATIONS INTERNATIONAL, INC.

            
	
               

            	 	 	
                

            
	
              Date: ______________________

            	 	
              By:
                

            	 
	 	 	 	
              Sheldon
                Nelson

            
	
               

            	 	 	
              President
                and Chief Executive Officer

            

    

       

    
      	
              Attest:

            
	 	 
	
              By: ______________________________________

            
	
              Name: ___________________________________

            
	
              Title: ____________________________________

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	(a)	
              NOTICE
                OF EXERCISE

            

    

     

    
      	
            	To:	
              MDU
                Communications International, Inc.

            

    

    
      	
            	Attn:	
              Corporate
                Secretary

            

    

    

    The
      undersigned hereby elects to:

     

    Purchase
      _________________ shares of Common Stock of MDU Communications
      International, Inc., pursuant to the terms of the attached Warrant and payment
      of the Exercise Price per share required under such Warrant accompanying this
      notice.

     

    The
      undersigned hereby represents and warrants that the undersigned is acquiring
      such shares for its own account for investment purposes only, and not for resale
      or with a view to distribution of such shares or any part thereof.

    

    HOLDER:

    

    
      	
              By:______________________________________________

            
	 	 
	
              By:______________________________________________

            

    

    

    Address:

    

    Date: 
        

    

    Name
      in
      which shares should be registered:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TAG-ALONG
      RIGHTS AGREEMENT

    

    To
      Each
      Holder of a Warrant to Purchase Common Stock of MDU Communications
      International, Inc. and all Assignees, Transferees and Successors of such
      Holder:

    

    Reference
      is made to the Warrants to Purchase Common Stock of MDU Communications
      International, Inc (the "Warrant(s)") issued pursuant to the Amended and
      Restated Loan and Security Agreement between MDU Communications (USA), Inc.
      and
      ______________________ dated as of June 30, 2008. All capitalized terms used
      in
      this agreement which are defined in the Warrants are used as defined in the
      Warrants unless the context otherwise requires.

    

    The
      undersigned, MDU Communications International, Inc., a Delaware corporation
      ("MDUC"), warrants, covenants and agrees with the holders of the Warrants,
      their
      assignees, transferees and successors (the "Warrantholders") as
      follows:

    

    If
      the
      undersigned proposes any sale (other than pursuant to a public offering) (a
      "Sale") of Common Stock ("Common Stock") (or any securities convertible into
      or
      exercisable or exchangeable for Common Stock), that in total exceeds thirty
      (30%) of the then issued and outstanding number of shares of Common Stock,
      then
      it shall permit each Warrantholder to participate as a seller in such
      transaction such that such Warrantholder exercising his or its right of co-sale
      hereunder shall be entitled to sell a percentage of the Warrants which, if
      exercised, would equal one share of Common Stock that the proposed purchaser
      (a
      "Proposed Purchaser") is willing to acquire in the transaction, times his or
      its
      respective percentage ownership, immediately prior to the sale, of all
      outstanding common stock of all classes (assuming for purposes hereof full
      exercise of all options, warrants and rights to acquire Common Stock of any
      class, including, without limitation, the Warrants).

    

    (a) The
      undersigned shall give each Warrantholder written notice of a proposed Sale
      of
      Common Stock not less than 15 days before such Sale is to take place. The notice
      ("Sale Notice") shall set forth:

    

    (i) the
      name
      and address of the Proposed Purchaser,

    

    (ii) the
      name
      and address of each Warrantholder as shown on the records of the Company, the
      number of Warrants held by each Warrantholder, and the number of shares of
      Common Stock underlying each such Warrant,

    

    (iii) the
      number of shares of Common Stock proposed to be transferred and the number
      of
      shares issuable upon conversion, exercise or exchange of any other securities
      to
      be transferred by the undersigned,

    

    (iv) the
      proposed amount and form of consideration and terms and conditions of payment
      offered by such Proposed Purchaser, and

    

    (v) the
      signed agreement of the Proposed Purchaser acknowledging that he or it has
      been
      informed of this letter agreement and has agreed to purchase Warrants in
      accordance with the terms hereof.

    

    (b) The
      tag-along rights provided in this agreement may be exercised by any
      Warrantholder (an "Electing Warrantholder") by delivery of a written notice
      (the
      "Tag-Along-Notice") to the undersigned (with a copy to each other Warrantholder)
      within 30 days after receipt of the Sale Notice. The Tag-Along Notice shall
      state the number of Warrants which the Warrantholder wishes to include in such
      sale to the Proposed Purchaser.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c) The
      Proposed Purchaser shall purchase from each Electing Warrantholder the number
      of
      Warrants (or portion thereof) which, if exercised, would be equal to the number
      of shares of Common Stock derived by multiplying (x) the number of shares of
      Common Stock plus the number of shares issuable upon conversion, exercise or
      exchange of any other securities to be purchased by the Proposed Purchaser
      by a
      fraction (y) the numerator of which is the number of shares of Common Stock
      such
      Electing Warrantholder wishes to transfer and the denominator of which is the
      total number of underlying shares of all outstanding and Common Stock (assuming
      for purposes hereof full exercise of all options, warrants and rights to acquire
      Common Stock of any class, including, without limitation, the
      Warrants).

    

    (d) Any
      Warrants purchased from the Warrantholders pursuant to this agreement shall
      be
      purchased at the same price per share (less the Warrant Exercise Price) and
      otherwise on the same terms and conditions as the proposed Sale (it being
      understood and agreed that such terms and conditions do not include the making
      of any representations and warranties, indemnities or other similar Agreements
      other than representations, warranties and indemnities as to the ownership
      of
      such Warrants and the due authority to sell such Warrants).

    

    
      	
              MDU
                COMMUNICATIONS INTERNATIONAL, INC.

            
	 	 
	
              By:

            	 
	 	
              Sheldon
                Nelson

            
	 	
              President
                and Chief Executive
                OfficeAgreement

       

      Regarding
        to

       

      Share
        Transfer of Hengda Electric Motor and Assets Transfer of Wendeng Second Electric
        Motor Factory

       

       

      Among

       

      Harbin
        Tech Full Electric Co. Ltd.

       

      And

       

      Wendeng
        Second Electric Motor Factory

       

      The
        Committee of Labor Union of Wendeng Second Electric Motor Factory 

       

      The
        People’s Government of Zhangjiachan Town, Wendeng County

       

       

      Date:
        July 10, 2008

       

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      Agreement

       

      This
        acquisition agreement (this “Agreement”)
        is
        made and entered into as of July 10, 2008
        at
        Weihai City by and among Harbin Tech Full Electric Co. Ltd., (“Party
        A”),
        and
        Wendeng Second Electric Motor Factory, the Committee of Labor Union of Wendeng
        Second Electric Motor Factory and the People’s Government of Zhangjiachan Town,
        Wendeng County (each as “Party
        B1”,
        “Party
        B2”,
        “Party
        B3”
and
        collectively as “Party
        Bs”).

      

      RECITALS

      

       

      WHEREAS,
        Party A and Party Bs are both legal person duly incorporated and validly
        existing according to PRC laws;

      

      WHEREAS,
        Party B1 and Party B2 are legitimate shareholders of Weihai Hengda Electric
        Motor (Group) Co. Ltd. (“Hengda
        Electric Motor”),
        of
        which Party B1 owns ninety seven point fifteen percent (97.15%) shares and
        Party
        B2 owns two point eighty five percent (2.85%) shares; and Party B3 is the
        shareholder and governing authority of Party B1;

      

      WHEREAS,
        Hengda Electric Motor is located at No.28 Station Zhangjiachan Town, Wendeng
        County, its registered capital as well as the contributed capital is RMB
        32,940,000, and its business scope covers: producing electric motor, mold,
        gear
        reduction asynchronous electric motor, speed control motor, hydraulic coupler,
        electronic devices, fiber reinforced plastic product, capacitor, cable and
        wire;
        exporting self-produced products and techniques; importing raw material,
        accessory, instrument, mechanical equipment, fittings and techniques needed
        by
        Hengda Electric Motor for its operation and research (excluding the products
        and
        techniques that are restricted from operation or not permitted for importing
        and
        exporting by the government); material processing or components assembling
        with
        imported materials and components;

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      WHEREAS,
        90.9% equity of Wendeng Wanda Chemical Products Limited Liability Company,
        95.6%
        equity of Wendeng Wenbao Electric Motors Limited Liability Company, 90% equity
        of Wendeng Chengxin Electric Motors Limited Liability Company and 90.9% equity
        of Wendeng Yongheng Electrical Instruments Limited Liability Company are
        held by
        Hengda Electric Motor; and 9.1% equity of Wendeng Wanda Chemical Products
        Limited Liability Company, 4.4% equity of Wendeng Wenbao Electric Motors
        Limited
        Liability Company, 10% equity of Wendeng Chengxin Electric Motors Limited
        Liability Company and 9.1% equity of Wendeng Yongheng Electrical Instruments
        Limited Liability Company, which are collectively referred to as Remaining
        Equity of Hengda Electric Motor’s Subsidiaries, are held by Party B2;

      

      WHEREAS,
        Party A and Party Bs have reached the “Agreement Related to Shares Acquisition
        of Weihai Hengda Electric Motor (Group) Co. Ltd. and Assets Purchase of Wendeng
        Second Electric Motor Factory” (the “Termsheet of Acquisition Agreement”) on
        March 27, 2008 with respect to the subject matter hereunder. Pursuant to
        such
        agreement, Party A will purchase from Party B1 and Party B2 the 100% shares
        of
        Hengda Electric Motor held by Party B1 and Party B2 and acquire all the other
        assets of Party B1;

      

      WHEREAS,
        Party B1 and Party B2 desire to sell to Party A, and Party A desires to purchase
        from Party B1 and Party B2, the 100% shares of Hengda Electric Motor held
        by
        Party B1 and Party B2;

      

      WHEREAS,
        Party B1 desires to transfer all of the assets it has (excluding the equity
        in
        Hengda Electric Motor held by it) (hereinafter referred to as “Party B1’s
        Remaining Assets”) to Party A, and Party A desires to purchase such assets upon
        the terms and subject to the conditions set forth herein; and Party A intends
        to, upon the consummation of acquisition of the above Party B1’s assets,
        increase the registered capital of Hengda Electric Motor with Party B1’s
        Remaining Assets; 

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      

      WHEREAS,
        Hengda Electric Motor will acquire the Remaining Equity of Hengda Electric
        Motor’s Subsidiaries from Party B2 to make Wendeng Wanda Chemical Products
        Limited Liability Company, Wendeng Wenbao Electric Motors Limited Liability
        Company, Wendeng Chengxin Electric Motors Limited Liability Company and Wendeng
        Yongheng Electrical Instruments Limited Liability Company as the wholly-owned
        subsidiaries of Hengda Electric Motor; the acquisition price will be paid
        by
        Party A on behalf of Hengda Electric Motor to Party B2. As the shareholders
        of
        Hengda Electric Motor, Party B1 and Party B2 warrant to make Hengda Electric
        Motor accept the related arrangement under this agreement.

      

      NOW,
        THEREFORE, regarding to transfer of all the shares of Hengda Electric Motor
        and
        transfer of Party B1’s Remaining Assets, Party A and Party Bs agree as follows
        after equal negotiation:

      

      ARTICLE
        1 DEFINITIONS AND DEFINED TERMS

      

       

      
        	1.1.	
                As
                  used in this Agreement, the following terms shall have the following
                  meanings:

              

      

      

      “Acquisition
        Equity”
shall
        mean the 100% shares of Hengda Electric Motor held by Party B1 and Party
        B2.

      

      “Party
        B1’s Remaining Assets” shall
        mean all the operational assets of Party B1(excluding 97.15% of the equity
        in
        Hengda Electric Motor held by it) , including but not limited to all of the
        manufacturing equipments, stocks, raw material, intellectual property,
        receivables, other receivables, payables and business contracts of Party
        B1.

      

      “Remaining
        Equity of Hengda Electric Motor’s Subsidiaries”
        shall
        mean 9.1% equity of Wendeng Wanda Chemical Products Limited Liability Company,
        4.4% equity of Wendeng Wenbao Electric Motors Limited Liability Company,
        10%
        equity of Wendeng Chengxin Electric Motors Limited Liability Company and
        9.1%
        equity of Wendeng Yongheng Electrical Instruments Limited Liability Company,
        which are held by Party B2.

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
 

      “Equity
        Acquisition Price” shall
        mean all the consideration to be paid by Party A for purchasing Acquisition
        Equity by Party A and acquisition price paid by Party A on behalf of Hengda
        Electric Motor to Party B2 for acquiring Remaining Equity of Hengda Electric
        Motor’s Subsidiaries by Hengda Electric Motor from Party B2. 

      

      “Acquisition
        Price”
        shall be
        the Price of Acquisition Assets as defined under the Termsheet of Acquisition
        Agreement, that is all the consideration to be paid by Party A to Party Bs
        as
        per Article2.3 hereof (including the Equity Acquisition Price paid by Party
        A to
        Party Bs and consideration paid by Party A to Party Bs for purchasing Party
        B1’s
        Remaining Assets), which shall be neither higher than 10 times of the total
        net
        profit that Hengda Electric Motor and Party B1 generated in the last consecutive
        12 months prior to March 31, 2008 (March 2008 included) nor than the evaluation
        value of Hengda Electric Motor’s Assets and Party B1’s Remaining Assets
        appraised by evaluation agent jointly ratified by Party A and Party
        Bs.

      

      “Closing
        Date”
        shall
        mean the day on which Party A and Party Bs complete all the legal procedures
        of
        the transfer of Acquisition Equity (including but not limited to the
        registration of share transfer of Hengda Electric Motor with the competent
        Industrial and Commercial Bureau) under Article 2.4 hereof.

      

      “Force
        Majeure” shall
        mean all events which are unforeseen, unavoidable or insurmountable, which
        arise
        after the Effective Date, which are reasonably outside the control of any
        Party,
        which prevent total or partial performance of the Agreement by any Party
        and
        which can not be cured by measures which might reasonably be taken in the
        ordinary course of business by any Party. Such events shall include but not
        limited to earthquakes, typhoons, fire, flood, war, epidemics, civil
        disturbances, tsunami, lightning, and any other similar events.

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      “PRC
        Laws and Regulations”
        shall
        mean PRC laws, regulations and rules which are officially promulgated,
        published, publicly available and already implemented.

      

      “PRC”
        shall
        mean the People’s Republic of China, which for the purposes of this Agreement
        shall not include the territories of (a) the Hong Kong Special Administrative
        Region, China, (b) the Macau Special Administrative Region, China, or (c)
        Taiwan, China.

      

      “RMB”
        means
        the lawful currency of the People’s Republic of China.

      

      
        	
                1.2.

              	
                Titles
                  and headings to sections herein are inserted for convenience of
                  reference
                  only, and are not intended to be a part of or to affect the meaning
                  or
                  interpretation of this Agreement. 

              

      

       

      ARTICLE
        2 PURCHASE AND SALE OF ACQUISITION EQUITY, REMAINING EQUITY OF HENGDA ELECTRIC
        MOTOR’S SUBSIDIARIES AND PARTY B1’S REMAINING ASSETS

       

      
        	
                2.1

              	
                At
                  the Closing Date, upon the terms and subject to the conditions
                  set forth
                  herein, Party Bs shall sell, transfer, convey, assign and deliver
                  to Party
                  A, and Party A shall purchase and acquire from Party Bs, all of
                  the
                  Acquisition Equity and Party B1’s Remaining Assets. Party B1 and Party B2
                  respectively give up the preemption right on shares of Hengda Electric
                  Motor for each other.

              

      

       

      
        	
                2.2

              	
                Party
                  B2 shall deliver to Hengda Electric Motor the Remaining Equity
                  of Hengda
                  Electric Motor’s Subsidiaries upon the terms and subject to the conditions
                  set forth herein. 

              

      

       

      
        	
                2.3

              	
                Acquisition
                  Price

              

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                2.3.1

              	
                The
                  Acquisition Price shall be an amount equal to RMB Three hundred
                  and
                  seventy-five Million Yuan (RMB375,000,000).

              

      

       

      
        	
                2.3.2

              	
                The
                  RMB 5,000,000 paid by Party A to Party Bs as deposit under the
                  Term-sheet
                  of Acquisition Agreement shall be portion of the Equity Acquisition
                  Price
                  on July 10, 2008.

              

      

      

      
        	
                2.3.3

              	
                Party
                  Bs agrees that RMB 5,000,000, as part of the Equity Acquisition
                  Price,
                  shall be paid by Party A within 2 years after the completion of
                  all the
                  legal procedures including the registration of share transfer of
                  Hengda
                  Electric Motor with the competent Industrial and Commercial Bureau,
                  during
                  which if any losses suffered by Hengda Electric Motor and/or Party
                  A
                  caused by Party B with respect to the issues under Article 3.1.4
                  and
                  Article 3.1.5 of this agreement, Party A is entitled to deduct
                  appropriate
                  amount directly from the RMB 5,000,000
                  reserved.

              

      

      

      
        	
                2.3.4

              	
                Party
                  Bs mutually agree that Party A shall make the payment of the Acquisition
                  Price (excluding RMB five million under Article 2.3.2 hereof) to
                  the bank
                  account as set forth below within 15 working days after the effectiveness
                  of this Agreement:

              

      

       

      
        
          	 	
                  AccountName:
                    The People’s Government of Zhangjiachan Town, Wendeng
                    Country

                

        

      

       

      
        
          	 	
                  Account
                    Number: 582801040000736

                

        

      

       

      
        	 	
                Opening
                  Bank: Agricultural Bank, Wendeng Country Branch, East City
                  Office

              

      

       

      
        	
                2.4

              	
                The
                  delivery of Acquisition Equity contemplated by this Agreement shall
                  take
                  place at the Closing Date, on which (1) Party B1 and Party B2 shall
                  deliver to Party A all the documents and instruments with respect
                  to all
                  the Acquisition Equity required to be delivered by Party B1 and
                  Party B2
                  pursuant to this Agreement and any other document or instrument
                  reasonably
                  requested by Party A; and (2) the share registration procedures
                  on
                  transferring 100% shares of Hengda Electric Motor held by Party
                  B1 and
                  Party B2 to Party A shall be
                  completed.

              

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                2.5

              	
                The
                  delivery of Remaining Equity of Hengda Electric Motor’s Subsidiaries under
                  this Agreement shall also take place at the Closing Date at the
                  same time,
                  on which the share registration procedures on transferring Remaining
                  Equity of Hengda Electric Motor’s Subsidiaries held by Party B2 to Hengda
                  Electric Motor shall be completed.

              

      

      

      
        	
                2.6

              	
                Party
                  A, Party Bs and Hengda Electric Motor shall bear respectively all
                  and any
                  taxes imposed in relation to the transactions contemplated under
                  this
                  Agreement in accordance with the PRC Laws and
                  Regulations.

              

      

       

      ARTICLE
        3 REPRESENTATIONS AND WARRANTIE

       

      
        	
                3.1

              	
                Party
                  B1, Party B2 and Party B3, jointly and severally, hereby represent
                  and
                  warrant to Party A, as of the Closing Date as
                  follows:

              

      

      

      
        	
                3.1.1

              	
                As
                  of the Closing Date, (i) 100% shares of Hengda Electric Motor (ii)
                  the
                  Remaining Equity of Hengda Electric Motor’s Subsidiaries and
                  (iii) Party
                  B1’s Remaining Assets are each free and clear of any mortgages, liens,
                  claims, charges, pledges or other encumbrances of any nature
                  whatsoever.

              

      

      

      
        	
                3.1.2

              	
                Up
                  to and as of the transfer of shares of Hengda Electric Motor to
                  Party A by
                  Party B1 and Party B2, Hengda Electric Motor shall duly own or
                  hold the
                  assets, rights and interests including but not limited to:
                  

              

      

      

      
        
          
            	3.1.2.1	
                    The
                      right to use the assigned state-owned lands, as recorded in
                      No. Wenguoyong
                      [2005] 150009, No. Wenguoyong [2006] 150006, No. Wenguoyong
                      [2005] 150020,
                      No. Wenguoyong [2005] 150016, No. Wenguoyong [2005] 150017
                      certificates
                      for the use of state-owned land, and the above-ground buildings
                      located
                      thereon;

                  

          

        

      

      

      
        	3.1.2.2	
                Registered
                  trademark with registration numbers as No. 623984 and No.
                  3224410.

              

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	
                3.1.3

              	
                After
                  the Closing Date, neither Party B1 or Party B2 nor any economic
                  organizations controlled by Party B1 or Party B2, directly or indirectly,
                  shall engage in any business which is same with or similar to and/or
                  in
                  competition with the business engaged by Hengda Electric Motor,
                  including
                  but not limited to the production and sale of electric motor, mold,
                  gear
                  reduction asynchronous electronic motor, speed control motor, hydraulic
                  coupler, electronic devices, fiber reinforced plastic product,
                  capacitor,
                  cable and wire.

              

      

      

      
        	
                3.1.4

              	
                After
                  the transfer of Acquisition Assets to Party A, Party Bs shall guarantee
                  Party A the completion of the procedure of obtaining the use right
                  of
                  assigned lands within the territory of Hengda Electric Motor, of
                  which
                  such procedure is still on-going. 

              

      

      

      
        	
                3.1.5

              	
                Party
                  Bs shall be responsible to Party A for the debts, contingent debts
                  and any
                  claims or liabilities relating to Hengda Electric Motor, which
                  is not
                  disclosed in the formal acquisition agreement.

              

      

      

      
        	
                3.1.6

              	
                As
                  of the execution date set forth above in this Agreement, Party
                  Bs have
                  obtained all the permits, approvals and filings as required by
                  PRC Laws
                  and Regulations with respect to the sale of 100% shares of Hengda
                  Electric
                  Motor, with respect to the sale of the Remaining Equity of Hengda
                  Electric
                  Motor’s Subsidiaries and with respect to the sale of Party B1’s Remaining
                  Assets.

              

      

      

      
        	
                3.1.7

              	
                Hengda
                  Electric Motor (i) has been duly organized, is validly existing
                  and is in
                  good standing as a limited liability company under the PRC Laws
                  and
                  Regulations, and has been duly approved or registered (as applicable)
                  by
                  competent PRC governmental authorities, (ii) has all requisite
                  power and
                  authority to carry on its business and to own, lease and operate
                  its
                  properties and assets, (iii) has obtained and remained valid in
                  full force
                  permits and approvals by competent governmental authorities, which
                  are
                  presently required or necessary to own or lease, as the case may
                  be, and
                  to operate its properties.

              

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	
                3.1.8

              	
                The
                  shares of Hengda Electric Motor held by Party B1 and Party B2 constitute
                  all of the issued and outstanding shares of Hengda Electric Motor
                  and have
                  been duly authorized and are validly issued in accordance with
                  PRC Laws
                  and Regulations, are fully paid and were not issued in violation
                  of any
                  preemptive or other similar right.

              

      

      

      
        	
                3.1.9

              	
                All
                  of the shares of Hengda Electric Motor held by Party B1 and Party
                  B2 and
                  all of the Remaining Equity of Hengda Electric Motor’s Subsidiaries are
                  not subject to any rescission right or put right nor does any entity
                  or
                  person have the right to require Hengda Electric Motor to repurchase
                  such
                  shares.

              

      

      

      
        	
                3.1.10

              	
                Party
                  B1 and Party B2 have valid and full title to all of the shares
                  of Hengda
                  Electric Motor and Party B2 has valid and full title to all of
                  the
                  Remaining Equity of Hengda Electric Motor’s Subsidiaries.
                  

              

      

      

      
        	
                3.1.11

              	
                Prior
                  to acquisition of Remaining Equity of Hengda Electric Motor’s Subsidiaries
                  from Party B2 by Hengda Electric Motor, except owning the 90.9%
                  equity of
                  Wendeng Wanda Chemical Products Limited Liability Company, the
                  95.6%
                  equity of Wendeng Wenbao Electric Motors Limited Liability Company,
                  the
                  90% equity of Wendeng Chengxin Electric Motors Limited Liability
                  Company
                  and the 90.9% equity of Wendeng Yongheng Electrical Instruments
                  Limited
                  Liability Company, Hengda Electric Motor has no Subsidiaries or
                  does not
                  own, directly or indirectly, any interest or investment in any
                  corporation, partnership, limited liability company, joint venture
                  or
                  trust. 

              

      

      

      
        	
                3.1.12

              	
                Hengda
                  Electric Motor and Party Bs are and have been in compliance with
                  and is
                  not in default under any PRC Laws and Regulations applicable to
                  them or
                  any of their respective properties, assets or
                  businesses.

              

      

       

      
        	3.1.13	
                All
                  the documents and materials of Hengda Electric Motor and Party
                  Bs
                  delivered and to be delivered to Party A by Party Bs, including
                  but not
                  limited to meeting minutes, resolutions of shareholders meeting
                  and board
                  meeting, financial statements, account books and other documents
                  in
                  connection with Hengda Electric Motor and Party Bs, accurately
                  reflect in
                  all material respects of all corporate actions and other actions
                  taken by
                  such entity as well as fairly present in all material respects
                  the
                  financial position and the results of operations of Hengda Electric
                  Motor
                  as of the respective dates thereof and for the respective periods
                  then
                  ended.

              

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      
        	3.1.14	
                To
                  the knowledge of Party Bs, there are no action, proceeding, claim,
                  suit,
                  demand, arbitration, opposition, challenge, hearing, notice of
                  violation
                  or deficiency or investigation, domestic or foreign, pending or,
                  threatened, that relate, directly or indirectly, to this Agreement
                  or that
                  apply, in whole or in part, to Hengda Electric Motor or Party Bs,
                  their
                  respective assets, properties or business or to the Remaining Equity
                  of
                  Hengda Electric Motor’s Subsidiaries or Party B1’s Remaining Assets.
                  

              

      

      

      
        	
                3.1.15

              	
                To
                  the knowledge of Party Bs, there is no event that is reasonably
                  likely to
                  occur in the foreseeable future, which if it were to occur, could,
                  individually or in the aggregate, have a material adverse change
                  to Hengda
                  Electric Motor or Party B1 or its respective assets, properties
                  or
                  business or to the Remaining Equity of Hengda Electric Motor’s
                  Subsidiaries or Party B1’s Remaining
                  Assets.

              

      

      

      
        
          
            	3.1.16	
                    Except
                      with the prior written consent of Party A, during the period
                      from the date
                      of this Agreement to the Closing Date, the businesses of Hengda
                      Electric
                      Motor and Party Bs shall be conducted in the ordinary course
                      of business;
                      Party Bs agree to cause Hengda Electric Motor and Party B1
                      to make all
                      commercially reasonable efforts consistent therewith to preserve
                      the
                      intactness of Hengda Electric Motor’s and Party B1’s material properties,
                      assets and business organizations. Except as otherwise specified
                      in this
                      Agreement, without the prior written consent of Party A, Party
                      Bs shall
                      cause Hengda Electric Motor and Party B1 not
                      to:

                  

          

        

      

      

      
        	3.1.16.1	
                amend
                  any of its organizational documents such as articles of association;
                  

              

      

      

      
        	3.1.16.2	
                liquidate,
                  dissolve, recapitalize or otherwise wind up its business;
                  

              

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        	3.1.16.3	
                make
                  any distribution or set aside any dividend, or make any other changes
                  in
                  the capital structure of Hengda Electric Motor and Party B1;
                  

              

      

      

      
        	3.1.16.4	
                other
                  than in the ordinary course of business and consistent with past
                  practice,
                  sell, assign, pledge, dispose of, lease, license, guarantee or
                  encumber,
                  or authorize the sell, assign, pledge, dispose of, lease, license,
                  guarantee or encumber of, any amount of properties or assets of
                  Hengda
                  Electric Motor and Party B1; 

              

      

      

      
        	3.1.16.5	
                incur
                  any indebtedness or issue any debt securities or assume or guarantee
                  the
                  obligations of any other entity in excess of RMB3,500,000 in single
                  or in
                  excess of RMB13,000,000 in the aggregate within six
                  months;

              

      

      

      
        	3.1.16.6	
                cancel
                  any third-party indebtedness owed to Hengda Electric Motor or Party
                  B1;
                  

              

      

      

      
        	3.1.16.7	
                enter
                  into or renew, amend or extend any contracts, agreements or binding
                  documents involving the payment or consideration in excess of RMB2,000,000
                  in single or in excess of RMB10,000,000 in the aggregate within
                  six
                  months;

              

      

      

      
        	3.1.16.8	
                agree
                  in writing to take any of the foregoing actions.
                  

              

      

      

      
        	3.1.17	
                Party
                  Bs shall and cause Hengda Electric Motor and Party B1 to provide
                  prompt
                  written notice to Party A of any change in any of the information
                  contained in the representations and warranties made by Party Bs
                  in
                  Article 3 and shall promptly furnish any information which Party
                  A may
                  reasonably request in relation to such change.

              

      

      

      
        	
                3.2

              	
                All
                  disclosure furnished by or on behalf of Party Bs to Party A regarding
                  to
                  the transactions contemplated under this Agreement, with respect
                  to the
                  representations and warranties made herein are true and do not
                  contain any
                  untrue or misleading statement of a material fact or omit to state
                  any
                  material fact. 

              

      

      

      
        	
                3.3

              	
                Party
                  A represents and warrants to Party Bs as of the date hereof and
                  as of the
                  Closing Date as follows: 

              

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      
        	
                3.3.1

              	
                Party
                  A has been duly organized, validly exists and is in good standing
                  as a
                  limited liability company under the PRC Laws and
                  Regulations.

              

      

      

      
        	
                3.3.2

              	
                Party
                  A will pay Party Bs the Acquisition Price pursuant to the provisions
                  of
                  this Agreement. 

              

      

      

      
        	
                3.4

              	
                Each
                  Party hereby represents and warrant to the other Parties as of
                  the Closing
                  Date as follows:

              

      

      

      
        	
                3.4.1

              	
                It
                  has all requisite corporate power and authority to execute and
                  perform its
                  obligations under this Agreement and to consummate the transactions
                  contemplated hereby.

              

      

      

      
        	
                3.4.2

              	
                This
                  Agreement constitutes a legal, valid and binding obligation of
                  it,
                  enforceable against it in accordance with its terms.
                  

              

      

      

      
        	
                3.4.3

              	
                The
                  execution by it of this Agreement and the consummation by it of
                  the
                  transactions contemplated do not and shall not (i) violate, conflict
                  with
                  or result in the breach of any PRC Law and Regulations applicable
                  to it or
                  any of its properties or assets, or (ii) result in a breach of
                  or the
                  termination of any contract or agreement which it or its property
                  or
                  assets are bound.

              

      

      

      
        	
                3.4.4

              	
                Upon
                  the terms and subject to the conditions of this Agreement, each
                  of the
                  Parties shall use its reasonable best efforts to take all actions
                  to
                  consummate the transactions contemplated by this Agreement as promptly
                  as
                  practicable, including but not limited to the prompt preparation
                  and
                  filing of all forms, registrations and notices and use its reasonable
                  best
                  efforts as necessary to obtain any requisite approvals, consents
                  by any
                  governmental authority. 

              

      

      

      
        	
                3.4.5

              	
                Each
                  Party shall promptly inform the other Parties of any communication
                  from
                  any governmental authority regarding any of the transactions contemplated
                  by this Agreement. If any Party receives a request for additional
                  information or documentary material from any such governmental
                  authority
                  with respect to the transactions contemplated by this Agreement,
                  then such
                  Party shall endeavor in good faith to make, or cause to be made,
                  as soon
                  as reasonably practicable and after consultation with the other
                  Parties,
                  an appropriate response. 

              

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        4 TERMINATION

       

      
        	
                4.1

              	
                This
                  Agreement may be terminated at any time prior to the Closing Date
                  in the
                  following way: 

              

      

      

      
        	
                4.1.1

              	
                by
                  mutual written consent of Party A and Party
                  Bs;

              

      

      

      
        	
                4.1.2

              	
                by
                  Party A if:

              

      

      

      
        	
                4.1.2.1

              	
                a
                  governmental authority shall have issued an order, decree or ruling
                  or
                  taken any other action, in each case permanently restraining or
                  otherwise
                  prohibiting the transactions contemplated by this Agreement;
                  or

              

      

      

      
        	
                4.1.2.2

              	
                the
                  transaction contemplated in this Agreement shall have not been
                  consummated
                  on or before August 5, 2008; or

              

      

      

      
        	
                4.1.2.3

              	
                there
                  is a default or breach by any of Party Bs with respect to the due
                  and
                  timely performance of any of its obligations contained herein,
                  or if the
                  representations or warranties of any of Party B’s contained in this
                  Agreement shall have become inaccurate and has not been cured within
                  twenty (20) calendar days after written notice by Party A to such
                  breaching party; or

              

      

      

      
        	
                4.2

              	
                In
                  the event of the termination of this Agreement pursuant to Article
                  4
                  hereof, this Agreement shall forthwith become void and have no
                  effect.
                  Nothing contained in this Article shall relieve any party from
                  liability
                  for any breach of this
                  Agreement.

              

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        5 SURVIVAL & INDEMNIFICATION 

       

      
        	
                5.1

              	
                Subject
                  to the provisions of this Agreement, the representations and warranties
                  of
                  Party Bs in Article 3 shall survive the Closing Date and remain
                  in full
                  force and effect for the period of two (2) years after the Closing
                  Date.
                  

              

      

      

      
        	
                5.2

              	
                Party
                  Bs agree to jointly and severally indemnify, defend and hold harmless
                  Party A and its successors and assignees from and against all losses
                  and
                  damages which any such party may actually incur or suffer as a
                  result of
                  or in connection with any inaccuracy in, or breach of, any representation
                  or warranty made by Party B1, Party B2 or Party B3 under this Agreement
                  or
                  the failure to perform any covenant or agreement set forth in this
                  Agreement to be performed by Party B1, Party B2 or Party
                  B3.

              

      

      

      ARTICLE
        6 FORCE MAJEURE

       

      
        	
                6.1

              	
                In
                  the event of occurrence of Force Majeure, the obligations of the
                  Parties
                  under this Agreement shall be suspended during the period of Force
                  Majeure, and the relevant performance period shall be automatically
                  extended by a time period which is equivalent to the actual duration
                  of
                  the Force Majeure. 

              

      

      

      
        	
                6.2

              	
                The
                  Party claiming Force Majeure shall notify the other Parties in
                  writing
                  without delay, and within fifteen (15) days thereafter provide
                  detailed
                  information concerning, and documents evidencing, the occurrence
                  and
                  expected duration of the Force Majeure. The party claiming Force
                  Majeure
                  shall take reasonable actions to minimize the effects of the Force
                  Majeure. 

              

      

      

      
        	
                6.3

              	
                In
                  the event of occurrence of Force Majeure, the Parties shall consult
                  with
                  each other without delay so as to work out an equitable resolution
                  and
                  shall use their best endeavours to minimize the effects of the
                  Force
                  Majeure. 

              

      

      

      ARTICLE
        7 RESOLUTION OF DISPUTES

       

      
        
          
            
              	7.1	
                      In
                        the event of any dispute, controversy or claim arising out
                        of or relating
                        to this Agreement, including, but not limited to, any questions
                        regarding
                        the breach, termination or invalidity hereof (a “Dispute”), the Parties
                        shall attempt in the first instance to resolve such Dispute
                        through
                        friendly consultations. Such consultations shall commence
                        promptly after a
                        party has advised the other Parties in writing of the existence
                        of a
                        Dispute. 

                    

            

          

        

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      
        
          
            	7.2	
                    If
                      the Dispute has not been resolved within thirty (30) days from
                      the date on
                      which one party first advised the other Parties in writing
                      of the
                      existence of a Dispute, any party may submit the Dispute to
                      the China
                      International Economic and Trade Arbitration Commission (“CIETAC”)÷
                      in
                      accordance with this Article for arbitration in Beijing in
                      accordance with
                      the CIETAC’s rules of arbitration then applicable.
                      

                  

          

        

      

      

      
        
          
            	7.3	
                    The
                      arbitral award shall be final and binding upon the Parties.
                      Except for the
                      specific matters in dispute which are then currently being
                      arbitrated, the
                      Parties shall continue to perform their obligations under this
                      Agreement.
                      

                  

          

        

      

      

      
        
          
            	7.4	
                    The
                      costs of arbitration shall be borne by the losing party, unless
                      otherwise
                      determined by the arbitration award.

                  

          

        

      

      

      ARTICLE
        8 MISCELLANEOUS PROVISIONS

       

      
        	8.1	
                Waiver
                   

              

      

      

      No
        failure or delay of any party to exercise a right under this Agreement shall
        be
        deemed a waiver of such right. The single or partial exercise of a right
        shall
        not prevent the exercise of the same right in the future. 

      

      
        	8.2	
                Notices
                  

              

      

      

      All
        notices and other communications required or permitted hereunder will be
        in
        writing and, unless otherwise provided in this Agreement, will be deemed
        to have
        been duly given when delivered in person or when dispatched by electronic
        facsimile transfer (confirmed in writing by mail simultaneously dispatched)
        or
        two (2) working days after having been dispatched by courier to the appropriate
        party at the address specified below: 

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      If
        to
        Party A, to No.9 Ha Ping Xi Lu, Ha Ping Lu Ji Zhong Qu Harbin Kai Fa Qu,
        Harbin,
        China 150060

      Attention:
        Tianfu Yang

      

      If
        to
        Party B1, to No. 28 Zhangjiachan Town Base, Wendeng Country, Shandong Province,
        China 264407

      Attention:
        Wanfeng Liu

      

      If
        to
        Party B2, to No. 28 Zhangjiachan Town Base, Wendeng Country, Shandong Province,
        China 264407

      Attention:
        Wanfeng Liu

      

      If
        to
        Party B3, to The People’s Government of Zhangjiachan Town, 5 Kilometers from the
        North of the New City of Wendeng Country, Shangdong Province, China
        264407

      Attention:
        Binggang Wang

      

      or
        to
        such other address or addresses as any such party may from time to time
        designate as to itself by like notice.

      

      
        
          	8.3	
                  Assignment

                

        

      

      

      No
        party
        shall assign any of its rights or obligations hereunder to any third party
        without the prior written consent of the other Parties. 

       

      
        	8.4	
                Invalidity
                  

              

      

      

      The
        invalidity of a provision of this Agreement shall not affect the validity
        of any
        other provision of this Agreement. 

      

      
        	8.5	
                Language
                  and Execution in Counterparts

              

      

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      This
        Agreement is made in Chinese in quintuplicate originals with equal weight,
        and
        each Party shall keep one original. 

      

      
        	8.6	
                Entire
                  Agreement

              

      

      

      This
        Agreement represents the entire agreement between the Parties with respect
        to
        the subject matter contained herein and supersedes all prior discussions,
        negotiations and agreement between the Parties. 

       

      
        	8.7	
                Amendments

              

      

      

      This
        Agreement may be changed, amended or modified only by means of written agreement
        executed by the duly authorized representatives of the Parties or their
        permitted successors or assignees. 

       

      
        	8.8	
                Applicable
                  Law

              

      

      

      The
        conclusion, validity, interpretation, implementation of this Agreement and
        the
        resolution of disputes hereunder, shall be governed by PRC Laws and Regulations.
        

       

      
        	
                8.9

              	
                Effectiveness
                  

              

      

      

      This
        Agreement shall take effect when it is executed by the Parties.

      

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
        by
        their respective duly authorized representative on the date first set forth
        above. 

      

      

      Party
        A: Harbin Tech Full Electric Co. Ltd.

      

      Legal
        representative/Authorized representative: 

      

      

      

      Party
        B1: Wendeng Second Electric Motor Factory

      

      Legal
        representative/Authorized representative: 

      

      

      

      Party
        B2: The Committee of Labor Union of Wendeng Second Electric Motor
        Factory

      

      Legal
        representative/Authorized representative: 

      

      

      

      Party
        B3: The People’s Government of Zhangjiachan Town, Wendeng
        County

      

      Authorized
        representative: 

      

      
        
          
          

        

        
          18

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