THT Heat Transfer Technology Inc.: Exhibit 10.5 - Filed by newsfilecorp.com





Exhibit 10.4

Execution Copy

RIGHT OF CO-SALE AGREEMENT

THIS RIGHT OF CO-SALE AGREEMENT (the
“Agreement”) is made as of the 2nd day of November, 2010 by and
among THT Heat Transfer Technology, Inc., a Nevada corporation (the
“Company”); the investors listed on Schedule A hereto (the
“Investors”); and Guohong Zhao, Xiaoqiu Yu, and Xiaomei Fang (the
“Key Holders”).

WHEREAS, each Key Holder is the beneficial owner of the
number of shares of Common Stock, set forth opposite the name of such Key Holder
on Schedule B; 

WHEREAS, the Company and the Investors are parties to
that certain Securities Purchase Agreement, of even date herewith (the
“Purchase Agreement”), pursuant to which the Investors have agreed
to purchase shares of the Common Stock of the Company, par value $0.001 per
share (“Private Offering Stock”); and

WHEREAS, the Key Holders and the Company desire to
further induce the Investors to purchase the Private Offering Stock.

NOW, THEREFORE, the Company, the Key Holders, and the
Investors each hereby agree as follows:

	 	1. 	Definitions. 


“Affiliate” means, with respect to any specified
Investor, any other Investor who or which, directly or indirectly, controls, is
controlled by or is under common control with such Investor, including without
limitation any general partner, officer, director or manager of such Investor,
and any venture capital fund now or hereafter existing which is controlled by
one or more general partners or managing members of, or shares the same
management company with, such Investor. 

“Common Stock” means shares of Common Stock of
the Company, $0.001 par value per share.

“Investors” has the meaning ascribed to it in the
Preface of this Agreement; provided, however, that any such person
shall cease to be considered an Investor for purposes of this Agreement at any
time such person and his, her or its Affiliates collectively hold fewer than
200,000 shares of Common Stock (as adjusted for any stock combination, stock
split, stock dividend, recapitalization or other similar transaction). 

“Key Holders” means Guohong Zhao, Xiaoqiu Yu and
Xiaomei Fang and each person to whom the rights of a Key Holder are assigned
pursuant to Section 3.1, and each person who hereafter becomes a
signatory to this Agreement pursuant to Section 5.9 or 5.17 and
any one of them, as the context may require.

“Proposed Key Holder Transfer” means any sale or
offer to sell, other than in an open market transaction or transaction effected
pursuant to a 10b-5 trading plan as long as the shares thus sold does not exceed
in aggregate 10% of the then issued and outstanding Common Stock in any twelve months period, an aggregate of 10% or higher of the
then issued and outstanding Common Stock proposed by any of the Key Holders to a
single entity or individual in a single transaction, in a multiple or series of
transactions. The transfer price of such a Proposed Key Holder Transfer should
not be any lower than US$3.2 per share unless the Investors agree otherwise. 

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“Proposed Transfer Notice” means written notice
from a Key Holder to an Investor setting forth the terms and conditions of a
Proposed Key Holder Transfer.

“Prospective Transferee” means any person to whom
a Key Holder proposes to make a Proposed Key Holder Transfer.

“Qualified Public Offering” means a public
offering conducted by the Company in which it raises gross proceeds of at least
$20 million at a valuation of at least $120 million.

“Right of Co-Sale” means the right, but not an
obligation, of an Investor to participate in a Proposed Key Holder Transfer on
the terms and conditions specified in the Proposed Transfer Notice.

“Transfer Stock” means shares of Common Stock
owned by a Key Holder, or issued to a Key Holder after the date hereof
(including, without limitation, in connection with any stock split, stock
dividend, recapitalization, reorganization, or the like).

	 	2. 	Agreement Among the Company, the
      Investors and the Key Holders. 
	 	 	 
	 	  	2.1 	Right of Co-Sale. 


(a)         
Confidentiality Regarding Proposed Key Holder Transfer. In exchange for
the parties willingness to agree to these procedures, each Investor hereby
irrevocably agrees that it will hold in strict confidence the existence and
terms of any and all communications (whether written or oral) that relate in any
way to a Proposed Key Holder Transfer.

(b)         
Exercise of Right. If a Key Holder proposes to effectuate a Proposed Key
Holder Transfer, a Proposed Transfer Notice shall be delivered by the Key Holder
to each Investor after and only if such Investor has delivered to the Company a
confidentiality agreement in which such Investor agrees to keep confidential the
existence and terms of the Proposed Key Holder Transfer and not transact in any
shares of the Company’s securities until the earlier of (i) such time the
Proposed Key Holder Transfer is consummated or terminated or (ii) the Proposed
Key Holder Transfer ceases to be material non-public information such
information. Each Investor who desires to exercise its Right of Co-Sale must
give the selling Key Holder written notice to that effect within thirty (30)
days after receipt of the Proposed Transfer Notice, and upon giving such notice
such Investor shall be deemed to have effectively exercised the Right of
Co-Sale. If any Transfer Stock subject to a Proposed Key Holder Transfer is to
be sold to a Prospective Transferee, each respective Investor may elect to
exercise its Right of Co-Sale and participate on a pro rata basis in the
Proposed Key Holder Transfer as set forth in Section 2.1(b) below and
otherwise on the same terms and conditions specified in the Proposed Transfer
Notice.

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(c)         
Shares Includable. Each Investor who timely exercises such Investor’s
Right of Co-Sale by delivering the written notice provided for above in
Section 2.1(a) may include in the Proposed Key Holder Transfer all or any
part of such Investor’s Common Stock equal to the product obtained by
multiplying (i) the aggregate number of shares of Transfer Stock subject to the
Proposed Key Holder Transfer by (ii) a fraction, the numerator of which is the
number of shares of Common Stock owned by such Investor immediately before
consummation of the Proposed Key Holder Transfer and the denominator of which is
the total number of shares of Common Stock owned, in the aggregate, by all
Investors immediately prior to the consummation of the Proposed Key Holder
Transfer, plus the number of shares of Transfer Stock held by the selling Key
Holder. To the extent one or more of the Investors exercise such right of
participation in accordance with the terms and conditions set forth herein, the
number of shares of Transfer Stock that the selling Key Holder may sell in the
Proposed Key Holder Transfer shall be correspondingly reduced.

(i)          Delivery
of Certificates. Each Investor shall effect its participation in the
Proposed Key Holder Transfer by delivering to the transferring Key Holder(s), no
later than fifteen (15) days after such Investor’s exercise of the Right of
Co-Sale, one or more stock certificates, properly endorsed for transfer to the
Prospective Transferee, representing the number of shares of Common Stock that
such Investor elects to include in the Proposed Key Holder Transfer.

(d)          Purchase
Agreement. The parties hereby agree that the terms and conditions of any
sale pursuant to this Section 2.1 will be memorialized in, and governed
by, a written purchase and sale agreement with customary terms and provisions
for such a transaction and the parties further covenant and agree to enter into
such an agreement as a condition precedent to any sale or other transfer
pursuant to this Section 2.1.

(e)         
Deliveries. Each stock certificate an Investor delivers to the selling
Key Holder pursuant to Section 2.1(b) above will be transferred to the
Prospective Transferee against payment therefor in consummation of the sale of
the Transfer Stock pursuant to the terms and conditions specified in the
Proposed Transfer Notice and the purchase and sale agreement, and the selling
Key Holder shall concurrently therewith remit or direct payment to each Investor
the portion of the sale proceeds to which such Investor is entitled by reason of
its participation in such sale. If any Prospective Transferee or Transferees
refuse(s) to purchase securities subject to the Right of Co-Sale from any
Investor exercising its Right of Co-Sale hereunder, no Key Holder may sell any
Transfer Stock to such Prospective Transferee or Transferees unless and until,
simultaneously with such sale, such Key Holder purchases all securities subject
to the Right of Co-Sale from such Investor on the same terms and conditions
(including the proposed purchase price) as set forth in the Proposed Transfer
Notice.

(f)         
Additional Compliance. If any Proposed Key Holder Transfer is not
consummated within forty-five (45) days after receipt of the Proposed Transfer
Notice by the Company, the Key Holders proposing the Proposed Key Holder
Transfer may not sell any Transfer Stock unless they first comply in full with
each provision of this Section 2. The exercise or election not to
exercise any right by any Investor hereunder shall not adversely affect its
right to participate in any other sales of Transfer Stock subject to this
Section 2.1.

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2.2          If,
as a result of the granting or existence of the Right of Co-Sale contained
herein, the U.S. Securities and Exchange Commission (the “SEC”)
issues any comments to a registration statement or annual or periodic filing
made by the Company, which requires the modification or elimination of such
Right of Co-Sale, each of the Investors will act in good faith to discuss
whether to modify or not to exercise such right in order to allow the Company to
resolve to the satisfaction of the Company and the SEC any such comments made by
the SEC.

2.3          Effect of Failure to Comply. 

(a)         
Transfer Void; Equitable Relief. Any Proposed Key Holder Transfer not
made in compliance with the requirements of this Agreement shall be null and
void ab initio, shall not be recorded on the books of the Company or its
transfer agent and shall not be recognized by the Company. Each party hereto
acknowledges and agrees that any breach of this Agreement would result in
substantial harm to the other parties hereto for which monetary damages alone
could not adequately compensate. Therefore, the parties hereto unconditionally
and irrevocably agree that any non-breaching party hereto shall be entitled to
seek protective orders, injunctive relief and other remedies available at law or
in equity (including, without limitation, seeking specific performance or the
rescission of purchases, sales and other transfers of Transfer Stock not made in
strict compliance with this Agreement).

(b)         
Violation of Co-Sale Right. If any Key Holder purports to sell any
Transfer Stock in contravention of the Right of Co-Sale (a “Prohibited
Transfer”), each Investor who desires to exercise its Right of Co-Sale
under Section 2.1 may, in addition to such remedies as may be available
by law, in equity or hereunder, require such Key Holder to purchase from such
Investor the type and number of shares of Common Stock that such Investor would
have been entitled to sell to the Prospective Transferee under Section 2.1
had the Prohibited Transfer been effected pursuant to and in compliance with
the terms of Section 2.1. The sale will be made on the same terms and
subject to the same conditions as would have applied had the Key Holder not made
the Prohibited Transfer, except that the sale (including, without limitation,
the delivery of the purchase price) must be made within ninety (90) days after
the Investor learns of the Prohibited Transfer, as opposed to the timeframe
proscribed in Section 2.1. Such Key Holder shall also reimburse each
Investor for any and all reasonable and documented out-of-pocket fees and
expenses, including reasonable legal fees and expenses, incurred pursuant to the
exercise or the attempted exercise of the Investor’s rights under Section
2.1.

3.          Exempt Transfers. 

3.1         
Exempted Transfers. Notwithstanding the foregoing or anything to the
contrary herein, the provisions of Section 2.1 shall not apply: (a) to a
repurchase of Transfer Stock from a Key Holder by the Company at a price no
greater than that originally paid by such Key Holder for such Transfer Stock and
pursuant to an agreement containing vesting and/or repurchase provisions
approved by a majority of the Board of Directors or (b) to any transfer of
Transfer Stock by a Key Holder as a gift or without consideration, including,
without limitation, transfers for estate planning purposes; provided that
in the case of clause(s) (a) or (b), the Key Holder shall deliver prior written
notice to the Investors of such gift or transfer and such shares of Transfer Stock shall at all times remain subject to the
terms and restrictions set forth in this Agreement and such transferee shall, as
a condition to such issuance, deliver a counterpart signature page to this
Agreement as confirmation that such transferee shall be bound by all the terms
and conditions of this Agreement as a Key Holder (but only with respect to the
securities so transferred to the transferee), including the obligations of a Key
Holder with respect to Proposed Key Holder Transfers of such Transfer Stock
pursuant to Section 2.

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3.2         
Exempted Offerings. Notwithstanding the foregoing or anything to the
contrary herein, the provisions of Section 2 shall not apply to the sale
of any Transfer Stock (a) to the public in an offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended or (b)
pursuant to a liquidation event.

3.3         
Prohibited Transferees. Notwithstanding the foregoing, no Key Holder
shall transfer any Transfer Stock to (a) any entity which, in the determination
of the Company’s Board of Directors, directly or indirectly competes with the
Company or (b) any customer, distributor or supplier of the Company, if the
Company’s Board of Directors should determine that such transfer would result in
such customer, distributor or supplier receiving information that would place
the Company at a competitive disadvantage with respect to such customer,
distributor or supplier.

4.         
Legend. The parties agree that within 180 days after the execution of
this Agreement, each of the Key Holder shall cause each certificate representing
shares of Transfer Stock held by such Key Holders or issued to any permitted
transferee in connection with a transfer permitted by Section 3(a) hereof
shall be endorsed with the following legend:

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO, AND IN CERTAIN CASES PROHIBITED
BY, THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF CO-SALE AGREEMENT BY AND
AMONG THE STOCKHOLDER, THE CORPORATION AND CERTAIN OTHER HOLDERS OF STOCK OF THE
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE CORPORATION.

Each Key Holder agrees that the Company may instruct its
transfer agent to impose transfer restrictions on the shares represented by
certificates bearing the legend referred to in this Section 4
above to enforce the provisions of this Agreement, and the Company agrees to
promptly do so. The legend shall be removed upon termination of this Agreement
at the request of the holder.

5.          Miscellaneous. 

5.1         
Term. This Agreement shall automatically terminate upon the earlier of
(a) the average daily trading volume of the Company reaching 50,000 shares for
two consecutive months and (b) consummation of a Qualified Public Offering.
Notwithstanding the foregoing, the Investors may terminate this Agreement
unilaterally without consent of either the Key Holders or the Company by
notifying the Key Holders and the Company in writing.

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5.2         
Stock Split. All references to numbers of shares in this Agreement shall
be appropriately adjusted to reflect any stock dividend, split, combination or
other recapitalization affecting the Common Stock occurring after the date of
this Agreement.

5.3         
Ownership. Each Key Holder represents and warrants that such Key Holder
is the sole legal and beneficial owner of the shares of Transfer Stock subject
to this Agreement and that no other person or entity has any interest in such
shares (other than a community property interest as to which the holder thereof
has acknowledged and agreed in writing to the restrictions and obligations
hereunder).

5.4         
Dispute Resolution. Any unresolved controversy or claim arising out of or
relating to this Agreement, except as (i) otherwise provided in this Agreement,
or (ii) any such controversies or claims arising out of either party’s
intellectual property rights for which a provisional remedy or equitable relief
is sought, shall be submitted to arbitration by one arbitrator mutually agreed
upon by the parties, and if no agreement can be reached within thirty (30) days
after names of potential arbitrators have been proposed by the American
Arbitration Association (the “AAA”), then by one arbitrator having
reasonable experience in corporate finance transactions of the type provided for
in this Agreement and who is chosen by the AAA. The arbitration shall take place
in New York, NY, in accordance with the AAA rules then in effect, and judgment
upon any award rendered in such arbitration will be binding and may be entered
in any court having jurisdiction thereof. There shall be limited discovery prior
to the arbitration hearing as follows: (a) exchange of witness lists and copies
of documentary evidence and documents relating to or arising out of the issues
to be arbitrated, (b) depositions of all party witnesses and (c) such other
depositions as may be allowed by the arbitrators upon a showing of good cause.
Depositions shall be conducted in accordance with the California Code of
Civil Procedure, the arbitrator shall be required to provide in writing to the
parties the basis for the award or order of such arbitrator, and a court
reporter shall record all hearings, with such record constituting the official
transcript of such proceedings. The prevailing party shall be entitled to
reasonable attorney’s fees, costs, and necessary disbursements in addition to
any other relief to which such party may be entitled. 

5.5         
Notices. All notices and other communications given or made pursuant to
this Agreement shall be in writing and shall be deemed effectively given and
received: (a) upon personal delivery to the party to be notified, (b) when sent
by confirmed electronic mail or facsimile if sent during normal business hours
of the recipient, and if not so confirmed, then on the next business day, (c)
five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one (1) business day after deposit
with a nationally recognized overnight courier, specifying next business day
delivery, with written verification of receipt; provided, however, that all
notices sent outside the United States shall be sent via facsimile and overnight
courier. All communications shall be sent to the respective parties at their
address as set forth on Schedule A or Schedule B hereof, as the
case may be, or to such email address, facsimile number or address as
subsequently modified by written notice given in accordance with this Section
5.6. If notice is given to the Company, it shall be sent to THT Heat
Transfer Technology, Inc., No. 5 Nanhuan Road, Tiexi District, Siping, Jilin
Province, China 136000, Attention: Chief Financial Officer; and a copy (which
shall not constitute notice) shall also be sent to Pillsbury Winthrop Shaw
Pittman, LLP, 2300 N Street, N.W., Washington, DC 20037; and if notice is given
to the Investors it shall be sent to the address of the Investors on the Company’s records and a copy (which shall not constitute
notice) shall also be given to Winston & Strawn LLP, Beijing Representative
Office, Suite 718, China World Office 1, 1 Jiangguomenwai Avenue, Beijing
100004, China. 

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5.6         
Entire Agreement. This Agreement (including the Exhibits and Schedules
hereto) constitutes the full and entire understanding and agreement between the
parties with respect to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between the parties are
expressly canceled.

5.7         
Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to any party under this Agreement, upon any breach or default of
any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

5.8         
Amendment; Waiver and Termination. This Agreement may be amended,
modified or terminated (other than pursuant to Section 5.1 above) and the
observance of any term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a written instrument
executed by (a) the Company, (b) the Key Holders holding at least fifty percent
(50%) of the shares of Transfer Stock then held by all of the Key Holders and
(c) Investors holding at least seventy-five percent (75%) of the shares of
Common Stock held by the Investors (voting as a single class and on an
as-converted basis). Any amendment, modification, termination or waiver so
effected shall be binding upon the Company, the Investors, the Key Holders and
all of their respective successors and permitted assigns whether or not such
party, assignee or other shareholder entered into or approved such amendment,
modification, termination or waiver. Notwithstanding the foregoing, (i) this
Agreement may not be amended, modified or terminated and the observance of any
term hereunder may not be waived with respect to any Investor or Key Holder
without the written consent of such Investor or Key Holder unless such
amendment, modification, termination or waiver applies to all Investors and Key
Holders, respectively, in the same fashion and (ii) the consent of the Key
Holders shall not be required for any amendment, modification, termination or
waiver if such amendment, modification, termination or waiver does not apply to
the Key Holders No waivers of or exceptions to any term, condition or provision
of this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.

5.9          Assignment of Rights. 

(a)          The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties.


7




Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and permitted assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. 

(b)          Any
successor or permitted assignee of any Key Holder, including any Prospective
Transferee who purchases shares of Transfer Stock in accordance with the terms
hereof, shall deliver to the Company and the Investors, as a condition to any
transfer or assignment, a counterpart signature page hereto pursuant to which
such successor or permitted assignee shall confirm their agreement to be subject
to and bound by all of the provisions set forth in this Agreement that were
applicable to the predecessor or assignor of such successor or permitted
assignee.

(c)          The
rights of the Investors hereunder are not assignable without the Company’s
written consent (which shall not be unreasonably withheld, delayed or
conditioned), except (i) by an Investor to any Affiliate or (ii) to an assignee
or transferee who acquires at least 250,000 shares of Common Stock (as adjusted
for any stock combination, stock split, stock dividend, recapitalization or
other similar transaction), it being acknowledged and agreed that any such
assignment, including an assignment contemplated by the preceding clauses (i) or
(ii) shall be subject to and conditioned upon any such assignee’s delivery to
the Company and the other Investors of a counterpart signature page hereto
pursuant to which such assignee shall confirm their agreement to be subject to
and bound by all of the provisions set forth in this Agreement that were
applicable to the assignor of such assignee. 

(d)         
Except in connection with an assignment by the Company by operation of law to
the acquirer of the Company, the rights and obligations of the Company hereunder
may not be assigned under any circumstances.

5.10         
Severability. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other
provision.

5.11         
Governing Law. This Agreement and any controversy arising out of or
relating to this Agreement shall be governed by and construed in accordance with
the laws of the State of New York as to matters within the scope thereof,
without regard to conflict of law principles that would result in the
application of any law other than the law of the State of New York.

5.12         
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.

5.13         
Counterparts; Facsimile. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed and delivered by facsimile signature and in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

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5.14         
Aggregation of Stock. All shares of Common Stock held or acquired by
Affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement and the exercise
of any such rights may be allocated among such Affiliated entities in such
manner as such Affiliated entities may determine in their discretion. 

5.15         
Specific Performance. In addition to any and all other remedies that may
be available at law in the event of any breach of this Agreement, each Investor
shall be entitled to specific performance of the agreements and obligations of
the Company and the Key Holders hereunder and to such other injunction or other
equitable relief as may be granted by a court of competent jurisdiction.

[signature pages follow]

9




IN WITNESS WHEREOF, the parties have executed this Right of
Co-Sale Agreement as of the date first written above.

	 	COMPANY: 
	 	 
	 	THT HEAT TRANSFER TECHNOLOGY, INC.

	 	By:       
      ___________________________________
	 	Name:  
      ___________________________________
	 	Title:    
      ___________________________________
	 	  
	 	INVESTORS: 
	 	_________________________________________ 
	 	 
	 	By:       
      ___________________________________
	 	Name:  
      ___________________________________
	 	Title:     ___________________________________  
	 	 
	 	_________________________________________  
	 	 
	 	
	 	By:      
      ___________________________________
	 	Name:  ___________________________________
	 	Title:   
      ___________________________________  
	 	
	 	_________________________________________  
	 	 
	 	By:      
      ___________________________________
	 	Name: 
    ___________________________________
	 	Title:   
      ___________________________________
	 	  
	 	KEY HOLDERS: 
	 	  
	 	_________________________________________
	 	GUOHONG ZHAO 
	 	  
	 	_________________________________________
	 	XIAOQIU YU 
	 	 
	 	_________________________________________
	 	XIAOMEI FANG 


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SCHEDULE A
INVESTORS
(to be
completed)

	Name and Address 	Number of Shares Held
  
	 	 
	 	 






SCHEDULE B

KEY HOLDERS

	Name and Address 	Number of Shares Held 
	 	 
	GUOHONG ZHAO 	4,559,214 
	 	 
	XIAOQIU YU 	1,911,667 
	 	 
	XIAOMEI FANG 	1,070,533