EX-10.20







Exhibit 10.20




BETWEEN




LIN YUN




WU TING LI




ZHANG YAO FANG




ZHOU JIAN




AND




CHINA HYDROELECTRIC CORPORATION









SHARE TRANSFER AGREEMENT




For




PINGNAN COUNTY YUANPING HYDROELECTRIC




CO., LTD.








 









 





CONTENTS




	 	 	 	 	 	 	 
	CHAPTER I DEFINITIONS AND INTERPRETATIONS	 	 	6	 
	 
	 	 	 	 	 	 
	Article 1
	 	Definitions	 	 	6	 
	 
	 	 	 	 	 	 
	CHAPTER II THE EQUITY STAKE	 	 	8	 
	 
	 	 	 	 	 	 
	Article 2
	 	Transfer of Equity Stake	 	 	8	 
	Article 3
	 	Share Transfer Price	 	 	8	 
	Article 4
	 	Payment of the Transfer Price	 	 	9	 
	Article 5
	 	Taxes Payable Under the Transfer of Equity Stake	 	 	12	 
	 
	 	 	 	 	 	 
	CHAPTER III REPRESENTATIONS AND WARRANTIES BY ALL PARTIES	 	 	12	 
	 
	 	 	 	 	 	 
	Article 6
	 	Representations and Warranties By All Parties	 	 	12	 
	 
	 	 	 	 	 	 
	CHAPTER IV DISCLOSURES, REPRESENTATIONS AND WARRANTIES BY THE TRANSFERORS	 	 	13	 
	 
	 	 	 	 	 	 
	Article 7
	 	Disclosures, Representations and Warranties by the Transferors	 	 	13	 
	Article 8
	 	General Representations and Warranties by the Transferors	 	 	15	 
	Article 9
	 	Ownership	 	 	15	 
	Article 10
	 	The Company and the Hydroelectric Station Project	 	 	16	 
	 
	 	 	 	 	 	 
	CHAPTER V DISCLOSURES, REPRESENTATIONS AND WARRANTIES BY THE TRANSFEREE	 	 	25	 
	 
	 	 	 	 	 	 
	Article 11
	 	Disclosures, Representations and Warranties by the Transferee	 	 	25	 
	 
	 	 	 	 	 	 
	CHAPTER VI DELIVERY	 	 	26	 
	 
	 	 	 	 	 	 
	Article 12
	 	Delivery	 	 	26	 
	 
	 	 	 	 	 	 
	CHAPTER VII EMPLOYEES	 	 	28	 
	 
	 	 	 	 	 	 
	Article 13
	 	Employees	 	 	28	 
	 
	 	 	 	 	 	 
	CHAPTER VIII CONFIDENTIALITY	 	 	29	 
	 
	 	 	 	 	 	 
	Article 14
	 	Confidentiality	 	 	29	 
	 
	 	 	 	 	 	 
	CHAPTER IX BREACH OF CONTRACT	 	 	30	 
	 
	 	 	 	 	 	 
	Article 15
	 	Liability for Breach of A Representation or Warranty	 	 	30	 
	Article 16
	 	Liability for Breach of Contract	 	 	31	 
	 
	 	 	 	 	 	 
	CHAPTER X FORCE MAJEURE	 	 	32	 
	 
	 	 	 	 	 	 
	Article 17
	 	Force Majeure	 	 	32	 
	 
	 	 	 	 	 	 
	CHAPTER XI RESOLUTION OF DISPUTES	 	 	33	 
	 
	 	 	 	 	 	 
	Article 18
	 	Arbitration	 	 	33	 
	Article 19
	 	Validity of the Arbitration Award	 	 	34	 
	Article 20
	 	Continuation of Rights and Obligations	 	 	34	 
	 
	 	 	 	 	 	 
	CHAPTER XII APPLICABLE LAW	 	 	34	 
	 
	 	 	 	 	 	 
	Article 21
	 	Applicable Law	 	 	34	 
	 
	 	 	 	 	 	 
	CHAPTER XIII MISCELLANEOUS	 	 	34	 
	 
	 	 	 	 	 	 
	Article 22
	 	Waiver	 	 	35	 
	Article 23
	 	Transfer	 	 	35	 
	Article 24
	 	Amendment	 	 	35	 
	Article 25
	 	Severability	 	 	35	 






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	Article 26
	 	Language	 	 	36	 
	Article 27
	 	Validity of the Text and Appendices	 	 	36	 
	Article 28
	 	Notification	 	 	36	 
	Article 29
	 	The Entire Agreement	 	 	37	 
	 
	 	 	 	 	 	 
	APPENDIX I EXISTING DEBTS OF THE COMPANY	 	 	39	 
	 
	 	 	 	 	 	 
	APPENDIX II LIST OF SECURITY	 	 	41	 







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SHARE TRANSFER AGREEMENT



This Share Transfer Agreement (hereinafter referred to as this “Agreement”) is executed by and
among the following Parties in Fuzhou City, China on August 15, 2008.





	(1)	 	Party A: China Hydroelectric Corporation (hereinafter referred to as the “Transferee”), a
company registered and established in accordance with the laws of the Cayman Islands, with its
registered address at 558 Lime Rock Road, Lime Rock, Connecticut 06039, the authorized
representative of which is John D. Kuhns, whose position is chairman and nationality is United
States of America;
	 
	(2)	 	Party B: Lin Yun, a PRC citizen with the PRC ID card number 350128196704100069, and domicile at
No.17, North Section of Qian Bian Ao, Qian Bian Ao Village, Aodong Town, Pingtan County, Fujian
Province;
	 
	(3)	 	Party C: Wu Tingli, a PRC citizen with the PRC ID card number 352228196907224018, and domicile
at No.002, Shang Yang Gan, Luxia Village, Luxia Township, Pingnan County, Fujian Province;
	 
	(4)	 	Party D: Zhang Yaofang, a PRC citizen with the PRC ID card number 352228196309230055, and
domicile at Room 401, No.189, Cuiping Road, Gufeng Town, Pingnan County, Fujian Province;
	 
	(5)	 	Party E: Zhou Jian, a PRC citizen with the PRC ID card number 350428197102181018, and domicile
at No.188, Xinan Road, Shuinan Town, Jiangle County, Fujian Province.




Party B, Party C, Party D and Party E are hereinafter collectively referred to as the
“Transferors”. The Transferors and Transferee are hereinafter collectively referred to as “All
Parties” as well as each of the Transferors and Transferee is hereinafter referred to as “Party”.




WHEREAS:



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	(1)	 	Pingnan County Yuanping Hydroelectric Co., Ltd. (hereinafter referred to as the “Company”) is a
company incorporated in China, conducting the business of hydropower generation and development
with its registered capital in the amount of RMB44,800,000 and registration number 350923100000668;
	 
	(2)	 	Party B holds five percent (5%) of the equity stake of the Company, and can exercise all of her
full rights as a shareholder;
	 
	(3)	 	Party C holds thirty-six percent (36%) of the equity stake of the Company, and can exercise all
of his full rights as a shareholder;
	 
	(4)	 	Party D holds forty-four percent (44%) of the equity stake of the Company, and can exercise all
of his full rights as a shareholder;
	 
	(5)	 	Party E holds fifteen percent (15%) of the equity stake of the Company, and can exercise all of
his full rights as a shareholder;
	 
	(6)	 	Subject to the terms and conditions set out in this Agreement, Party B is willing to transfer
five percent (5%) of the equity stake of the Company held by her, Party C is willing to transfer
thirty-six percent (36%) of the equity stake of the Company held by him, Party D is willing to
transfer forty-four percent (44%) of the equity stake of the Company held by him and Party E is
willing to transfer fifteen percent (15%) of the equity stake of the Company held by him to the
Transferee, all of which represent one hundred percent (100%) of the equity stake of the Company
(hereinafter referred to as the “Equity Stake”);
	 
	(7)	 	Party B, Party C, Party D and Party E all agree to waive their pre-emptive rights over the
Equity Stake;
	 
	(8)	 	The Transferee is willing to acquire one hundred percent (100%) of the equity stake of the
Company from the Transferors subject to the terms and conditions set out in this Agreement.




Page 5 of 43









 










Therefore, after friendly consultations, on the principles of equality and mutual benefit, all
Parties to this Agreement have reached the following agreement in accordance with the provisions of
the Company Law of the People’s Republic of China, the Contract Law of the People’s Republic of
China and other relevant laws and regulations of the People’s Republic of China:




CHAPTER I DEFINITIONS AND INTERPRETATIONS




Article 1 Definitions



Unless otherwise prescribed and stipulated herein, the following terms used in this Agreement shall
have the meanings set forth as follows:



The “Company” refers to Pingnan County Yuanping Hydroelectric Co., Ltd., a limited liability
company registered and established in accordance with the laws of China, with its registration
number being 350923100000668, registered capital (paid-up capital) being RMB44,800,000 and
registered address at Yuanping Village, Shoushan Township, Pingnan County.



The “Hydroelectric Station Project” refers to Yuanping Hydroelectric Station Technical Improvement
Project with the installed capacity of 16,000 KW, which is legally owned and operated by the
Company.



The “New Articles of Association” refers to the new Articles of Association of the wholly foreign
owned enterprise, Pingnan County Yuanping Hydroelectric Co., Ltd. upon the completion of the share
transfer stipulated in this Agreement, which has been approved by the Examination and Approval
Authority.



“PRC” or “China” refers to the People’s Republic of China.




Page 6 of 43









 







“Claims” refers to all the claims, actions, demands, proceedings judgments liabilities, damages
amounts, costs and expenses (including legal costs and disbursements) whatsoever and howsoever
arising.



“Signing Date” refers to the date on which this Agreement is signed.



“Encumbrance” refers to any mortgage, assignment, lien, charge, pledge, title retention, right to
acquire, security interest, option, pre-emptive right, and any other restriction or conditions
whatsoever including but not limited to:





	(1)	 	any right or power granted or reserved in or over or affecting the Equity Stake;
	 
	(2)	 	the right or power created or otherwise arising in or over the Equity Stake for Transfer under
a fiduciary transfer, charge, lien, pledge, power of attorney or other forms of encumbrance; or
	 
	(3)	 	any security over the Equity Stake for the payment of a debt or any other monetary obligations
or the performance of any other obligations.




“Examination and Approval Authority”, pursuant to the provisions for the examination and approval
of projects which have investments by foreign investors in the PRC, refers to the relevant Chinese
government departments having authority to examine and approve this Agreement, the New Articles of
Association of the Company and the transfer of the Equity Stake contemplated in this Agreement.




“Material Adverse Change” refers to





	 	(1)	 	investigations (which may cause the Company to be punished) and penalties upon the Company by
relevant governmental authorities, which may have material impact on the normal business and
operation of the Company;
	 
	 	(2)	 	involvement with any litigation, arbitration or any other judicial proceedings by the Company,
which may have material impact on the normal business and operation of the Company; or




Page 7 of 43









 






	 	(3)	 	any change (or any development that, insofar as can reasonably be foreseen, is likely to result
in any change) that may cause loss to the financial conditions, business, assets or liabilities of
the Company in the amount of more than RMB100,000.




“RMB” or “Renminbi” refers to the legal currency of the PRC.



“US Dollar” or “US$” refers to the legal currency of the United States of America.



“Third Party” refers to any natural person, legal entity, or other organization or entity, other
than the parties to this Agreement.



“Business Days” refers to the days on which the banks in both Beijing and New York are open for
business.




Chapter II The Equity Stake




Article 2 Transfer of Equity Stake





	 	 	 	Pursuant to the terms stipulated in this Agreement, the Transferors agree to transfer to the
Transferee and the Transferee agrees to acquire from the Transferors the Equity Stake being one
hundred percent (100%) of the equity stake of the Company with all the rights and obligations of
and attaching to the Equity Stake including, without limiting the generality thereof, all the
rights to receive dividends and to receive or subscribe for shares (if any) declared, paid or
issued by the Company and free of any Claims or Encumbrances.





Article 3 Share Transfer Price





	 	3.1	 	The Transferors and Transferee agree that the transfer price for the transfer of the Equity
Stake shall refer to the appraisal value of the Equity Stake given in the Valuation
Report (document number: Zhong Tuo Zheng Tai (2008) No.




Page 8 of 43









 






	 	 	 	P00055-8) issued by Zhuhai Zhongtuo Zhengtai Assets Appraisal and Land Valuation Co., Ltd. (a
qualified valuation agency). The Transferors and Transferee, after consultations, have finally
determined that the price for the Equity Stake shall be agreed at RMB58,000,000 (hereinafter
referred to as the “Transfer Price”). Specifically, the amount respectively payable to the
Transferors shall be as follows:




Party B: US Dollars equivalent to RMB2,900,000;



Party C: US Dollars equivalent to RMB20,880,000;



Party D: US Dollars equivalent to RMB25,520,000;



Party E: US Dollars equivalent to RMB8,700,000.





	 	3.2	 	The Transfer Price shall be paid in instalments.
	 
	 	 	 	The Transfer Price under this Agreement shall be paid in two (2) instalments.
	 
	 	3.3	 	The Transferee shall pay the Transfer Price in the equivalent of US Dollars but shall assure
that the Transferors will receive the pre-agreed amount in RMB.





Article 4 Payment of the Transfer Price





	 	4.1	 	Seventy-five percent (75%) of the Transfer Price, namely, RMB43,500,000, shall be paid to the
Transferors within one (1) month after this Agreement has been approved in writing by the
Examination and Approval Authority and the Certificate of Approval for Establishment of Enterprises
with Foreign Investment in People’s Republic of China has been issued, among which, RMB2,175,000
shall be paid to Party B, RMB15,660,000 to Party C, RMB19,140,000 to Party D and RMB6,525,000 to
Party E .
	 
	 	 	 	The second instalment of the Transfer Price, namely, twenty-five percent (25%) of the Transfer
Price in the amount of RMB14,500,000, shall be paid to




Page 9 of 43









 






	 	 	 	the Transferors within thirty (30) Business Days after the Foreign Invested Enterprises Business
License has been issued, the alteration registration of the Equity Stake with the local
administration for industry and commerce has been completed and the Equity Stake has been
registered under the name of the Transferee, among which, RMB725,000 shall be paid to Party B,
RMB5,220,000 to Party C, RMB6,380,000 to Party D and RMB2,175,000 to Party E, otherwise, the
Transferee shall be deemed as being in breach of this Agreement.
	 
	 	 	 	The Transferors shall provide to the Transferee with the information in relation to the bank
accounts respectively opened under the name of the Transferors in a timely fashion so as to enable
the Transferee to make the payment of the Transfer Price.
	 
	 	 	 	The obligations of the Transferee shall be deemed as having been fully fulfilled after the Transfer
Price has been fully remitted into the bank accounts respectively designated by the Transferors and
the Transferee shall not assume any responsibilities or obligations in relation to the payment of
the Transfer Price thereafter.
	 
	 	4.2	 	The Transferors hereby jointly agree and warrant that the Transferors shall remit to the bank
account designated by the Transferee in the amount of RMB4,000,000 within five (5) Business Days
from the date when the first instalment of the Transfer Price arriving at the bank accounts
designated by the Transferors, which shall be served as the guarantee deposit for the procurement
of the approval concerning the on-grid tariff of the Company issued by the competent price
administration authority, the completion of the obligations stipulated in Articles 10.27, 10.28,
10.29, 10.30 and 10.31 hereof, the fulfilment of other obligations under this Agreement and the
quality guaranty for the Hydroelectric Station Project. Each Party of the Transferors shall assume
joint liability for the payment of such guarantee deposit. The guarantee deposit in the amount of
RMB2,000,000 shall be refunded to the Transferors within ten (10) Business Days after the
Transferors have procured the approval concerning the on-grid tariff of the Company issued by the




Page 10 of 43









 






	 	 	 	competent price administration authority and such approval has been provided to the Transferee. In
the event that the Company suffers from any damages or losses, or the Transferors are in breach of
any provisions of this Agreement, the Transferee is entitled to deduct corresponding amount
directly from the aforesaid guarantee deposit as compensation to the Company and/or the Transferee
until the drawdown of this guarantee deposit. In addition, the compensation mentioned above shall
not prejudice any other rights of the Transferee and/or the Company to claim for damages against
the Transferors in accordance with other provisions hereof and PRC laws and regulations. The
balance of the said guarantee deposit (if any) shall be refunded to the Transferors within ten (10)
Business Days after all obligations stipulated in Articles 10.27, 10.28, 10.29, 10.30 and 10.31
hereof have been fully completed by the Transferors as scheduled and relevant documents have been
provided to the Transferee.
	 
	 	4.3	 	Within five (5) Business Days after the Transfer Price has arrived at the bank accounts
designated by the Transferors, the Transferors shall be responsible to complete the registrations
of receiving foreign exchange for share transfer  with the local governmental
authority in charge of the administration of foreign exchange. Within two (2) Business Days after
the completion of such registrations, the Transferors shall provide the Transferee with the
originals of Registration Form of Receiving Foreign Exchange for Share
Transfer .
	 
	 	4.4	 	The Transferors shall issue the receipts to the Transferee within five (5) Business Days after
having received the Transfer Price. In the event that the Transferors fail to issue the receipts
within the prescribed time limit, the Transferee shall be entitled to claim for the liquidated
damages for the delayed performance in the amount of 0.5‰ of the Transfer Price per day. In the
event that the receipts issued by the Transferors are not in compliance with the PRC laws and
regulations which cause the Transferee and/or the Company to suffer from any damage or loss, the
Transferors shall assume joint liability for the compensation in full payable to the Transferee
and/or the Company.




Page 11 of 43









 






	 	4.5	 	The profits of the Company shall be distributed in accordance with corresponding ratio of the
paid Transfer Price accounting for the Equity Stake from the date of actual receipt of the Transfer
Price by the Transferors.





Article 5 Taxes Payable under the Transfer of Equity Stake





Any taxes or fees arising out of and payable pursuant to the fulfilment of the terms of this
Agreement by each of the Transferors and Transferee shall be paid by the respective Party liable
for the taxes or fees under the provisions of relevant laws and regulations of China.



Chapter III Representations and Warranties by All Parties




Article 6 Representations and Warranties by All Parties





	 	6.1	 	Prior to the signing of this Agreement, if the signing party is a company, such company shall
provide a power of attorney which authorizes its representative to sign this Agreement; if the
signing party is an individual, such individual shall provide a copy of his/her identification card
together with the original of the identification card being shown. In case of proxy, power of
attorney thereof and a copy of the identification card of the principal shall be provided.
	 
	 	6.2	 	When signing this Agreement, the Transferors and Transferee hereby state that the documents and
information provided to any other Party or their agencies (including, without limitation, the
lawyers, valuers, financial consultants, etc.) before the Signing Date are still valid and
authentic, and confirm that where there is any discrepancy therein with the terms of this
Agreement, this Agreement shall prevail.
	 
	 	6.3	 	The Transferors and Transferee hereby agree that upon this Agreement coming into effect, the
contracts or documents pertaining to the transfer of the Equity




Page 12 of 43









 






	 	 	 	Stake entered into between the Transferors and the Transferee prior to this Agreement shall lapse
automatically.
	 
	 	6.4	 	All Parties to this Agreement agree to strive jointly in coordinating the work pertaining to
the transfer of the Equity Stake, including, without limitation, application for approvals,
registration and filing of record, etc., and the costs and expenses arising therefrom shall be
borne by the Company.





Chapter IV Disclosures, Representations and Warranties by the Transferors




Article 7 Disclosures, Representations and Warranties by the Transferors





The Transferors hereby jointly and severally represent and warrant to the Transferee that:




	 	7.1	 	All information and facts relating to the Company that is in the possession of the Transferors
or is known to any of the Transferors which will have a substantive and adverse effect on the
Transferors’ ability to fulfil any of their obligations in this Agreement or when disclosed to the
Transferee shall have a substantive effect on the willingness of the Transferee to sign and fulfil
its obligations under this Agreement, have been disclosed to the Transferee and the information
provided by the Transferors to the Transferee does not contain any representation that is untrue or
misleading.
	 
	 	7.2	 	No lawsuits, arbitrations, or other legal or administrative proceedings or governmental
investigations are on-going against the Transferors that will materially affect their ability to
sign this Agreement or fulfil their obligations under this Agreement.
	 
	 	7.3	 	As of the Signing Date, the Transferors have informed the Third Party the whole matter of the
transfer of the Equity Stake under this Agreement who are related to the Equity Stake and the
Company; and in case of any requirement




Page 13 of 43









 






	 	 	 	for the consent of such Third Party, the Transferors have already procured the corresponding
written consent from such Third Party.
	 
	 	7.4	 	The Transferors hereby jointly undertake that none of them will take any action after the
Signing Date that will cause any adverse impact on the Company.
	 
	 	7.5	 	Regarding the documents and information provided by the Transferors to the Transferee and/or
the Transferee’s agencies (including, without limitation, the lawyers, valuers, financial
consultants, etc.) prior to the Signing Date, the Transferors hereby undertake that:






	 	7.5.1	 	all copies made from original documents are true and complete and that such original
documents are authentic and complete;
	 
	 	7.5.2	 	all originals supplied to the Transferee and/or the Transferee’s agencies are authentic and
complete;
	 
	 	7.5.3	 	all signatures (stamps) appearing on documents supplied to the Transferee and/or the
Transferee’s agencies as originals or copies of originals are genuine; and
	 
	 	7.5.4	 	the Transferors have drawn to the attention of the Transferee and/or the Transferee’s
agencies all matters that are material for the Transferee to proceed with the transaction as
contemplated in this Agreement.






	 	7.6	 	At any moment of present or in the future, upon the request of the Transferee, the Transferors
shall, on their own expenses, make all efforts to carry out and/or conduct in a way which is
satisfactory to the Transferee, or to impel the Third Party to carry out and/or conduct in a way
which is satisfactory to the Transferee, any action and/or document which the Transferee reasonably
deems requisite, in order to realize the full effectiveness and implementation of this Agreement.




Page 14 of 43









 











Article 8 General Representations and Warranties by the Transferors





Party B, Party C, Party D and Party E are PRC citizens with all civil abilities to enter into this
Agreement and fulfil all of their obligations stipulated herein. Signing this Agreement and
fulfilling all of their obligations stipulated herein by Party B, Party C, Party D, and Party E
shall not contravene or result in the violation of or constitute a failure to fulfil or an
inability to fulfil any of the stipulations in any laws, regulations, stipulations, any
authorization or approval from any government body or department or the stipulations of any
contract or agreement that Party B or Party C or Party D or Party E is a party to or is bound by.



Article 9 Ownership





	 	9.1	 	The Transferors hereby jointly and severally undertake and warrant that: the Transferors are
the legal owners of the Equity Stake and have full authority and right to transfer the Equity Stake
to the Transferee and the Equity Stake does not involve any state-owned assets and interest.
	 
	 	9.2	 	The Transferors hereby jointly and severally undertake and warrant that: up to the Second
Payment Date (inclusive), the Equity Stake is not subject to any Claims or Encumbrances (including
but not limited to any form of option, acquisition right, mortgage, pledge, guarantee, lien or any
other forms of third party rights); and there is no interest present and no agreement or
undertaking in existence that may result in or create any Claim or Encumbrance on the Equity Stake
(including but not limited to the aforesaid option, acquisition right, mortgage, pledge, guarantee,
lien or any other forms of third party rights and interest).
	 
	 	9.3	 	The Transferors hereby jointly and severally undertake and warrant that: no lawsuits,
arbitrations, or other legal or administrative proceedings or governmental investigations are
on-going against any party of the Transferors




Page 15 of 43









 






	 	 	 	that will materially affect the Transferors’ ability to sign this Agreement or fulfil the
Transferors’ obligations under this Agreement.





Article 10 The Company and the Hydroelectric Station Project





The Transferors hereby jointly and severally represent and warrant to the Transferee that:




	 	10.1	 	The Company is a legal entity duly established according to the laws of China, which is
validly and legally in existence and also operating normally in accordance with the laws and
regulations of China.
	 
	 	10.2	 	The registered capital of this Company has been fully paid up within the prescribed time
limit. The Transferors have fully fulfilled their capital contribution obligations, which have been
legally verified in accordance with relevant PRC laws. There is no withdrawal of the registered
capital by the Transferors.
	 
	 	10.3	 	The Company is the legal owner of the Hydroelectric Station Project and can enjoy the full and
complete ownership, operation right and right to profit of the Hydroelectric Station Project.
	 
	 	10.4	 	Except for the completion acceptance document of the Hydroelectric Station Project, the
development, construction and operation of the Hydroelectric Station Project have procured all
requisite approvals issued by relevant governmental authorities and are complied with relevant PRC
laws and regulations and the approvals and permits issued by relevant governmental authorities, and
there is no violation of the PRC laws and regulations and approvals and permits issued by relevant
governmental authorities.
	 
	 	10.5	 	Prior to the date of the delivery of the assets, every aspect of the Hydroelectric Station
Project, including but not limited to the hydrology, geology, water flow, dam safety and hydropower
generator units, etc., is complied with the requirements for the normal power generation, and
except for normal




Page 16 of 43









 






	 	 	 	operation losses, is free from any flaw, defect or any other problems. In the event that the
Transferee and/or the Company incur any damage or loss arising out of any flaw, defect or any other
problem which has already existed before the transfer of the Equity Stake, the Transferors shall be
jointly liable for the full compensation on the Transferee and/or the Company.
	 
	 	10.6	 	The Transferors warrant that they shall procure the approval concerning the on-grid tariff of
the Company issued by the competent price regulatory authority. After the First Payment Date, in
the event that the value-added tax rate applicable to the Company is 17% and the on-grid tariff
approved by the competent price regulatory authority is lower than RMB0.31/kwh, the Transferors
shall be jointly liable for the full compensation on the Transferee and/or the Company; in the
event that the value-added tax rate applicable to the Company is 6% and the on-grid tariff approved
by the competent price regulatory authority is lower than RMB0.28/kwh, the Transferors shall be
jointly liable for the full compensation on the Transferee and/or the Company.
	 
	 	10.7	 	As of the First Payment Date, the Company has never been involved in and is not currently
involved in any administrative investigations, lawsuit, arbitration, disputes, Claims or other
proceedings (no matter ongoing, pending or threatened), nor has the Company been punished, and the
Transferors can foresee that no punishment is to be made against the Company by any administrative
authorities of the PRC for the issues already existed before the transfer of the Equity Stake. Up
to the Signing Date, the Transferors have fully disclosed to the Transferee all information in
respect of environmental protection, water and soil conservation, flood prevention plan,
utilization of land (woodland), woods cutting, power generation, emigrants relocation,
fire-prevention and work safety of the Company, etc. In addition, the Transferors hereby jointly
warrant that all fees, charges, penalties and expenses payable to or being required to pay to any
PRC governmental authority have been paid off. As of the Second Payment Date, there are no such
fees, charges, penalties and expenses in default, nor are there any costs and/or expenses being
required by any PRC governmental authority to be paid for any purpose of correcting defects and/or
inappropriate actions of the Company in default. In the event




Page 17 of 43









 






	 	 	 	that the Transferee and/or the Company suffers from any penalty, damage, loss, etc. due to any such
administrative investigations, lawsuit, arbitration, disputes, Claims, penalties and/or other
proceedings which existed before the completion of the transfer of the Equity Stake, the
Transferors shall be jointly liable for the full compensation on the Transferee and/or the Company.
	 
	 	10.8	 	The Company legally owns all real estate (including but not limited to land, buildings, dams,
headrace, electricity power transmission lines, structures and affiliated facilities) and moveable
assets (including but not limited to machines, equipments, vehicles, furniture and office
facilities), which are requisite for its business operation and shall be not less than those real
estate and moveable assets listed out in the assets list jointly confirmed by the Transferors and
Transferee in writing. Except for the securities disclosed in Appendix II to this Agreement, the
Company has not created any other security (including but not limited to mortgage, pledge and lien)
or other Encumbrance on the real estate and movable assets listed in the assets list jointly
confirmed by the Transferors and Transferee in writing. Prior to the date of the delivery of the
assets, all material aspects of all buildings, machines, equipments, vehicles and other assets
owned by the Company are in good, safe and operational conditions (excluding the loss from normal
usage), which are anticipated not to be repaired (excluding the daily requisite maintenance),
replaced or supplemented within twelve (12) months after the Signing Date due to the causes existed
prior to the date of delivery. The Transferors hereby warrant and undertake that commencing from
the Signing Date, the real estate and movable assets mentioned above will not suffer from any loss
or damage resulting from the actions of the Transferors or any Third Party. In the event that such
real estate and movable assets suffer from any losses or damages due to the actions of the
Transferors or any Third Party, the Transferors shall be jointly liable for the full compensation
on the Transferee and/or the Company.
	 
	 	10.9	 	The production, operation, construction and business of the Company are in compliance with all
relevant applicable PRC laws and regulations in material aspects, including but not limited to
those laws and regulations in relation to




Page 18 of 43









 






	 	 	 	hydropower generation, environmental protection, water and soil conservation, flood prevention
plan, design and construction of hydro projects, bidding, utilization of woodland, woods cutting,
fire-prevention, production safety and emigrants relocation. The Transferors warrant that the
environmental protection authority, water resources authority, electricity regulatory authority,
construction authority, forestry authority, fire-prevention authority, planning authority,
production safety authority and other governmental authority will not punish the Company due to the
issues of environmental protection, water and soil conservation, water fetching, flood prevention
plan, design and construction of hydro projects, bidding, power generation, utilization of
woodland, woods cutting, fire-prevention, production safety and emigrants relocation, etc. which
already existed before the Second Payment Date. In the event that the Company suffers from any loss
or damage due to the punishment by local government, environmental protection authority, water
resources authority, electricity regulatory authority, forestry authority, construction authority,
fire-prevention authority, planning authority, production safety authority or other governmental
authorities, the Transferors shall fully compensate the Transferee and/or the Company so as to hold
the Transferee and/or the Company harmless.
	 
	 	10.10	 	The fire-prevention design of all construction projects of the Company are fully complied with
all relevant PRC laws and regulations and the relevant requirements of national fire-prevention
technical standards.
	 
	 	10.11	 	Prior to the signing of this Agreement, the Transferors have already disclosed all information
regarding the debts of the Company. As of the Second Payment Date, such information remains
complete, reliable, accurate and genuine. As of the Signing Date, all debts of the Company have
been set out in Appendix I to this Agreement, and as of the completion date of the alteration
registration with the competent administration for industry and commerce, all due principal and
accrued interests of the debts listed out in Appendix I have been fully paid off (during the period
between the Signing Date and the completion date of the alteration registration with the competent
administration for industry and commerce, in the event that the Transferors




Page 19 of 43









 






	 	 	 	repays all or partial principal and interest of the debts listed out in Appendix I hereto, the
Company and/or the Transferee shall refund such payments to the Transferors in a timely fashion).
The Transferors shall assume joint liabilities for any undisclosed debts or unpaid due principal
and interests of the Company so as to hold the Transferee and the Company harmless.
	 
	 	10.12	 	The Transferors warrant that the security providers of the Company listed out in Appendix II
to this Agreement will continue to provide the security for the Company in accordance with the
stipulations in relevant security contracts, and such continuous secured term shall be not less
than twelve (12) months after the Second Payment Date. The Transferee warrants that, within such
twelve-month-period, the Transferee or any Third Party designated by the Transferee shall provide
the security for the benefit of the said security providers until the security provided by such
security providers for the benefit of the Company has been released; in the meanwhile, the
Transferee shall, within the aforesaid twelve (12) months, take measures to release the security
provided by such providers for the benefit of the Company. In the event that the aforesaid security
providers suffer from any loss due to the provision of the security for the benefit of the Company,
the Transferee and the Company shall assume joint liability and fully compensate such security
providers.
	 
	 	10.13	 	As for the bank loans listed in Appendix I to this Agreement, the Transferors shall use their
best efforts to assist the Transferee in negotiating with relevant banks.
	 
	 	10.14	 	The Company can legally own the land use right of all the land (the total area being not less
than 2,816.58 m2) and the ownership of all the buildings currently used by the Company,
free from being sued, arbitrated, punished or suffering from other damages or loss. In the event
that the Transferee and/or the Company suffer from any punishment, damage or loss due to the use of
such land or building, the Transferors shall assume joint liabilities to fully compensate the
Transferee and/or the Company.




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	 	10.15	 	The procurement of the land use right (granted) with the State-owned Land Use Right
Certificate (the certificate No: Ping Guo Yong (2003) Zi No. 0032 with the total area of 2,816.58
m2) for the land currently used by the Company is in full compliance with PRC laws and
regulations, and all relevant taxes and fees (including, without limitation, the compensation fees
for land requisition, and land grant fees) have been fully paid off in accordance with law. In the
event that the Transferee and/or the Company suffer from any penalty, damage or loss due to the
said land, the Transferors shall assume joint liabilities to fully compensate the Transferee and/or
the Company.
	 
	 	10.16	 	After the Signing Date, the Transferors shall normally operate and manage the Company until
the completion of the delivery stipulated in Chapter VI hereof and warrant that there will be no
Material Adverse Change to the operation, business and conditions of the Company.
	 
	 	10.17	 	As of the Second Payment Date, the Company has not carried out any equity investment in any
other companies, enterprises, etc. In the event that the
Company suffers from any damage or loss due to such undisclosed equity investment, the Transferors
shall assume joint liabilities to fully compensate the Transferee and/or the Company.
	 
	 	10.18	 	As of the Second Payment Date, except for the securities listed out in Appendix II to this
Agreement, the Company’s assets and rights are free from any other security (including but not
limited to mortgage, pledge and lien) or any other Encumbrance, neither has the Company provided
any security (including but not limited to mortgage, pledge and guarantee) for any other companies,
enterprises, economic entities or any individuals. In the event that the Company suffers from any
damage or loss due to such undisclosed security, the Transferors shall assume joint liabilities to
fully compensate the Transferee and/or the Company
	 
	 	10.19	 	As of the Second Payment Date, the Company has fully paid off all taxes required by the PRC
laws and regulations, including but not limited to enterprise income tax, value-added tax,
municipal construction tax and




Page 21 of 43









 






	 	 	 	additional education fees. The Transferors shall assume joint liabilities for any unpaid taxes to
the Transferee and/or the Company so as to hold the Transferee and/or the Company harmless.
	 
	 	10.20	 	All construction projects (whether completed or under construction) of the Company, excluding
the management building which is located at the upstream of the management building of Yuheng
hydroelectric station, have obtained all requisite governmental approvals and licenses and are
constructed in strict compliance with such approvals and licenses issued by relevant governmental
authorities and there are no violation thereof. In the event that after the completion of the
transfer of the Equity Stake, the Company is punished by any governmental authority as a result of
any above-mentioned issues, the Transferors shall assume joint liabilities to fully compensate the
Company and/or the Transferee.
	 
	 	10.21	 	Under the condition of normal and scientific operation, in the event that the rainfall volume
reached the designed level within twelve (12) months from the First Payment Date, by reference to
the power generation volume of the station located in the upstream, the power generation volume of
the Hydroelectric Station Project shall reach the designed level in principle (the examination of
such factor shall be based on the combination of the statistics of both the new and old Yuanping
Stations, and the total power generation volume of these two stations shall be not less than
167,500,000 kwh); in the event that it fails to reach the aforesaid 167,500,000 kwh, the
Transferors shall assume joint liabilities to fully compensate the Company and/or the Transferee.
	 
	 	10.22	 	The effectiveness of this Agreement shall not or is impossible to cause any Third Party to
terminate the contracts or agreements concluded with the Company prior to the effective date of
this Agreement (inclusive) which are still being effective.
	 
	 	10.23	 	The Company’s production technology and process are in full compliance with relevant PRC laws,
regulations, standards and norms, and there are no illegal actions of infringing upon intellectual
property rights of others, such as patent,




Page 22 of 43









 






	 	 	 	know-how, etc. In the event that the Company suffers from any punishment, damage or loss due to any
above-mentioned illegal actions, the Transferors shall assume joint liabilities to fully compensate
the Company and/or the Transferee.
	 
	 	10.24	 	Labour Contracts between the Company and the employees who are still employed by the Company
upon the Signing Date have been legally and effectively executed. The social insurance registration
for the employees of the Company has been legally and validly carried out. The various social
insurance premiums, which shall be taken out for the employees according to relevant PRC laws and
regulations, have been fully paid up in a timely fashion, and there has not been any payment for
the employees’ social insurance premiums, salaries, and other welfares provided in PRC laws and the
Company’s internal regulations in default. As of the Second Payment Date, there has not been any
situation which may cause the employees to bring labour arbitrations or lawsuits against the
Company. In the event that the Company and/or the Transferee suffer from any punishment, loss or
damage due to the aforesaid issues, the Transferors shall assume joint liabilities to fully
compensate the Transferee and/or the Company.
	 
	 	10.25	 	As of the Second Payment Date, except for the leased buildings provided in the Building Use
Agreement entered into by and between Pingnan County Yuheng Hydroelectric Co., Ltd. and the
Company, and the Lease Contract entered into by and between Fujian Dachuang Hydroelectric Group
Co., Ltd. and the Company, the Company does not lease any other real estate or movable assets such
as land, buildings, machines and equipments, etc.
	 
	 	10.26	 	The Company has taken out requisite insurances usually purchased by other enterprises within
the same industry as reasonably required by its production and operation, all policies of which are
still valid, all the due insurance premiums of which have been paid off, and all other material
conditions of which have been fully fulfilled and observed. As of the Second Payment Date, there is
no circumstance which may have caused to or may cause to the invalidity of the aforesaid insurance
policies. The aforesaid insurance policies




Page 23 of 43









 






	 	 	 	are free from any special or unusual restrictions. As of the Second Payment Date, there have been
no situations under which the Company could claim for compensation against the insurer in
accordance with the aforesaid policies.
	 
	 	10.27	 	The Transferors warrant that, prior to the First Payment Date, the Transferors shall deliver
the list of all documents and vouchers, etc. of the Company to the Transferee, including but not
limited to all financial vouchers, accounting books, all approvals, certificates and licenses,
permits, customer information, Building Ownership Certificates, State-owned Land Use Right
Certificates, all contracts and agreements signed by the Company, and information concerning
employees, etc.
	 
	 	10.28	 	The Transferors warrant that, within one (1) year from the Signing Date, the Transferors shall
complete the alteration registrations of the legal address indicated on the Social Insurance
Registration Certificate and Power Business Permit (power generation) of the Company. In the event
that the Transferors fail to complete the aforesaid alterations on schedule, the Transferors shall
assume joint liabilities to fully compensate the Transferee and/or the Company.
	 
	 	10.29	 	The Transferors warrant that, within one (1) year from the Signing Date, the Transferors
shall, in accordance with relevant PRC laws and regulations, accomplish the alteration
registrations of the Tax Registration Certificates (State and Local) of the Company and deliver the
originals of such altered Tax Registration Certificates to the Transferee. In the event that the
Transferors fail to procure the aforesaid tax registration certificates, the Transferors shall
assume joint liabilities to fully compensate the Transferee and/or the Company.
	 
	 	10.30	 	The Transferors warrant that, within one (1) year from the Signing Date, the Transferors
shall, on their own expenses, procure the Water Fetching Permit under the name of the Company and
provide the original of the Water Fetching Permit to the Transferee. In the event that the
Transferors fail to




Page 24 of 43









 






	 	 	 	procure the aforesaid Water Fetching Permit, the Transferors shall assume joint liabilities to
fully compensate the Transferee and/or the Company.
	 
	 	10.31	 	The Transferors warrant that, within one (1) year from the Signing Date, the Transferors
shall, on their own expenses and in accordance with relevant PRC laws and regulations, accomplish
the completion acceptance of the Hydroelectric Station Project, obtain the Completion Acceptance
Certificate and deliver the original of such certificate to the Transferee. In the event that the
Transferors fail to accomplish the completion acceptance of the Hydroelectric Station Project and
procure the Completion Acceptance Certificate, the Transferors shall assume joint liabilities to
fully compensate the Transferee and/or the Company.





Chapter V Disclosures, Representations and Warranties by the Transferee




Article 11 Disclosures, Representations and Warranties by the Transferee





The Transferee hereby represents and warrants to the Transferors that:




	 	11.1	 	The Transferee is an enterprise duly established according to the laws of the Cayman Islands
which is validly and legally in existence and also operating normally in accordance with the laws
and regulations of the Cayman Islands.
	 
	 	11.2	 	Signing this Agreement and fulfilling all of its obligations stipulated herein shall not
contravene or result in the violation of or constitute a failure to fulfil or an inability to
fulfil any of the stipulations of the Transferee’s articles of association or its internal rules,
any laws, regulations, stipulations, or any authorizations or approvals from any government body or
department or any contract or agreement that the Transferee is a party to or is bound by.
	 
	 	11.3	 	No lawsuits, arbitrations, or other legal or administrative proceedings or governmental
investigations, etc. are on-going against the Transferee that will




Page 25 of 43









 






	 	 	 	materially affect its ability to sign this Agreement or fulfil its obligations under this
Agreement.





Chapter VI Delivery




Article 12 Delivery





	 	12.1	 	After the Signing Date, the Transferors and Transferee shall immediately organize and
establish a Delivery Team to actively carry out the delivery of the Company and the Hydroelectric
Station Project, etc., including, without limitation, the delivery of the production, operation and
management, financial affairs, assets sorting and counting, files and documents, certificates and
licenses, approval documents, official stamps and the project constructions from the Transferors to
the Transferee.
	 
	 	12.2	 	The Transferors shall warrant making a full and complete delivery and there shall be no
derogation between the Company’s movable assets and real estate delivered to the Transferee and
those listed out in the assets list jointly confirmed by the Transferors and Transferee in writing.
	 
	 	12.3	 	The delivery shall include, without limitation, the following:






	 	(1)	 	the delivery of all stamps of the Company, such as the official stamp, financial stamp and
contract stamp, to the Transferee;
	 
	 	(2)	 	the checking and counting of all the assets (including, without limitation, the real estate and
movable assets) of the Company by the Transferors and Transferee, the formulation of the list of
the Company’s assets, and the delivery of such assets, subject to the on-site confirmation by
signing of the representatives respectively from the Transferors and Transferee; as for the
derogated assets during the assets sorting and counting, the compensation shall be made by the
Transferors in accordance with the appraisal value;




Page 26 of 43









 






	 	(3)	 	the delivery of the originals of all approvals, certificates and licences, permits, customer
information, building ownership certificates and state-owned land use right certificates to the
Transferee;
	 
	 	(4)	 	the delivery of the originals of all project drawings, contracts, agreements (including,
without limitation, grid connection and dispatching agreement, power sale and purchase contract,
project contracts, equipment contracts, installation contracts and materials contracts) and other
files and documents to the Transferee;
	 
	 	(5)	 	the delivery of the originals of all financial accounting books, financial vouchers and the
accounting files to the Transferee;
	 
	 	(6)	 	the technology transfer and delivery of the list concerning the units and entities contracting
the construction works of the Hydroelectric Station Project, equipment manufacturer, design,
project supervision, quality examination and transmission lines, etc. to the Transferee; and
	 
	 	(7)	 	the delivery of all other materials and files of the Company.






	 	12.4	 	The delivery shall be fully completed within ten (10) days from the First Payment Date. In
addition, the completion of such delivery shall be subject to the written confirmation of the
Transferee. In the event that the Transferors believe that the delivery has been fully completed,
the Transferors may require the Transferee in writing to confirm the completion of the delivery;
within five (5) Business Days after receiving the written requirement for the confirmation from the
Transferors, if the Transferee fails to make a written confirmation or a written objection, the
delivery shall be deemed as having been confirmed to be fully completed.
	 
	 	12.5	 	After the completion of the delivery, the Transferors shall provide active cooperation when
the Transferee reasonably requires further delivery in writing.




Page 27 of 43









 






	 	12.6	 	The Transferors shall make sure the continuity, stability and safety of the production and
operation of the Company during the process of the delivery.
	 
	 	12.7	 	The Transferors shall fully cooperate so as to complete the delivery. In the event that the
Transferee or the Company after the transfer of the Equity Stake suffers from any damage due to the
Transferors’ non-cooperation, the Transferors shall be jointly liable for the compensation in
accordance with law.
	 
	 	12.8	 	The Transferors warrant and undertake that, there are no inconsistency in quantities and
qualities of the Hydroelectric Station Project, relevant equipments and facilities with the assets
list jointly confirmed by the Transferors and Transferee in writing. In the event that the
Transferee suffers from any loss due to the quantity and quality problems of the Hydroelectric
Station Project, equipments and etc., the Transferors shall be liable for the full compensation on
the Transferee.





Chapter VII Employees




Article 13 Employees





	 	13.1	 	Upon the completion of the transfer of the Equity Stake, the Company will choose to employ
excellent employees from the existing employees of the Company. The terms and conditions of their
employment including their remuneration for their employment shall be determined by reference to
the current standards in principle and implemented in accordance with the Labour Law of the PRC,
the Labour Contract Law of the PRC and other relevant
Chinese laws and regulations.
	 
	 	13.2	 	The Company shall protect the legal rights and interests of its employees in accordance with
law.




Page 28 of 43









 











Chapter VIII Confidentiality




Article 14 Confidentiality





	 	14.1	 	All Parties agree that unless otherwise provided for in another relevant confidentiality
agreement, with regard to the confidential and exclusive information that have been disclosed to or
may be disclosed to the other Parties by any Party to this Agreement pertaining to their respective
businesses, or financial situations and other confidential matters, all Parties to this Agreement
which have received the aforesaid confidential information (including written information and
non-written information, hereinafter referred to as “Confidential Information”) shall:






	 	14.1.1	 	Keep the aforesaid Confidential Information confidential;
	 
	 	14.1.2	 	Save for the disclosure of the Confidential Information by a Party to this Agreement to its
employees solely for the performance of their duties and responsibilities, none of the Parties to
this Agreement shall disclose the Confidential Information to any Third Party or any entity.






	 	14.2	 	The provisions of the aforesaid Article 14.1 shall not apply to Confidential Information:






	 	14.2.1	 	which was available to the receiving Party from the written records procured by the
receiving Party before the disclosing Party disclosed the information to the receiving Party;
	 
	 	14.2.2	 	which has become public information by means not attributable to any breach by the receiving
Party;




Page 29 of 43









 






	 	14.2.3	 	which was obtained, by the receiving Party from a Third Party not subject to any
confidentiality obligation affecting the said Confidential Information.






	 	14.3	 	As far as any natural person or legal entity which has been a Party to this Agreement is
concerned, notwithstanding that it has ceased to be a Party to this Agreement because of the
transfer of its rights and obligations pursuant to the terms of this Agreement, the stipulations
set out in this Chapter VIII shall remain binding on it.





Chapter IX Breach of Contract




Article 15 Liability for Breach of a Representation or Warranty





	 	15.1	 	If any representation or warranty made by any Party to this Agreement is found to be an error,
or if any fact that has or is likely to have a major or substantial effect on the signing of this
Agreement by any Party has been omitted, or if any representation or warranty is found to be
misleading or untrue in any respect, the non-breaching Party shall be entitled to look to the Party
(ies) in breach for full compensation for any loss, damage, cost or expense arising from the
erroneous, omitted, misleading or untrue representation or warranty of the Party (ies) in breach or
arising from any other breach of any representation and warranty given by the Party (ies) in
breach.
	 
	 	15.2	 	Each representation and warranty set out in this Agreement is to be construed independently.
	 
	 	15.3	 	For the avoidance of doubt, the Transferors hereby unconditionally and irrevocably agree and
confirm that they shall be jointly liable for any liability for any breach of representation or
warranty.




Page 30 of 43









 











Article 16 Liability for Breach of Contract





	 	16.1	 	In the event of a breach committed by any Party to this Agreement, the said defaulting Party
shall be liable to the other Party (ies) for the losses and damages or any other liabilities
arising out of that defaulting Party’s breach of contract in accordance with the provisions of this
Agreement and the laws and regulations of China.
	 
	 	16.2	 	In the event that the undisclosed issues by the Transferors prior to the signing of this
Agreement which may influence the legal existence of the Company and the Hydroelectric Station
Project, after the completion of the Equity Stake, actually influence the legal existence of the
Company or the Hydroelectric Station Project, the Transferee is entitled to terminate this
Agreement and to require the Transferors to pay one percent (1%) of the Transfer Price as
liquidated damages, and is entitled to enjoy other legal remedy rights in accordance with other
provisions hereof and PRC laws and regulations.
	 
	 	16.3	 	In the event that the Transferors fail to fully accomplish the delivery in accordance with the
time limit and conditions stipulated in Chapter VI hereof and/or fail to remit the guarantee fund
in full into the bank account designated by the Transferee in accordance with the time limit and
conditions stipulated in Article 4.2 hereof, and the Transferors still fail to perform or refuse to
perform within ten (10) days after the Transferee has notified in writing, the Transferors shall
pay the liquidated damages in the amount of RMB15,000,000 to the Transferee within three (3) days
after the expiration of the time limit for such notification, and the Transferee is entitled to
require the Transferors to continue to perform this Agreement. The Transferee is entitled to claim
for other compensations and remedies prescribed under PRC laws and this Agreement. The Transferors
shall assume joint liabilities for the payment of the aforesaid liquidated damages.
	 
	 	16.4	 	Any violation of the obligations, representations and warranties under this Agreement by any
Party of the Transferors or Transferee shall constitute a




Page 31 of 43









 






	 	 	 	breach of contract, and the defaulting Party (ies) shall assume the liability to compensate all the
losses due to the breach of contract to the other Party.
	 
	 	16.5	 	Any delayed performance of the obligations, representations and warranties under this
Agreement by any Party of the Transferors or Transferee shall constitute a breach of contract;
however, the delayed performance or non-performance due to the other Party’s advance performance
obligation shall not constitute a breach of contract.
	 
	 	 	 	The defaulting Party with delay in performance of this Agreement shall pay the liquidated damages
per day in the amount of the Transfer Price multiplied by the one-year bank loan rate announced by
the People’s Bank of China to the non-defaulting Party (ies); in the event that the defaulting
Party delays to perform this Agreement over thirty (30) days, the non-defaulting Party (ies) is
entitled to apply to the Examination and Approval Authority for the approval regarding the
termination of this Agreement in accordance with law, and to require the defaulting Party to pay
one percent (1%) of the Transfer Price as liquidated damages. The receipt of the liquidated damages
shall not prejudice the right of the non-defaulting Party (ies) to claim for other remedies in
accordance with other provisions of this Agreement and the PRC laws and regulations.
	 
	 	16.6	 	For the avoidance of doubt, the Transferors hereby unconditionally and irrevocably agree and
confirm that they shall be jointly liable for any liability for any breach of this Agreement
committed by any of the Transferors.





Chapter X Force Majeure




Article 17 Force Majeure





	 	17.1	 	“Force Majeure” refers to earthquake, typhoon, flood, fire, war, political unrest and such
special incidents or events that are deemed to be Force




Page 32 of 43









 






	 	 	 	Majeure occurrences under the provisions of the relevant laws and regulations of China.
	 
	 	17.2	 	In the event of the occurrence of a Force Majeure event, the obligations of the Party to this
Agreement affected by this Force Majeure event shall cease during the period of the Force Majeure
event and any term or period set out in this Agreement to which the affected party is subject shall
automatically be extended by a period equivalent to the term or period of the Force Majeure event,
and the said Party shall not be liable for any losses and damages or any other liabilities arising
out of a breach of contract as provided for in this Agreement for the duration of the Force
Majeure.
	 
	 	17.3	 	The Party claiming the occurrence of a Force Majeure event shall promptly inform the other
Party (ies) in writing, and within seven (7) days thereafter, it shall provide sufficient evidence
(issued by the notary organization or the competent authorities) for the occurrence and the
continuity of the Force Majeure event. In addition, the Party claiming the occurrence of a Force
Majeure event shall also do its best to eliminate the adverse effect of the Force Majeure event.





Chapter XI Resolution of Disputes




Article 18 Arbitration





	 	18.1	 	Any dispute arising out of or in connection with this Agreement between the Parties to this
Agreement shall firstly be resolved through friendly consultation. In the event that sixty (60)
days after the commencement of the friendly consultations, the dispute cannot be resolved through
such means, either Party may submit the dispute to the China International Economic and Trade
Arbitration Commission in Beijing for arbitration in accordance with its prevailing valid
arbitration rules. The arbitration place shall be in Beijing.




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	 	18.2	 	The arbitration tribunal shall be composed by three (3) arbitrators, and the arbitration
procedure shall be conducted in Chinese.





Article 19 Validity of the Arbitration Award





The arbitration award shall be final and binding on all Parties to this Agreement. All Parties to
this Agreement agree to be bound by the said award, and to act accordingly.



Article 20 Continuation of Rights and Obligations





After a dispute has arisen and during its arbitration process, other than the disputed matter, all
Parties to this Agreement shall continue to exercise their other respective rights stipulated in
this Agreement, and shall also continue to fulfil their other respective obligations stipulated in
this Agreement as well.



Chapter XII Applicable Law




Article 21 Applicable Law





The laws and regulations of the PRC shall govern and be binding on the establishment, validity,
interpretation and execution of this Agreement. All disputes arising out of or in connection with
this Agreement shall be determined according to the laws of the PRC. In the event the laws of the
PRC do not make provision for a certain issue relating to this Agreement, reference shall be made
to general international business practices.



Chapter XIII Miscellaneous




Page 34 of 43









 








Article 22 Waiver





The non-exercise or delay in the exercise of an entitlement stipulated in this Agreement by any
Party to this Agreement shall not be regarded as a waiver of the said entitlement. Any single
exercise or partial exercise of an entitlement shall not rule out any future re-exercise of the
said entitlement.



Article 23 Transfer





Unless otherwise described and prescribed in this Agreement, none of the Parties to this Agreement
shall transfer or assign all or any part of this Agreement or transfer or assign that Party’s
entitlement or obligations as stipulated in this Agreement provided that it has not obtained the
consents in writing from other Parties to this Agreement in advance or the approval in writing from
the Examination and Approval Authority as required by the laws.



Article 24 Amendment





	 	24.1	 	This Agreement has been executed for the benefit of all Parties to this Agreement and their
respective lawful successor(s) and assignees, and shall have legal binding effect on them.
	 
	 	24.2	 	This Agreement shall not be amended verbally. Any amendment to this Agreement shall become
effective, only upon the procurement of the written documents indicating their consents singed by
All Parties and the written approval of the Examination and Approval Authority.





Article 25 Severability





The invalidity of any term of this Agreement shall not affect the validity of other terms of this
Agreement.



Page 35 of 43









 





Article 26 Language





This Agreement is written in both the Chinese language and the English language. In case of any
inconsistency between the Chinese text and the English text, the Chinese text shall prevail.



Article 27 Validity of the Text and Appendices





	 	27.1	 	This Agreement shall come into effect upon the approval of the Examination and Approval
Authority. The Chinese text of this Agreement shall be signed in eight (8) sets of original. Each
Party shall hold one (1) set of original, and one (1) set of original shall be sent to the
Examination and Approval Authority, the competent Administration for Industry and Commerce and any
other governmental authorities as required respectively. The remaining originals shall be filed and
kept by the Company.
	 
	 	27.2	 	The English text of this Agreement shall be signed in five (5) sets of original and each Party
shall hold one (1) set of original, and one (1) set of original shall be sent to the Examination
and Approval Authority, the competent Administration for Industry and Commerce and any other
governmental authorities as required respectively.
	 
	 	27.3	 	The Appendices to this Agreement shall form an integral part of this Agreement, and shall have
the same legal effect as this Agreement.





Article 28 Notification





	 	28.1	 	Unless otherwise specified and prescribed, any Party issuing any notification or written
communication to the other Party (ies) according to the provisions of this Agreement shall have
them written in the Chinese Language and shall send them as a letter by a courier service company,
or by facsimile. Letters sent by a courier service company shall be deemed as having been served
seven (7) Business Days after handing over the notification or communication




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	 	 	 	to the courier service company. Any notification or written communication sent in accordance with
the stipulations of this Agreement shall be deemed to be served on the date of receipt. If the
notification and communication are sent by facsimile, the date of receipt shall be deemed to be
three (3) Business Days after transmission, subject to a facsimile confirmation report evidencing
this.
	 
	 	28.2	 	All notifications and communications shall be sent to the following addresses, until such time
when the other Party (ies) issues a written notice of any change to its address:





	 	 	 
	The Transferee’s Address:

	 	District B, 25th Floor, New Poly Plaza, No.1, North Street of
Chaoyangmen, Dongcheng District, Beijing China.
	Telephone Number:

	 	86-10-6492-8483 
	Facsimile Number:

	 	86-10-6496-1540 
	Attention:

	 	Jin Lei
	 
	 	 
	Transferors’ Address:

	 	No.007, Yi Xiang, Huancheng Road, Gufeng Town, Pingnan County
	Telephone Number:

	 	0593-3309556 
	Facsimile Number:

	 	0593-3322468 
	Attention:

	 	Li Cong Bin






Article 29 The Entire Agreement





This Agreement constitutes the entire agreement of all Parties to this Agreement pertaining to the
transaction agreed upon in this Agreement, and shall replace all the previous discussions,
negotiations and agreements among all Parties to this Agreement in respect of the transaction of
this Agreement.



(REMAINDER OF PAGE INTENTIALLY LEFT BLANK)






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IN WITNESS WHEREOF, the duly authorised representatives of Party A has signed this Agreement with
Party B, Party C, Party D and Party E on the date first above written.




Party A: China Hydroelectric Corporation




Signature:
                  
            




Position:




Party B: Lin Yun




Signature:           
                    




Party C: Wu Ting Li




Signature:           
                    




Party D: Zhang Yaofang




Signature:           
                    




Party E: Zhou Jian




Signature:           
                    




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Appendix I Existing Debts of the Company




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Loan	 	 	 	Balance of	 	 	 	 	 	 
	 	 	Contract	 	Lender	 	Loan	 	 	 	Current	 	Mortgage and/or Pledge
	No.	 	Number	 	Bank	 	(RMB)	 	Loan Term	 	Interest Rate	 	Assets
	1 

	 	351012006
 00001670
	 	Agricultural Bank
of China, Pingnan
County Sub-branch
	 	 	36,000,000	 	 	June 20, 2006 to
November 20, 2016
	 	For the bank loans
in the amount of
RMB20,000,000, the
interest rate is
7.029% (from 30
June 2006 to 20
November 2013);


For the bank loans
in the amount of
RMB16,000,000, the
interest rate is
7.524% (from 30
September 2006 to
20 November 2016)
	 	The real estate and
movable properties of
Yuanping Station
(technical
improvement project)






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	 	 	Loan	 	 	 	Balance of	 	 	 	 	 	 
	 	 	Contract	 	Lender	 	Loan	 	 	 	Current	 	Mortgage and/or Pledge
	No.	 	Number	 	Bank	 	(RMB)	 	Loan Term	 	Interest Rate	 	Assets
	2 

	 	351012006
00001662
	 	Agricultural Bank
of China, Pingnan
County Sub-branch
	 	 	17,000,000	 	 	February 27, 2006
to November 20,
2011
	 	 	6.73	%	 	Guarantee provided
by Pingnan Minfeng
Electricity Co.,
Ltd.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3 

	 	351012006
00001666
	 	Agricultural Bank
of China, Pingnan
County Sub-branch
	 	 	16,000,000	 	 	February 27, 2006
to November 20,
2012
	 	 	7.029	%	 	The real estate and
movable properties
of Yuanping Station
(technical
improvement
project)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4 

	 	351012007
00009429
	 	Agricultural Bank
of China, Pingnan
County Sub-branch
	 	 	13,000,000	 	 	one hundred and
twenty -eight (128)
months commencing
from the date of
actual grant of the
first
instalment of the
bank loan
	 	 	8.613	%	 	Pledge of the right
to collect
electricity fees,
guarantee provided
by Fujian Dachuang
Hydroelectric Group
Co., Ltd., Wu
Tingli, Zhou Jian,
Lin Yun and Zhang Yaofang 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Amount (the
Principal)	 	RMB82,000,000






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Appendix II List of Security




List of Security





	1.	 	The Transferors have disclosed to the Transferee the following securities (including but not
limited to mortgage, pledge, guarantee and securities in other forms) provided by the Company
for the benefit of the Company itself:





	 	 	 	 	 	 	 	 	 
	 	 	Security Contract	 	 	 	 
	No.	 	Number	 	Creditor	 	Type of Security
	1

	 	 	35902200700006712	 	 	Agricultural Bank of China, Pingnan County Sub-branch
	 	Mortgage
	 
	2

	 	 	35904200700009496	 	 	Agricultural Bank of China, Pingnan County Sub-branch
	 	Pledge of Right






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	2.	 	The Transferors have disclosed to the Transferee the following securities (including but not
limited to mortgage, pledge, guarantee and securities in other forms) provided by the Third
Party for the benefit of the Company:





	 	 	 	 	 	 	 	 	 	 	 
	No.	 	Warrantor	 	Security Contract Number	 	Creditor	 	Type of Security
	1

	 	Pingnan Minfeng
Electricity Co., Ltd.
	 	 	35901200600002840	 	 	Agricultural Bank of China, Pingnan County Sub-branch
	 	Guarantee
	 
	 	 	 	 	 	 	 	 	 	 
	2

	 	Fujian Dachuang
Hydroelectric Group
Co., Ltd.
	 	 	35901200700011466	 	 	Agricultural Bank of China, Pingnan County Sub-branch
	 	Guarantee
	 
	 	 	 	 	 	 	 	 	 	 
	3

	 	Wu Tingli, Zhou Jian, Lin
Yun and Zhang Yaofang
	 	 	35901200700011472	 	 	Agricultural Bank of China, Pingnan County Sub-branch
	 	Guarantee







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