A-Power Energy Generation Systems, Ltd. No. 44 Jingxing Road Tiexi District Shenyang, Liaoning, China 110021
Xx. 00
Xxxxxxxx Xxxx
Xxxxx
Xxxxxxxx
Xxxxxxxx,
Xxxxxxxx, Xxxxx 110021
June 19,
2009
Dear Xx.
Xx:
Reference
is hereby made to that certain Securities Purchase Agreement, dated June 19,
2009 (the “Securities
Purchase Agreement”), between A-Power Energy Generation Systems, Ltd., a
British Virgin Islands company (the “Company”) and the
buyers named on the Schedule of Buyers thereto (the “Buyers”), pursuant to
which the Company has agreed to sell senior convertible notes in the aggregate
principal amount of $40,000,000 (the “Notes”) and warrants
to purchase common shares of the Company (the “Common
Shares”).
Pursuant
to the Notes, the Buyers may elect to convert their Notes into Common Shares
issued by the Company at the conversion price as specified therein at any time
following Shareholder Approval (as such term is defined in the Securities
Purchase Agreement). Pursuant to the Warrants, the Buyers may elect
to exercise their Warrants at the exercise price specified therein at any time
following Shareholder Approval. Notwithstanding the foregoing, in the
event that the Company does not obtain Shareholder Approval on or prior to the
six month anniversary of the Closing Date, each of the Notes and the Warrants
may be exchanged for Common Shares held by you (such Notes, the “Exchanged Notes”, and
such Warrants, the “Exchanged Warrants”),
pursuant to the terms of put agreements between you and each of the Buyers (the
“Put
Agreements”).
Pursuant
to the Pledge Agreement (the “Pledge Agreement”),
you have agreed to initially pledge six million Common Shares, and additional
Common Shares from time to time, up to a maximum number of seven million Common
Shares, on the terms set forth in the Pledge Agreement (the “Pledged Shares”), in
order to secure your obligations under the Put Agreements. All Common
Shares to be issued upon any exchange of the Notes and/or the Warrants shall be
issued from the Pledged Shares.
In the
event that any of the Pledged Shares are exchanged for the Notes (the “Note Exchange
Shares”) and/or the Warrants (the “Warrant Exchange
Shares”) pursuant to the Put Agreements, the Company hereby agrees to use
its commercially reasonable efforts to obtain the approval of the shareholders
of the Company as may be necessary pursuant to the Company’s Memorandum and
Articles of Association and the rules of the Nasdaq Stock Market in order to (i)
increase the number of authorized Common Shares in a manner sufficient to (ii)
allow the conversion of the Exchanged Notes into a number of Common Shares equal
to the number of Note Exchange Shares, and (iii) allow the exercise of the
Exchanged Warrants into a number of Common Shares equal to the number of Warrant
Exchange Shares. The Company and you hereby further agree that,
notwithstanding anything to the contrary set forth in the Notes or the Warrants,
(i) the conversion price of the Exchanged Notes shall be fixed at the conversion
price then in effect at the time the Buyers exchanged the Notes, and (ii) the
exercise price of the Exchanged Warrants shall be fixed at the exercise price
then in effect at the time that the Buyers exchanged the Warrants.
The
Company hereby agrees to make you whole, reimburse you, and indemnify you and
hold you harmless from and against, and with respect to any and all, losses,
costs, liabilities, actions, causes of action, suits, penalties, judgments,
damages and expenses of any kind or nature whatsoever (including attorneys’
fees) in connection with, as a result of, or in any way relating to, the
transactions described above.
This
letter agreement shall be governed by and construed in accordance with the laws
of the State of New York without regard to any principles pertaining to conflict
of laws that would require the application of the laws of any other
jurisdiction. This letter agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement. If the foregoing accurately reflects our agreements with
respect to the foregoing matters, please so confirm by signing
below.
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Very
truly yours,
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By:
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Name:
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Title:
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Agreed as
of this ___ day of __________, 2009
By:__________________________
Name: Xxxxxxxx
Xx
