EX-10.5









Exhibit 10.5





Contract Number: Z070049




Contract




For




TRANSFER OF FIFTY PERCENT OF THE EQUITY INTERESTS




Of




YUNHE COUNTY SHAPULONG HYDROPOWER GENERATION CO., LTD.




Transferor: Yunhe County Yunhe State Assets Management Co., Ltd.




Transferee: China Hydroelectric Corporation




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Parties to this Contract



Transferor (hereinafter referred to as “Party A”): Yunhe County Yunhe State Assets


 Management Co., Ltd.




	 	 	 
	Registration Number:

	 	3325231000372
	 
	 	 
	Registered Address:

	 	No. 108, Xinhua Street, Yunhe Town
	 
	 	 
	Legal Form:

	 	Limited Liability Company
	 
	 	 
	Legal Representative:

	 	Wang Chang Rong
	 
	 	 
	ID Card Number:

	 	332523196704050012
	 
	 	 
	Telephone Number:

	 	0578-5133872





Transferee (hereinafter referred to as “Party B”): China Hydroelectric Corporation




	 	 	 
	Legal Representative:

	 	John Douglas Kuhns






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In accordance with the provisions of the Contract Law of the People’s Republic of China, the
Interim Measures for the Administration of Transfer of State-Owned Assets of
Enterprises and other relevant laws and regulations of the People’s Republic of China
(the “PRC”), Party A and Party B, after friendly consultations and on the principles of
free will, fairness and good faith, have reached agreement concerning the transfer of
fifty percent (50%) of the equity interests of Yunhe County Shapulong Hydropower
Generation Co., Ltd. held by Party A to Party B, and entered into the Equity Transfer
Contract as follows (hereinafter referred to as this “Contract”):




Article 1 Subject Matter for Transfer



The transferred subject hereunder shall be fifty percent (50%) of the equity interests
of Yunhe County Shapulong Hydropower Generation Co., Ltd. (hereinafter referred to as
the “Target Company”) held by Party A (hereinafter referred to as the “Transferred
Equity”).




Article 2 Representations, Warranties and Undertakings by Party A





	1.	 	Party A has the legal and valid right to dispose of the Transferred Equity.
	 
	2.	 	All evidencing documents and materials provided to Party B for the purpose of
executing this Contract are authentic and complete.
	 
	3.	 	All requisite approvals for executing this Contract, including, without
limitation, the authorizations, examination and approval, and internal decisions
of the company, have been legally and validly obtained and all premises and
conditions precedent for the establishment of this Contract have been satisfied.
	 
	4.	 	The Transferred Equity does not involve any third party’s rights and interests
and the transfer of the Transferred Equity does not violate the articles of
associations, executed contracts, agreements and all other legal documents binding
on the Transferor.




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	5.	 	Party A shall provide all reasonable and necessary assistance so as to obtain
relevant approvals of and alteration with relevant governmental authorities, which
are requisite for the transfer of the Transferred Equity.





Article 3 Representations, Warranties and Undertakings of Party B





	1.	 	Party B has the ability to enter into this Contract and fulfill its obligations hereunder.
	 
	2.	 	All requisite approvals for executing this Contract, including, without
limitation, the authorizations, examination and approval, and internal decisions
of the company, have been legally and validly obtained.
	 
	3.	 	The acquisition of the Transferred Equity by Party B does not violate any legal
documents such as contracts and agreements which are binding on the Transferee.
	 
	4.	 	Party B undertakes that the information provided for bidding application and
relevant supporting documents evidencing Party B satisfying the qualifications as
the transferee (including relevant appendices) are authentic, legal and valid.
Party B shall further assure that its capacity as the transferee and all materials
provided by it can meet the requirements for the capacity as company shareholders
as set by the administration for industry and commerce and other authorities.
	 
	5.	 	Party B undertakes and warrants the genuineness, legality and validity of the
documents and materials provided by it for bidding application concerning the
counter security for the loan in the amount of RMB 73,500,000 borrowed by the
Target Company from China Construction Bank, Yunhe Sub-branch or concerning the
conclusion of separate loan arrangement.
	 
	6.	 	Party B undertakes that all external contracts executed by the Target Company
will be continued to be performed.




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Article 4 Disposal Scheme for Claims and Debts of the Target Company



All original claims and debts of the Target Company shall be assumed by the new company
established after the transfer of the Transferred Equity.




Article 5 Transfer Method; Transfer Price; Payment Schedule, Terms and Conditions for
the Payment of Transfer Price





	1.	 	The transfer shall be conducted by way of auction.
	 
	2.	 	The transfer price: Party A shall transfer the Transferred Equity at a price of
RMB33,000,000.00 (hereinafter referred to as the “Transfer Price”) to Party B in
accordance with Article 1 hereof.
	 
	3.	 	The terms for the payment of the Transfer Price: Party B shall pay the Transfer
Price in a lump. Within five (5) business days from the signing date of this
Contract, Party B shall remit the Transfer Price in full into the bank account
designated by Zhejiang Property & Stock Exchange.
	 
	4.	 	The methods for the settlement and transfer of the Transfer Price: within five
(5) business days after Zhejiang Property & Stock Exchange having received the
total amount of the Transfer Price and all transaction fees remitted by Party B,
Zhejiang Property & Stock Exchange shall remit 70% of the Transfer Price into the
bank account designated by Party A, and the rest thirty percent (30%) of the
Transfer Price shall be remitted to the bank account designated by Party A after
the alteration procedure for the equity transfer has been accomplished by Party A
and Party B.





Article 6 Delivery of the Transferred Equity




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	1.	 	It is agreed that, within ten (10) days from the full payment of the Transfer
Price by Party B, Party A shall provide Party B with a list of assets for delivery
regarding relevant title certificates, approvals, financial statements and other
documents and materials in connection with the Transferred Equity. Party B shall
confirm its examination and acceptance of the same by signing and sealing with its
stamp.
	 
	2.	 	Party A shall be responsible for the completeness and genuineness of the
above-mentioned list and the consistency between the list provided by it and
corresponding Transferred Equity, and shall assume all legal liabilities arising
out of any concealment or misrepresentation.
	 
	3.	 	Party A shall assist Party B in handling the transfer or alteration of relevant
certificates or approvals. The Transferred Equity shall be deemed as being
transferred to Party B after the property transfer or alteration procedures have
been accomplished.





Article 7 Fees in relation to Transfer



Relevant taxes, fees and other expenses in relation to the alteration and transfer of
property right in the course of the transaction stipulated herein shall be borne by
Party A and Party B respectively in accordance with relevant national regulations.




Article 8 Resolution of Disputes



Any dispute between the Parties to this Contract shall firstly be resolved through
friendly consultation or submitted to Zhejiang Property & Stock Exchange for
intermediation. In the event that such dispute cannot be resolved through consultation
or intermediation, either Party may bring action to the competent people’s court.



Article 9 Liability for Breach of Contract




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	1.	 	After this Contract comes into effect, in the event that any Party proposes to
terminate (rescind) this Contract without cause, such Party shall pay, in a lump,
10% of the Transfer Price to the other Party as liquidated damages; in the event
that the other Party incurs any losses, the defaulting Party shall assume
corresponding liability for compensation.
	 
	2.	 	In the event that either Party A or Party B violates any of its representations,
warranties or undertakings, the counterparty shall be entitled to require the
defaulting Party to pay 10% of the Transfer Price as liquidated damages; in
addition, the non-defaulting Party shall be entitled to further require the
defaulting Party to compensate all losses arisen therefrom.
	 
	3.	 	In the event that Party B fails to pay the Transfer Price in accordance with this
Contract, Party A shall be entitled to rescind this Contract, confiscate all
guarantee fund paid by Party B and require Party B to compensate all losses (which
shall be calculated by 0.5‰ per day of the total amount of the unpaid portion of
the Transfer Price). In the event that Party A does not exercise its right to
rescind this contract, it shall be entitled to require Party B to pay liquidated
damages calculated by 0.5‰ of the total amount of the unpaid portion of the
Transfer Price per day.
	 
	4.	 	In the event that Party A fails to deliver the Transferred Equity in accordance
with this Contract, Party B shall be entitled to rescind this Contract and require
Party A to compensate all losses arisen therefrom; in addition, Party B shall be
entitled to further require Party A to pay liquidated damages calculated by 10% of
the Transfer Price.
	 
	5.	 	In the event that this Contract fails to be performed or fully performed, or is
declared null and void by relevant governmental authorities due to any Party’s
fault, the defaulting Party shall assume the liabilities for breach of contract;
in the event that both Parties are in breach, each defaulting Party shall be
liable separately and proportionately to the other Party.




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Article 10 Applicable Law



This Contract shall be governed by and construed in accordance with PRC laws and
regulations.




Article 11 Modification and Rescission of This Contract



This Contract may be modified or rescinded upon mutual agreement by both Parties.
In the event that any of the following circumstances occurs, any Party may rescind this
Contract:





	1.	 	The occurrence of Force Majeure or the purpose of this Contract being unable to
be realized due to any reason not attributable to both Parties.
	 
	2.	 	The loss of the ability to perform this Contract by the other Party.
	 
	3.	 	The failure to perform this Contract by the other Party within the time limit
provided in this Contract or the committing of any other defaulting act, which
causes the purpose of this Contract to be failed.




This Contract shall be modified or rescinded in written form and shall be filed with Zhejiang
Property & Stock Exchange for record.




Article 12 Effectiveness of This Contract





	1.	 	This Contract shall become effective upon signing by the authorized
representatives of Party A and Party B and affixing with official stamps. (Where
approval or registration is required in accordance with laws and administrative
regulations, this Contract shall come into effect when approved by or registered
with the competent authorities).
	 
	2.	 	After this Contract comes into force, any modification on or supplement to this
Contract shall be conducted in written form by both Parties, which shall be
attached as appendice




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	 	 	to this Contract. The appendices hereto shall have the same legal effect as this Contract.





Article 13 Miscellaneous



Subject to auditing, the operational profits and losses occurred between the base date
of assets valuation and the completion date of equity transfer (the completion date of
alteration registrations with the competent administration for industry and commerce)
shall be solely enjoyed or born by the Transferee.



This Contract shall be signed in eight (8) counterparts. Party A and Party B shall each
hold two (2) counterparts, Zhejiang Property & Stock Exchange shall keep one (1)
counterpart for record, and the rest three (3) counterparts shall be submitted to
relevant authorities.




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Transferor (Party A): Yunhe County Yunhe State Assets Management Co., Ltd.




Legal Representative (Signature):




Signing Date: October 12, 2007




Transferee (Party B): China Hydroelectric Corporation




Authorized Representative (Signature):




Signing Date: October 12, 2007




Witnessed By: Zhejiang Property & Stock Exchange Co., Ltd.




Authorized Representative (Signature):




Witness Date: October 12, 2007




Signing Place: Hangzhou, Zhejiang Province





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