EX-10.61





 Exhibit 10.61


China
Hydroelectric Corporation




And 



Henan Lan Tian Group Co., Ltd.




 






Capital
Increase Agreement




 






October 22nd,
2009




 









 





     Capital Increase Agreement of



Henan Wuyue Storage Power Generation Co., Ltd.



This Capital Increase Agreement (hereinafter referred to as the “Agreement”) is entered into at
Zhengzhou City as of
October 22nd, 2009 by and between the following parties:




	 	 	 
	Party A:

	 	China Hydroelectric Corporation
(Chinese translation of the name is:  a company
incorporated under the laws of Cayman Islands, its registered address is 558 Lime Rock Road,
Lime Rock, Connecticut 06039, and the authorized representative is John D. Kuhns;
	 
	 	 
	Party B:

	 	Henan Lan Tian Group Co., Ltd., a company incorporated under the laws of the People’s
Republic of China, its domicile is No.68 Jiefang Road, Zhumadian City, and its legal
representative is Li Xinhua.






In this Agreement, Party A and Party B shall be referred to collectively as “the Parties”.





	1.	 	Causes and Purpose of the Execution of this Agreement
	 
	1.1	 	Party B has already obtained the “Reply on carrying out the preparatory work of Henan Xinyang
Wuyue Storage Power Generation Station” (Fa Gai Ban Neng Yuan [2006] No. 503, hereinafter
referred to as the “Reply”), which approves of carrying out the preparatory work of
construction of Henan Xinyang Wuyue Storage Power Generation Station (hereinafter referred to
as “Wuyue Power Station”), and Party B has carried out part of the preparatory work.
	 
	1.2	 	Party B makes a contribution of RMB 43,000,000.00 Yuan and possesses 100% equity interest of
Henan Wuyue Storage Power Generation Co., Ltd (hereinafter referred to as “Wuyue Company”).




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	1.3	 	The Parties agree that Party A will subscribe the increased capital RMB 162,500,000.00
Yuan (hereinafter referred to as the “price of increased capital”) of Wuyue Company. After
the completion of capital increase, Wuyue Company will change into a China foreign equity
joint venture. The Parties unanimously agree to apply to National Development and Reform
Commission for the approval and subsequent construction of Wuyue Power Station for the
construction subject, i.e., the joint venture.
	 
	2.	 	Warranties and Undertakings
	 
	2.1	 	Party B undertakes that all the rights and interests obtained or to be obtained by it related
to Wuyue Company shall be enjoyed by Wuyue Company.
	 
	2.2	 	Party B warrants that no mortgage, pledge or other third party rights have been imposed upon
the assets of Wuyue Company, and Wuyue Company has never provided guaranty for any individual,
legal person, or other organizations. Party B warrants that its contribution to Wuyue Company
is real, without any conduct of false capital contribution, revocation, transfer, or illegal
withdrawal of contribution. Party B also warranties that no pledge or any third party rights
exist on the equity interest of Wuyue as it holds.
	 
	2.3	 	Party A and Party B warrant that all the attestations, documents, materials and information
provided or to be provided according to this Agreement are real, accurate and complete. The
facts upon which such attestations, documents, materials and information are based are real
and legitimate as well.
	 
	2.4	 	Party A and Party B warrant that they have obtained all the authorization and approval to
execute and perform the obligations of this Agreement. The execution and performance of this
Agreement will not conflict with other legitimate obligations assumed collectively or
respectively by the Parties.
	 
	2.5	 	Party A and Party B warranty and undertake that they are companies duly incorporated and
effectively existing and each Party has the capacity to perform the obligations under this
Agreement.
	 
	2.6	 	Party B is liable for carrying out the formalities of examination and approval, modification
and filing required by capital increase and equity interest transfer according to Chinese
laws. It also undertakes to obtain legal and effective certificate of approval and business
license for enterprise legal person. Party B is also liable for completing the project
approval procedures, other relevant procedures and work.




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	2.7	 	Party A undertakes that it will provide necessary documents and assist Party B with carrying
out the formalities of examination and approval, modification and filing required by capital
increase and equity interest transfer according to Chinese laws and requirements of relevant
authorities.
	 
	2.8	 	The Parties agree to consult friendly and take advantage of
each other so as to further strengthen the cooperation in the construction of Wuyue Power Station Project after
the China foreign equity joint venture has been set up.
	 
	3.	 	Capital Increase and Equity Interest Expansion, Equity Interest Transfer (the amount
and means of payment are for reference only)
	 
	3.1	 	The newly increased registered capital of Wuyue Company is RMB
162,500,000.00 Yuan which is all to be contributed by Party A in convertible foreign exchange
of US dollars. The U.S. dollars which is equivalent to RMB [162,500,000.00] Yuan (which shall
be calculated according to the benchmark exchange rate on the remittance date as published by
People’s Bank of China) shall be remitted to the special account used for capital increase of
Wuyue Company according to the provisions of this Agreement.
	 
	3.2	 	Party A shall pay the first installment of increased capital within 30 days after this
Agreement is approved by the authorized examination and approval department, the first
installment of increased capital shall be 20% of the newly increased capital of Wuyue Company.
Party A shall pay off the remaining increased capital within 2 years upon the approval on
registration for alteration of Wuyue Company.
	 
	3.3	 	The capital structure of Wuyue Company after the capital increase is as follows: Party A
contributes RMB 162,500,000.00 Yuan, accounting for 79% of the equity
interest; Party
B contributes RMB 43,000,000.00 Yuan, accounting for 21% of the equity interest. The
Parties agrees that during the period from this capital increase is completed to the
proportion of the equity interests Party A holds reaches 95%, Party A is entitled to keep
increasing the registered capital of Wuyue Company according to construction of Wuyue Power
Station Project, and independently decide the schedule and amount of capital increase; Party B
agrees to waive the right to subscribe the increased capital of Wuyue Company, and undertakes
to assist and cooperate with Party




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	 	 	A regarding the capital increase, including but not limited to issuing necessary
documents/resolutions, completing the examination/approval, registration, recording and
other procedures.
	 
	3.4	 	The Parties agree that one of the use the price of increased capital is to pay off the
liabilities payable to Party B by Wuyue Company, RMB 18,000,000.00
Yuan to Party B, the
schedule of the payment is as follows: Party A will pay RMB 10,000,000.00 Yuan to Party B
within 7 days after Wuyue Company receives the first installment of the price of increased
capital and pay RMB 4,000,000.00 Yuan to Party B within 5 days after the feasibility study
report of Wuyue Power Station Project is examined and approved by relevant authority, and pay
the remaining RMB 4,000,000.00 Yuan to Party B within 5 days after Wuyue Power Station Project
is approved by the authority in charge.
	 
	3.5	 	After the foregoing capital increase and equity interest transfer are completed, Wuyue
Company shall hire an accounting institution to produce the capital verification report and
issue the contribution certificates to Party A and Party B.
	 
	3.6	 	Party B is liable for submitting the documents and matters regarding this capital increase
to the examination and approval authority for approval, and is liable for registration for
alteration at the Administration for Industry and Commerce.
	 
	4.	 	Delivery
	 
	4.1	 	Party B warrants that Wuyue Company may sign any contract or document, and issue any document
on condition that the prior consent in writing of Party A has been obtained during the period
from the execution of this Agreement to Wuyue Company which is a China foreign equity joint
venture has been set up.
	 
	4.2	 	The corporate seal, special seal for contractual uses and all the other seals of Wuyue
Company, and all the original documents of Wuyue Power Station Project such as the
certificates, contracts, agreements, documents and government approvals etc shall be
managed by Party A within 5 days after Wuyue Company (which is a China foreign equity joint
venture) has been set up.
	 
	4.3	 	The Annex 1 of this Agreement “The schedule of accounts payable” which is




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	 	 	disclosed by Party B specifies the whole liabilities Wuyue Company assumes as of September
30th,
2009. The total amount is RMB 14,141,819.62 Yuan. Such liabilities shall
be assumed by Wuyue Company. The debts under other projects and which have not been listed
in Annex 1 “The schedule of accounts payable” shall be assumed by Party B, the creditor’s
rights shall be enjoyed by Party B. Party B shall appropriately pay off or deal with such
rights and debts after this Agreement comes into effect. Party B shall compensate Party A
or Wuyue Company for any losses or liabilities resulting from such rights and debts.
	 
	4.4	 	After this Agreement comes into effective, Party A will preferentially employ the staff from
Wuyue Project Department of Party B subject to the principle of selecting the best,
objectivity and fairness, and will build the employment relationship according to the law.
	 
	4.5	 	The Articles of association of the company shall be altered, the board of directors and
relevant management bodies shall be reorganized after this capital increase is completed. The
directors shall be appointed by Party A, but Party B can recommend one candidate for director
who will be officially appointed by Party A after being approved by Party A. The establishment
of the other management bodies shall be decided by the board of directors of the Company.
	 
	5.	 	Liability for Breach of the Agreement
	 
	5.1	 	If this Agreement becomes null and void, unable to be
performed or unable to be fully
performed, because the execution or performance of this Agreement by one party conflicts or
violates other contracts or articles of association of that party, or
the authorization or
approval of governmental organizations, or due to reasons attributable to any party, it
comprises the breach of the Agreement by that party. The breaching party shall pay one
percent of capital increase as penalty to the observant party. If the penalty cannot
compensate the observant party for the losses resulting from the execution and performance of
this Agreement, the breaching party shall make up for the losses.
	 
	5.2	 	If any party breaches its duties under the Agreement, or makes any misstatement, or fails
to perform liability of guaranty, it constitutes breach of




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	 	 	this Agreement. The breaching party shall pay one percent of the capital increase as
penalty. If the penalty cannot compensate the observant party for the losses resulting
from the execution and performance of this Agreement, the breaching party shall make up
for the losses.
	 
	5.3	 	If the legal existence of Wuyue Company or Wuyue Power Station Project is affected, because
Party B fails to disclose any information which shall be disclosed, Party A has the right to
terminate this Agreement, and take back the investment already paid,
moreover, Party B shall
pay one percent of the price of increased capital to Party A as penalty. If the penalty cannot
compensate the observant party for the losses resulting from the execution and performance of
this Agreement, the breaching party shall make up for the losses.
	 
	5.4	 	If Party A fails to pay the increased capital according to Article 3.2 under this Agreement
or make the compensation payment to Party B according to the provision of Article 3.4 under
this Agreement, Party A shall pay 0.05% of the delayed payment per day as penalty for overdue
payment.
	 
	5.5	 	From the execution of this Agreement to the approval on registration of registered
capital change of Wuyue Company, if Party B conducts any performance which causes
damages to the assets, rights or benefits of Wuyue Company, it consists breach of this
Agreement. Party B shall compensate Party A for the losses resulting from the breach.
	 
	6.	 	Modification and termination of the Agreement
	 
	6.1	 	The modification or supplementary to this Agreement shall be
agreed by both Parties in
written agreement.
	 
	6.2	 	In any of the following conditions, this Agreement can be terminated upon written agreement
by both parties:





	 	(1)	 	after the execution of this Agreement until the completion of capital
increase, there are some modifications or changes to the applicable laws, regulations,
or policies, resulting in substantive impact on the performance of
this Agreement, and the Parties cannot reach a consensus regarding the modification of
this Agreement according to the new laws or regulations;
	 
	 	(2)	 	Wuyue Power Station Project fails to obtain the approval of National
Development and Reform Commission according to the provisions of this Agreement;




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	 	(3)	 	if the Agreement becomes unable to be performed due to force majeure;
	 
	 	(4)	 	other circumstances under which both Parties agree upon the termination
of this Agreement.






	7.	 	Confidentiality
	 
	 	 	Any commercial secret or other unpublicized information obtained by one Party during the
execution and performance of this Agreement shall not be disclosed or used by that party,
except for the disclosure as required by laws, regulations, or supervisory departments.
	 
	8.	 	Force Majeure
	 
	 	 	If one Party or the Parties fail to perform this Agreement
because of force majeure, the
Party claiming force majeure shall inform the other party promptly and use reasonable
endeavors to minimize the losses. It shall also furnish within fifteen days thereafter
sufficient proof of the occurrence of such force majeure issued by relevant authorities.
Both Parties shall consult with each other in order to decide whether to suspend the
performance or to terminate the Agreement and shall arrive at written agreement.
	 
	9.	 	Dispute resolution and applicable laws
	 
	 	 	This Agreement is governed by and explained according to Chinese laws. Any disputes
arising from or related to this Agreement shall be resolved through the friendly
consultation by the Parties. Should the Parties fails to settle the disputes by
consultation, each party is entitled to apply to China International Economic and Trade
Arbitration Commission (CIETAC) for arbitration, and the disputes shall be resolved by
arbitration in Beijing in accordance with the Arbitration Rules of CIETAC being in force
when the application is made.
	 
	10.	 	Execution, coming into force and others
	 
	10.1	 	This Agreement is executed in both Chinese and English, and the Chinese version shall
prevail. This Agreement comes into force after the execution of both
Parties and approval by
authorities.
	 
	10.2	 	This Agreement is made in [ 8 ] copies, with each
party holding [ 2 ] copy.
	 




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	 	 	Other copies are used for the modification procedures and each copy has the same legal
effectiveness.
	 
	10.3	 	The cost for the procedures of capital increase as required by Chinese laws shall be borne
by Wuyue Company which has completed the capital increase, and the cost for the execution and
performance of this Agreement shall be borne by each Party. The tax paid for the capital
increase shall be assumed by each Party according to relevant laws and regulations. As this
Agreement comes into effective, the reasonable expenses paid by Party B for the approval
procedures of Wuyue Power Station Project and other relevant formalities/work, after being
approved by Party A, shall be borne by Wuyue Company which has completed the capital
increase.
	 
	11.	 	Notice
	 
	 	 	Any notice sent by one party to the other party shall be delivered by means of telegraph,
telex, email or letters. The addresses and recipients for the Parties in this Agreement are
as follows:
	 
	 	 	 Party A: Zone B, 25th
Floor, New Poly Plaza, North Street No. l, Chao
Yang Men, Dong Cheng District, Beijing





Postcode: 100010



Telephone: 010-64082341



Facsimile: 010-64974430



Recipient:
Xu Hongliang




Party B:
Jiefang Road No. 68, Zhumadain City, Henan Province



Postcode: 463000



Telephone: 0396-2958018



Facsimile: 0396-2958000




Recipient: Hu Mingyao





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This page contains no text and is the signature page for Capital Increase Agreement.




	 
	Party A:

	 

	

	 

	Authorized representative:

	 

	Party B:

	 

	

	 

	Authorized representative:








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Annex 1




The schedule of accounts payable




	 	 	 
	Name: Henan Wuyue Storage Power Generation Co., Ltd

	 	As of: September 30, 2009






	 	 	 	 	 	 	 	 	 
	No	 	Name	 	Content	 	Banlance (Yuan)
	1

	 	Lan Tian Holiday Village under Henan Ecology Tour Co., Ltd.
	 	Conference and Meal expense
	 	 	514,398.00	 
	2

	 	Shen Wei
	 	arrearage for purchasing furniture
	 	 	2,440.00	 
	3

	 	Li Wanbai
	 	make the payment for the construction
of laying foundation, which is expected
to be reimbursed
	 	 	270,569.07	 
	4

	 	Henan Ecology Tea Co., Ltd.
	 	tea expenses
	 	 	154,712.00	 
	5

	 	Hennan Electric Power Survey & Design Institute
	 	consulting fee
	 	 	200,000.00	 
	6

	 	Hydrochina Zhongnan Engineering Corporation
	 	design fee
	 	 	10,000,000.00	 
	7

	 	Post Office of Xinyang City
	 	labour fees payable
	 	 	79,800.00	 
	8

	 	China Power Construction Engineering Consulting Zhongnan Coporation
	 	consulting fee
	 	 	200,000.00	 
	9

	 	Hydrochina Consulting Corporation
	 	preliminary feasibility study technology
examining fees
	 	 	1,000,000.00	 
	10

	 	Guangshan County Heguangduo Station for Purchase and Supply of the Famous High-quality Wine
	 	cigrette and wine expenses
	 	 	15,700.00	 
	11

	 	Zhuangyuanfu Hotel
	 	serving expenses
	 	 	22,651.00	 
	12

	 	Simaguang Hotel
	 	serving expenses
	 	 	6,000.00	 
	13

	 	Bi Hai Yun Tian Hotel
	 	accomadation and meal fees
	 	 	56,545.00	 
	14

	 	Wang Shengli
	 	tea and meal expenses payable
	 	 	147,134.00	 
	15

	 	Zhongyuan Hotel
	 	accommodation and meal expenses
	 	 	600,000.00	 
	16

	 	Guangshan County Zhongjin Stones Factory
	 	price of materials used for building
roads and laying foundation
	 	 	123,000.00	 
	17

	 	Zhumadian Boxin Accounting Co., Ltd.
	 	capital verification auditing fees
	 	 	12,000.00	 
	18

	 	employee
	 	expenses payable for reimbursement
	 	 	604,003.09	 
	19

	 	Zhong Yuan Gasification Engineering Co., Ltd.
	 	payment for construction
	 	 	75,330.46	 
	20

	 	the Pension of employee
	 	 	 	 	6,096.00	 
	21

	 	Li Wanhai
	 	meal expenses payable
	 	 	51,441.00	 
	 

	 	 
	 	 
	 	 	 	 
	 

	 	Total
	 	 	 	 	14,141,819.62