Document:

EX-10.40

Exhibit
10.40

GRID CONNECTION AND POWER PURCHASE AGREEMENT

Party A: Sanming Zhongyin Banzhu Hydroelectric Co., Ltd.

Party B: Fujian Province Sanming Power Industry Bureau

For the purpose of coordinating the relationship between power seller and power purchaser, and
identify the responsibilities and obligations of the Parties, Party A and Party B, according to the
spirit of the Reply concerning the Amended Opinion on the Grid-connection Plan of Sanming Banzhu
Hydropower Station (document number: Min Dian Ji [1994] No.235) issued by the Power Industry Bureau
of Fujian Province, after the consultation, agree to enter into this Grid-connection and Power
Purchase Agreement (this “Agreement”) as set out below:

	I	 	On-grid Installed Capacity
	 
	 	 	Party A is installed with three (3) hydroelectric generator units (Type: SFWG15.0-68) with a
total installed capacity of 45,000 KW, and No.1 step-up substation of 20,000 kilovar and No.2
step-up substation of 40,000 kilovar.
	 
	II	 	Grid-connection Mode

	 	1	 	Party A is connected to the provincial grid by means of 35KV double circuit line and
is responsible only for power generation other than power supply. No.1 generator unit of
the first phase, after the transformation to 35KV by No.1 step-up substation of 20,000
kilovar, is connected to No.302 Interval of Liexi Substation of the provincial grid
through 343 Banlie Line for operation; the following No.2 and No.3 generator units, after
the transformation to 35KV by No.2 step-up substation of 40,000 kilovar, are connected to
No.346 Interval of Chenda Substation of the provincial grid through 344 Banchen Line for
operation. In addition, the busbar of Segment I of 343 Banlie Line and the busbar of
Segment II of 344 Banchen Line could be tied with 3400 isolating switch through the 35KV
bus tie, the operation form of which will be identified in the dispatching agreement.
	 
	 	2	 	Party B will provide to Party A with power for the overhaul usage during its entire
outage period by 975 Line of Liedong Substation, with the approved capacity of 250 KW.
	 
	 	3	 	In principle, power supply for the overhaul usage and etc. shall not be provided by
Banlie Line and Banchen Line; in case of emergency and requirement for reversed power
supply, upon the approval from the dispatcher of Party B, such power supply could be
provided, but Party A shall immediately and actively consultant with Party B for the
non-metered power output and other issues.

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	III	 	Metering

	 	1	 	The metering points for the electricity fees of Party A shall be respectively set at
302 Interval of Liexi Substation and 346 Interval of Chenda Substation (the intervals for
the grid connection shall be invested and constructed by Party A, and then transferred,
without any charge, to Party B for management and maintenance), with the respective CT
no-load voltage ratio of 750/5 and 600/5, the current and potential transformers for
metering of category 0.2 accuracy and imported multifunctional kilowatt-hour meter
installed, which shall be examined and tested to be qualified and sealed by Party B. The
metering points shall be maintained and managed by Party B during the period of the
metering and calculation of power output and fees. Party B shall return the kilowatt-hour
meters of the same type to Party A upon the cancellation of the account.
	 
	 	2	 	The meter with peak and valley differentiation function shall be installed at the
power supply source for overhaul usage of 975 Line so as to meter the power used by Party
A.

	IV	 	Management of Power Purchase

	 	1	 	Party B shall reasonably arrange the power generation of Party A in accordance with
the actual supply and demand conditions of the grid, and the power purchase plan released
by the Power Industry Bureau of Fujian Province.
	 
	 	2	 	Party A shall submit the power generation proposal for the next year (quarter) to
Party B and the Power Industry Bureau of Fujian Province respectively at the end of July
in each year and within twenty days before the next quarter, which shall be released and
carried out upon the overall balancing by the Power Industry Bureau of Fujian Province.
Party B will not purchase the power output exceeding the permitted planned output.
	 
	 	3	 	Party A shall carry out its power generation strictly in accordance with the reactive
and active load curves released by the local dispatching agency of Party B, and the
power-factor of the on-grid power output shall be examined according to the standard 0.9.
	 
	 	4	 	Party A shall submit to Party B the monthly statement of the power generation
conditions of the previous month on the first day of the subsequent month.

	V	 	Tariff and Settlement of Electricity Fees

	 	1	 	The on-grid tariff of Party A shall be executed in accordance with the tariff
approved by the Power Industry Bureau of Fujian Province and the Price Commission of
Fujian
Province.

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	 	2	 	The electricity fees for the on-grid power output of Party A shall not be calculated
separately at the tariff respective for the peak and valley periods for the time being.
	 
	 	3	 	Party B shall regularly read the meter at 24:00 at the end of each month, and upon
the double check jointly by Party A and Party B on the site, the value-added tax invoice
shall be issued and delivered by Party A to the financial staff of Party B within the
first five days of each month. The settled electricity fees shall be paid off by Party B
within thirty days after the receipt of the said invoice.
	 
	 	4	 	The circuit power-factor of the power supply source for the overhaul of Party A shall
be examined according to the standard 0.9, and the electricity fees shall be calculated
separately at the tariff respective for the peak and valley periods.
	 
	 	5	 	The on-grid power output and power output for the overhaul of Party A shall not be
offset with each other.
	 
	 	6	 	In the event that the kilowatt-hour meters located at Liexi Substation and Chenda
Substation for metering the on-grid power output break down and therefore could not meter
accurately, the metering data at the outlet of the line of step-up substation of Party A
may be used for reference to the settlement of the on-grid power output.

	VI	 	Property Demarcation and Maintenance and Management

	 	1	 	The property demarcation point of Banlie Line is set at No.33 Pole, which is one
meter away from the side insulator string of Liexi Substation. The property rights of
No.33 Pole and its lines shall belong to Party A.
	 
	 	2	 	The property demarcation point of Banchen Line is set at No.12 Pole, which is one
meter away from the side insulator string of Chenda Substation. The property rights of
No.12 Pole and its lines shall belong to Party A.
	 
	 	3	 	Party A shall be responsible for the maintenance and management of its self-owned
equipments. In the event that it is hard for Party A to maintain such equipments, Party A
may entrust Party B with the maintenance, and enter into a separate entrusted maintenance
agreement. Party B shall be responsible for the maintenance and management of its
self-owned equipments. Party A and Party B shall be respectively responsible for the
safety of their own equipments.
	 
	 	 	 	The property demarcation between Party A and Party B are indicated on the attached chart.

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	VII	 	Dispatching Operation and Communication Management
	 
	 	 	Party A shall follow the dispatching of grid and enter into a dispatching agreement with the
dispatching agency of Party B, which shall be attached as appendix to this Agreement.

	VIII	 	Miscellaneous

	 	1	 	Party A shall carry out the precaution testing and relay protection commission
periodically for its high voltage electric equipments in accordance with the national
regulations; in addition, one copy of the testing reports on the switch of the main
transformer lines and relevant main equipments shall be submitted to Party B for record.
	 
	 	2	 	Party A shall strengthen the technical training and position safety training of its
electric operating staff, who shall also be familiar with the Power Industry Safety
Regulation and Grid Dispatching Regulations in Sanming Area, so as to ensure the
production safety.
	 
	 	3	 	The staff, who is appointed by Party B for the examination of Party A, shall strictly
abide by the regulations and rules of Party A and keep the information confidential; in
addition, Party A shall provide convenience for the work of the staff appointed by Party
B. Party A shall seriously study the safety issues raised by Party B during the
examination, and solve them in a timely manner.
	 
	 	4	 	Any issue, which is not covered in this Agreement, shall be settled in light of the
Electric Power Law and relevant power regulations, and the regulations of the superior
authorities.
	 
	 	5	 	This Agreement shall come into effect upon the signing with a valid term of one year
for the time being. In case of no objection from the Parties, this Agreement continues
being effective.
	 
	 	6	 	This Agreement shall be executed in eight sets of originals for Party A and Party B’s
record, and in eight sets of duplicates for submission to relevant authorities.

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Party A: Sanming Zhongyin Banzhu Hydroelectric Co., Ltd.

Responsible Person:

Legal Representative:

Party B: Fujian Province Sanming Power Industry Bureau

Responsible Person:

Legal Representative:

This Agreement is executed on April 30, 1997

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Contract Serial Number: H Diao Du 091 [2006] No.0338

GRID CONNECTION AND

DISPATCHING AGREEMENT

FOR

SANMING ZHONGYIN BANZHU

HYDROELECTRIC

CO., LTD.

Fujian Province Sanming Power Industry Bureau

sanming Zhongyin Banzhu Hydroelectric Co., Ltd.

September 2006

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(Agreement Serial Number:)

GRID CONNECTION AND DISPATCHING AGREEMENT

This Grid Connection and Dispatching Agreement (hereinafter referred to as this “Agreement”) is
executed by and between the following two Parties:

Party A: Fujian Province Sanming Power Industry Bureau, a local power grid operation
enterprise registered with the Administration Authority for Industry and Commerce, with the tax
registration number of 35040215558376, the registered address at No.1032, Liedong
Street, Sanming City, Fujian Province, and Post Code of 365000, the legal
representative of which is Cai Hong Xian.

Party B: Sanming Zhongyin Banzhu Hydroelectric Co., Ltd., a power generation enterprise
with the status of legal entity, registered with the Administration for Industry and Commerce of
Sanming City, Fujian Province, with the registration number of Qi Zuo Ming Zong Fu Zi
No.000597, the registered address at Building 160, Qianlong New Village, Xinshi North Road,
Sanming City, and Post Code of 365000, the legal representative of which is Yao
Zheng Xiang.

WHEREAS:

Party B constructs, owns, operates and manages the Banzhu Hydropower Station (hereinafter referred
to as the “Power Plant”) with a total installed capacity of 45MW in Sanming City, and agrees to
connect the Power Plant to Party A’s grid for operation in accordance with the

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provisions hereof and accept the dispatching management conducted by the dispatching agency of
Party A within its functional area.

In order to ensure the safety, high quality and economic operation of the electric power system,
regulate the dispatching of power grid and grid-connected operations, and protect the lawful rights
and interests of the two parties to this Agreement (hereinafter collectively referred to as Both
“Parties” as well as individually as a “Party”), on the principle of equality, willingness and good
faith, both Parties hereto have entered into this Agreement through consultations in accordance
with the Electric Power Law of the People’s Republic of China, the Contract Law of the People’s
Republic of China, the Administration Regulations on the Dispatching of Power Grids and other
relevant laws and regulations of the People’s Republic of China.

CHAPTER I DEFINITIONS AND INTERPRETATIONS

	1.1	 	Unless otherwise required by the context, the following terms used in this Agreement shall
have the meanings set forth as follows:

	 	1.1.1	 	“Fujian Power Dispatching (Trading) Center” (“Provincial Dispatching” for
abbreviation) refers to the agency in charge of the organization, direction and
coordination of the operation of the electric power system of Fujian Province pursuant to
laws.
	 
	 	1.1.2	 	“Sanming Local Dispatching Agency” (“Local Dispatching” for abbreviation) refers to
the Power Dispatching Station of Sanming City in charge of the organization, direction and
coordination of the operation of the electric power system of Sanming area pursuant to
laws.
	 
	 	1.1.3	 	“Power Plant” refers to the power generation facility with all its auxiliary

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	 	 	 	facilities stretching to the property demarcation point with the total installed
capacity of 45 MW (including three (3) generator units, namely, No. 1 generator unit
with a installed capacity of 15 MW, No. 2 generator unit with a installed capacity of
15 MW and No. 3 generator unit with a installed capacity of 15 MW, the detailed
technical parameters please refer to Appendix II hereto), which is constructed, owned,
managed and operated by Party B and located at Banzhu, Meilie District.

	 	1.1.4	 	“Connection Points” refer to the interconnection points between the Power Plant and
the power grid.
	 
	 	1.1.5	 	“Connection Form” refers to one systematic connection form between the Power Plant
(generator units) and the power grid.
	 
	 	1.1.6	 	“AGC” refers to the Automatic Generation Control.
	 
	 	1.1.7	 	“AVC” refers to Automatic Voltage Control.
	 
	 	1.1.8	 	“RTU” refers to Remote Terminal Unit.
	 
	 	1.1.9	 	“Disconnection” insofar as this Agreement is concerned, specially refers to the
electric interruption of the connection between the power grid and the power generation
equipments which are interconnected to the power grid for operation.
	 
	 	1.1.10	 	“Special Operation Mode” refers to the operation arrangement for the abnormal line
connection mode of the Power Plant or the power grid, which is different from the normal
line connection mode, as a result of certain demand.
	 
	 	1.1.11	 	“Unit Available Capacity” refers to the output of the generator units modified at any
time due to the restrictions of the equipment conditions (including the restrictions of
water condition, shipping and etc. on the output of the generator units).
	 
	 	1.1.12	 	“Planned Outage” refers to the status of the units of the Power Plant during the planned
overhaul and reserve periods, including the general overhaul, the maintenance, the planned
overhaul for general service system, and the holiday repairing, the elimination of defects
during off-peak period, the shutdown reserve,

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	 	 	 	and etc. which are required by Sanming Local Dispatching Agency.

	 	1.1.13	 	“Unplanned Outage” refers to the unavailable status of the units of Power Plant other
than Planned Outage. Based on the outage urgency, the Unplanned Outage can be classified
into five categories: (1) immediate outage; (2) the outage which could be delayed for a
short while but the units must exit within six hours; (3) the outage which could be
postponed over six hours but the units must exit within seventy-two hours; (4) the outage
which could be deferred over seventy-two hours but the units must exit before the next
Planned Outage; and (5) the prolonged outage which is beyond the period of the Planned
Outage.
	 
	 	1.1.14	 	“Forced Outage” refers to the categories 1, 2 and 3 of the Unplanned Outage set forth in
1.1.13.
	 
	 	1.1.15	 	“Equivalent Unit Derated Hours” refers to the outage hours calculated in accordance with
the maximum output on the nameplate, which are converted from the derated output hours.
	 
	 	1.1.16	 	“Equivalent Unplanned Outage Hours” refers to the sum of the hours for the Unplanned
Outage and unplanned Equivalent Unit Derated Hours.
	 
	 	1.1.17	 	“Daily Generation Dispatching Plan Curve” refers to the curve worked out by Sanming
Local Dispatching Agency on a daily basis for the determination of the generation output
of the Power Plant for each period of time of the next day in accordance with the daily
generation dispatching plan curve for Shaxi river valley released by the Provincial
Dispatching.
	 
	 	1.1.18	 	“Emergencies” refer to the material accidents occurred to the power generation or supply
facilities within the power system, including the conditions of the grid frequency or
voltage being over the prescribed limit, the loading of the transmission and
transformation facilities being over the regulated value, the power value of the main
lines being over the specified stability limit, and other operation situations that may
threaten the safe operation of the power grid, and cause the breakdown of the power system
to the extent of a large area power-cut.
	 
	 	1.1.19	 	“Dispatching Regulations for Electric Power System” (hereinafter referred to

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	 	 	 	as “Dispatching Regulations” or “Grid Dispatching Regulations”) refers to the
regulations formulated in accordance with the Administration Regulations on the
Dispatching of Power Grids, the national standards and the electric power industry
standards, in order to regulate the power system dispatching and operation activities
of the electric power system within the local area. The Dispatching Regulations
include the Power System Dispatching Regulations of Fujian Province and the Power
System Dispatching Regulations of Sanming District.

	 	1.1.20	 	“Party A’s Reason” refers to the requirements of Party A or liabilities attributed to
Party A, including the liabilities which shall be assumed by Party A for the enlargement
of accident due to Party A’s failure to perform relevant national regulations and
standards, etc.
	 
	 	1.1.21	 	“Party B’s Reason” refers to the requirements of Party B or liabilities attributed to
Party B, including the liabilities which shall be assumed by Party B for the enlargement
of accident due to Party B’s failure to perform relevant national regulations and
standards, etc.
	 
	 	1.1.22	 	“Power Purchase and Sale Contract” refers to the contract entered into by and between
Party A and Party B regarding the purchase and sale of the electricity output generated by
the Power Plant and other relevant commercial issues.
	 
	 	1.1.23	 	“Force Majeure” refers to the objective conditions which are unforeseen, unavoidable and
insurmountable, including volcano eruptions, tornados, tsunamis, snowstorms, mudslides,
landslides, flood, fire, water inflows below the designed standards, and earthquakes,
typhoons, thunder and lightening and fog flash, etc. with an intensity over the designed
standards, and nuclear radiation, wars, plagues and riots, etc.

	1.2	 	Interpretations

	 	1.2.1  	 	All headings hereof are only for the convenience of reading and shall not affect the
interpretations of this Agreement in any way.

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	 	1.2.2	 	The Appendices hereto shall have the same legal effect as the text of this
Agreement.
	 
	 	1.2.3	 	Unless otherwise agreed by both Parties, this Agreement shall be binding on the
lawful successors or assignees of any Party.
	 
	 	1.2.4	 	Unless otherwise required by the context, the year, month and day mentioned in this
Agreement shall be the year, month and day in Gregorian calendar.
	 
	 	1.2.5	 	The words “include” herein shall mean “include without limitation”.
	 
	 	1.2.6	 	All numbers and durations mentioned in this Agreement shall include the given
numbers.

CHAPTER II REPRESENTATIONS OF THE PARTIES

Each Party hereby represents to the other Party that:

	2.1	 	It is an enterprise duly established and validly and legally in existence in accordance with
laws, which has the full right to execute and the capability to perform this Agreement.

	2.2	 	All procedures required for the execution and performance of this Agreement (including the
procurement of the requisite governmental approvals, business license and power business
permit, etc.) have been accomplished legally and validly.

	2.3	 	Upon the execution of this Agreement, no judgment, verdict, award or specific administrative
activity has been issued or conducted by any courts, arbitration institutes, administrative
authorities or other supervisory bodies that is sufficient to

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	 	 	have material adverse effect on its performance of this Agreement.

	2.4	 	All internal authorization procedures required for executing this Agreement have been
accomplished and this Agreement is signed by its legal representative or authorized
representative. This Agreement shall be binding on both Parties after it comes into effect.

CHAPTER III OBLIGATIONS OF BOTH PARTIES

	3.1	 	Both Parties shall abide by the national laws, regulations, electric power industry
standards, and relevant policies, regulations and administrative measures formulated and
issued by the power administration authority of the State or Fujian Province with respect to
the basic construction, operation, maintenance, dispatching and management.
	 
	 	 	In addition, both Parties shall abide by the regulations, rules and administrative measures
and other regulative document in relation to technology regulations and operation
management which are formulated by the grid company of the State or Party A to ensure the
safe and stable operation of the power grid, presently those documents mainly include:

	 	(1)	 	The Power System Dispatching Regulations of Fujian Province and the Power
System Dispatching Regulations of Sanming District;
	 
	 	(2)	 	The Regulations on the Safe and Stable Operation of the Power System of
Fujian Province;
	 
	 	(3)	 	The Regulations on the Management of the Relay Protection and Automatic
Safety Devices of the Power System of Fujian Province;
	 
	 	(4)	 	The Implementation Rules on the Main Points of the Counter-accident Measures
for the Relay Protection and Automatic Safety Devices of the Power

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	 	 	 	System of Fujian Province;

	 	(5)	 	The Implementation Rules on the Technology Supervision for the Relay
Protection and Automatic Safety Devices of the Power System of Fujian Province;
	 
	 	(6)	 	The Administration Rules on the Setting Calculation of the Relay Protection
of the Power System of Fujian Province;
	 
	 	(7)	 	The Grounding Scheme for the Secondary System of the Relay Protection of the
Power System of Fujian Province;
	 
	 	(8)	 	The Administration Regulations for the Operation of the Power Grid
Dispatching Automatization System of Fujian Province;
	 
	 	(9)	 	Relevant Counter-accident Measures in connection with the Power Grid of
Fujian Province Power Co., Ltd.

	 	 	During the period for the performance of this Agreement, in case of any amendments to the
above-mentioned regulations, rules and administrative measures, the amended regulations,
rules and administrative measures shall be implemented.
	 
	3.2	 	Unless otherwise expressly provided in this Agreement, the obligations of Party A shall
include:

	 	3.2.1	 	Under the unified direction and coordination of the Provincial Dispatching,
Sanming Local Dispatching Agency shall carry out unified dispatching for the grid within
its dispatching area, be responsible for the operation and management of the relevant
equipments and facilities relating to the power grid within its controlled area to
fulfill the requirements for the normal operation of the Power Plant and the power grid.
	 
	 	3.2.2	 	To strictly abide by the laws, regulations, rules, standards, codes, provisions,
administrative measures and etc. provided in the Article 3.1 hereof and carry out the
unified dispatching accordingly on the principle of fairness, justice, publicity, economy
and reasonableness.

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	 	3.2.3	 	To reasonably arrange the active and reactive outputs of the Power Plant on the
basis of the Daily Generation Dispatching Plan Curve of Shaxi water valley released by
the Provincial Dispatching and incorporation with the actual operation condition of the
power grid under its dispatching;
	 
	 	3.2.4	 	To carry out unified arrangement for the power generation, frequency modulation,
voltage regulation, reserve and etc. of the Power Plant to satisfy the safe and stable
operation and qualified power energy of the power grid under its dispatching;
	 
	 	3.2.5	 	To take measures to prevent the occurrence of accidents which would affect the
safety operation of the power system under its dispatching, to carry out special and
professional safety inspections concerning the grid safety in coordination with the
arrangement of the Provincial Dispatching, and formulate counter-accident measures as
required, and carry out the grid-plant unified counter-accident rehearse plan in
coordination with the Provincial Dispatching and organize and implement accordingly. In
case of the occurrence of any accident that affects the safe and stable operation of the
power grid, Party A is entitled to participate in the accident investigation and accident
analysis;
	 
	 	3.2.6	 	To arrange the equipment overhaul of the Power Plant in time according to the
Dispatching Regulations and overhaul regulations, and the tendency of the non-emergency
defects of the equipment of the Power Plant advanced by Party B, subject to the actual
conditions of the operation of the power grid under its dispatching;
	 
	 	3.2.7	 	To support and coordinate with Party B for the technological improvement and
parameters adjustment implemented to certain equipments; to direct and coordinate the
dispatching, operation and management of Party B in relation to the grid under the
dispatching of Party A; to conduct direction and coordination to the electric equipments,
relay protection and automatic safety devices, excitation system and speed governor
system, power dispatching communication, dispatching automatization and other relevant
specification and business during the operation of the Party B, which are related to the
safe operation of the power

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	 	 	 	grid under Party A’s dispatching; and to conduct statistical examination on the
equipment operation conditions of the Power Plant in accordance with relevant
regulations;

	 	3.2.8	 	To circulate the defects information of the material equipments of the power grid
related to Party B and the power transmission capacity of the channels related to Party B
according to relevant regulations in a timely fashion, and disclose the power dispatching
information related to Party B twice every year;
	 
	 	3.2.9	 	To cooperate with Party B in respect of the investigations on accidents.

	3.3	 	Unless otherwise expressly provided in this Agreement, the obligations of Party B shall
include:

	 	3.3.1	 	To obey the unified dispatching of Sanming Local Dispatching Agency, reasonably
organize the production of the Power Plant, and strictly abide by the Dispatching
Regulations and the dispatching directions.
	 
	 	3.3.2	 	To work out the field operation regulations in full compliance with the power system
regulations and rules of Party A, which shall be revised every four years, and to file the
aforesaid regulations with Party A.
	 
	 	3.3.3	 	According to the requirement of Sanming Local Dispatching Agency, to provide
proposals concerning the equipment overhaul plans for the Power Plant, to implement the
approved overhaul plans, and organize the overhaul and maintenance work for the
equipments.
	 
	 	3.3.4	 	To timely carry out technological improvements or parameter adjustments for the
equipments according to the needs, and file such improvements or adjustments with Party A
(in case of involving grid safety, the approval from Party A must be procured).
	 
	 	3.3.5	 	To take measures to prevent accidents that may affect the operation safety of the
electric power system, to cooperate with Party A for the periodic special and professional
safety inspections relating to the grid safety, and implement the

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	 	 	 	precaution measures proposed during the inspections; in case of any specific
counter-accident measures or other requirements for the electric power system safety
issued by Sanming Local Dispatching Agency, to implement and maintain the operations
according to such requirements; to file relevant documents of safety measures to
Sanming Local Dispatching Agency; and to participate in the joint counter-accident
rehearsal organized by Sanming Local Dispatching Agency.

	 	3.3.6	 	In case of the occurrence of any material defects or hidden dangers of the material
equipments of the Power Plant, to settle it in a timely fashion according to the electric
power industry standards and Dispatching Regulations, and report the actual conditions to
Sanming Local Dispatching Agency; in addition, to notify Sanming Local Dispatching Agency
the settlement result upon the completion of such settlement.
	 
	 	3.3.7	 	To operate in accordance with the daily dispatching plan issued by Sanming Local
Dispatching Agency, modulate the frequency and regulate the voltage according to the
dispatching direction of Sanming Local Dispatching Agency, participate in the frequency
modulation, voltage regulation of the power grid and undertake the basic reserve power
volume of the power grid and other basic auxiliary services of the power grid.
	 
	 	3.3.8	 	To provide Sanming Local Dispatching Agency with the operating conditions of the
equipments of the Power Plant and the production information including the water
resources, statements and etc. timely and accurately in accordance with requirements
indicated in documents issued by Sanming Local Dispatching Agency on the basis of the
stipulations provided in Article 3.1 hereof, and ensure the accuracy of the information
provided.
	 
	 	3.3.9	 	To provide a full cooperation and support for the accidents investigations and
analysis in which Party A participates.
	 
	 	3.3.10	 	Within the valid term of this Agreement, in the event that Party A needs to add
facilities and equipments within the Power Plant or counter-accident measures and
technological improvements, etc. due to the requirements of the safe and

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	 	 	 	stable operation of the power grid or other requirements to the Power Plant, to take
charge of the implementation and operation maintenance and bear the corresponding fees
and costs in accordance with the requirement advanced by Sanming Local Dispatching
Agency.

	 	3.3.11	 	To participate in the professional conferences, counter-accident rehearsal and
technology training organized by Sanming Local Dispatching Agency; and to accept the
centralized management and supervision in respect of the professional technology, such as
operation dispatching, system stability, relay protection, communication, automatization,
reservoir dispatching and etc.
	 
	 	3.3.12	 	To provide training services for the field professional technology to the on-duty staff
for the dispatching operation of Party A.

CHAPTER IV CONDITIONS FOR GRID CONNECTION

	4.1	 	The primary and secondary equipments of Party B shall conform to the national standards, the
electric power industry standards and other relevant regulations (refer to the
counter-accident measures to prevent occurrence of the equipment flashover, electric
mis-operation and malfunction or missing operation of relay protection and automatic safety
devices, etc.), the equipment setting values have been set as required by the dispatching
range division with all conditions available for being connected to the power grid of Party A
and accepting the unified dispatching by Sanming Local Dispatching Agency.

	4.2	 	The relay protection and automatic safety devices (including the excitation system and speed
governor system) of the Power Plant shall conform to the national standards, the electric
power industry standards and other relevant regulations.

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	4.3	 	The dispatching automatization facilities of the Power Plant, including the computer
monitoring system, power output metering devices and etc., shall conform to the national
standards, the electric power industry standards and other relevant regulations.

	4.4	 	The power dispatching communication facilities of the Power Plant shall conform to the
national standards, the electric power industry standards and other relevant regulations.

	4.5	 	The electricity energy metering devices of the Power Plant shall be configured according to
the Technical Administration Code of Electric Power Metering Devices (DL / T448-2000) and the
Power Purchase Contract, and pass the testing and acceptance jointly organized by both
Parties.

	4.6	 	According to the requirements of the Regulations on Safe Protection of Computer Monitoring
and Control Systems and Dispatching Data Networks of Power Grids and Power Plants (No.30
Decree of the State Economic and Trade Commission) and relevant regulations, the secondary
system of the Power Plant have already carried out the safety precaution measures, which have
been approved by Sanming Local Dispatching Agency and available for operation.

	4.7	 	All operation and overhaul regulations for the Power Plant have been formulated and relevant
management regulations are complete.

	4.8	 	The names and serial numbers for the equipments of the Power Plant shall be indicated in
eye-catching places of the corresponding electric equipments in accordance with the names and
serial numbers released by Sanming Local Dispatching Agency.

14

 

	4.9	 	The on-duty operator of the Power Plant with the authority to take dispatching directions
shall, pursuant to the provisions of the Administration Regulations on the Dispatching of
Power Grids and other relevant regulations, receive the training organized by the Provincial
Dispatching or Local Dispatching, and procure relevant qualification certificates for the
positions.

	4.10	 	The primary and secondary equipments of Party B being operated in conjunction with the system
of Party A shall conform to the national standards, the electric power industry standards and
other relevant regulations.

	4.11	 	Both Parties have worked out relevant counter-accident measures against possible Emergencies
after the grid connection of the Power Plant, and such measures shall be filed with Sanming
Local Dispatching Agency.

	4.12	 	After the issuance of the rectification opinion letter, Sanming Local Dispatching Agency is
entitled to refuse the production of the generator units for operation, which could not reach
the conditions for independent operation in safety and the requirements of the dispatching
communication and power grid automatization.

CHAPTER V GRID CONNECTION APPLICATION AND ACCEPTANCE

(OMITTED)

15

 

CHAPTER VI GRID CONNECTION AND DISPATCHING DURING THE

COMMISSIONING PERIOD

(OMITTED)

CHAPTER VII OPERATION UNDER DISPATCHING

	7.1	 	During the operation period, the on-duty operators of the Power Plant shall strictly follow
the dispatching directions given by the on-duty dispatchers of Sanming Local Dispatching
Agency.

	 	7.1.1	 	The Power Plant must implement the dispatching directions released by the Sanming
Local Dispatching Agency in a prompt and accurate manner, and shall not refuse or delay
such implementation with any excuse. In case that the implementation of the dispatching
direction may endanger the personnel or equipments, the on-duty operators of the Power
Plant shall immediately report to the on-duty dispatchers of Sanming Local Dispatching
Agency with the reasons, and the on-duty dispatchers of Sanming Local Dispatching Agency
shall be entitled to determine whether to continue such implementation or not.
	 
	 	7.1.2	 	As for those equipments within the scope of direct dispatching by Sanming Local
Dispatching Agency, the Power Plant must strictly follow the relevant operation rules of
dispatching and carry out operations according to the dispatching directions, and take the
responsibility for the accuracy and timeliness of the dispatching direction
implementation; shall accurately report the field conditions and answer the inquiries from
the on-duty dispatchers of Sanming Local Dispatching Agency. The on-duty staff of the
Power Plant shall not operate the above-mentioned equipments without any dispatching
direction. Only in case of any conditions endangering the safety of the personnel and
equipments according to the field regulations, the on-duty staff may settle it in advance
according to relevant regulations, and shall report to the dispatcher of Sanming Local
Dispatching Agency after the completion of such settlement.

16

 

	 	7.1.3	 	As for those equipments within the permitted range of Sanming Local Dispatching
Agency, the on-duty operators of the Power Plant shall make a report to the on-duty
dispatchers of Sanming Local Dispatching Agency prior to the operations, and operates such
equipments upon the procurement of the approval according to the Dispatching Regulations
and the field operation regulations of the Power Plant.
	 
	 	7.1.4	 	The Power Plant shall ensure the attendance of certain staff with the authority to
take the dispatching directions in central control room at any time applicable for the
communication with the on-duty dispatcher of Sanming Local Dispatching Agency, and the
receiving of the dispatching directions released by Sanming Local Dispatching Agency.

	7.2	 	Sanming Local Dispatching Agency shall reasonably arrange the Daily Generation Dispatching
Plan Curve of the Power Plant according to the daily generation dispatching plan curve of
Shaxi water valley released by the Provincial Dispatching. During the normal operation, the
on-duty dispatcher of Sanming Local Dispatching Agency is entitled to make appropriate
adjustment to the Daily Generation Dispatching Plan Curve according to the actual operation
conditions, and such adjustment shall be notified to the on-duty operators of the Power Plant
five (5) minutes in advance.

	7.3	 	In case of any abnormal condition for the operation of the equipments of the Power Plant, the
Power Plant may, according to the regulations of the Dispatching Regulations, submit the
overhaul application to Sanming Local Dispatching Agency in advance. Sanming Local Dispatching
Agency may, according to the stipulations of the Dispatching Regulations and the actual
conditions of the power grid, approve such overhaul application in advance upon going through
relevant provided procedures and adjust the corresponding plans accordingly. In the event that
the equipments need emergent outage, Sanming Local Dispatching shall make timely response
considering the actual conditions. The Power Plant shall implement

17

 

	 	 	according to the final approval of Sanming Local Dispatching Agency,
and in case of any requirements of the grid operation, Sanming Local Dispatching
Agency cannot arrange the applied overhaul promptly, both Parties shall make a
consultation for accident precaution measures and accident settlement procedures in
accordance with the provisions of the Dispatching Regulations.
	 
	7.4	 	Sanming Local Dispatching Agency shall, on the principle that the generator units on the same
grid, of the same type, with the same technical conditions and the same water valley, shall be
modulated to a basically same extent, with the consideration of the power grid structure, the
requirement of the power grid operation, and the electric technical conditions of the Power
Plant, arrange the Power Plant to be involved in the peak regulation, frequency modulation,
voltage regulation and reserve operation of the electric power system in a safe, high quality
and economic manner.

	 	7.4.1	 	Peak Regulation
	 
	 	 	 	The Power Plant shall participate in the peak regulation of the electric power system
in accordance with relevant national regulation, standards and the capacity of the
generator units. The amplitude of such peak regulation shall reach the relevant
national regulations and standards.
	 
	 	7.4.2	 	Frequency Modulation

	 	(1)	 	Sanming Local Dispatching Agency may arrange the Power Plant to be
the frequency modulation plant for the power grid of the local district in
accordance with the actual conditions of the power grid in Sanming district, and
the Power Plant must carry out the frequency modulation according to the
dispatching directions and maintain the power frequency being within the provided
range in the Dispatching Regulations.
	 
	 	(2)	 	The Power Plant shall participate in the frequency modulation work
of the electric power system pursuant to the requirements of the Dispatching
Regulations, and fulfill corresponding obligations.
	 
	 	(3)	 	Upon the on-grid connection of the generator units, the automatic speed 

18

 

	 	 	 	governor system of the Power Plant must be put into operation; in case of
any occurrence of the failure or abnormal conditions to the automatic speed
governor system of the Power Plant, the staff of the Power Plant shall notice
Sanming Local Dispatching Agency immediately and resolve such defaults as soon as
possible.

	 	7.4.3	 	Voltage Regulation

	 	(1)	 	The voltage of the 110kv busbar of the Power Plant shall be the
examination point for the voltage of the power grid, which shall be operated
within the upper and lower limits of the voltage curve in the monthly plan
released by Sanming Local Dispatching Agency to ensure the monthly qualification
rate of the voltage of the examination point being 100%.
	 
	 	(2)	 	In the event that during the operation, the generator units lose
the reactive regulation capability (or reach the operational limit), or the
voltage of the examination point deviates from the qualification range of
voltage, the Power Plant shall notice Sanming Local Dispatching Agency
immediately, and the dispatcher of Sanming Local Dispatching Agency shall take
corresponding measures to control the voltage at the examination point being
within the qualification range. In case of any requirements for the reactive
optimization of the power grid of Sanming district, the Power Plant shall carry
out the regulations pursuant to the reactive load released by Sanming Local
Dispatching Agency provided that the voltage at the examination point of the
Power Point could be ensured to be within the qualified range.

	 	7.4.4	 	Reserve Operation
	 
	 	 	 	In case of any requirement of Sanming Local Dispatching Agency, the Power Plant shall
reserve certain capacity. If the reserved capacity could not satisfy the requirement
of Sanming Local Dispatching Agency, the Power Plant shall report to the on-duty
dispatcher of Sanming Local Dispatching Agency immediately.

19

 

	 	7.4.5	 	After the on-grid operation of the generators, unless the Power Plant’s Staff take
rectification measures according to the dispatching direction of Sanming Local Dispatching
Agency, the automatic excitation system of the Power Plant must be put into operation; in
case of any failure or default to the automatic excitation system of the Power Plant, the
staff of the Power Plant shall immediately notice Sanming Local Dispatching Agency, and
resolve the defaults as soon as possible; and if necessary, the generator could be
disconnected from the grid until such defaults get resolved.

	7.5	 	In case of any Special Operation Mode of Party A due to the equipment upgrading or
transformation which may affect the normal operation of the Power Plant, Sanming Local
Dispatching Agency shall notify the Power Plant of relevant plans two (2) days in advance and
implement the plan determined through consultation.
	 
	7.6	 	In case of any Special Operation Mode of Party B due to the equipment upgrading or
transformation which may affect the normal operation of the power grid, Party B shall notify
Sanming Local Dispatching Agency of relevant amended plans seven (7) days in advance.
	 
	7.7	 	Sanming Local Dispatching Agency shall organize the grid and plants joint meeting with the
on-grid power plants once a year, in which Party B shall be invited to participate, for the
analysis of the operation conditions of the power grid, anticipation of the system tendency,
presentation of the implementations of relevant technical measures for power grid safety, and
the consultation for the settlement of major issues concerning the operation of the electric
power system. Party B shall participate in such joint meetings, and report the operation
conditions of the Power Plant and the implementations of relevant technical measures for the
safety of the Power Plant.
	 
	7.8	 	Both Parties shall exchange the name lists of the on-duty staff in written form and 

20

 

	 	 	notify any alteration thereof promptly.

	7.9	 	The Power Plant shall keep the daily field operation records, recording the actual power
produced every hour, the operation conditions of all equipment, and any abnormal condition
occurred during the period of planned or unplanned power cut and overhaul, the date and time
for each record shall be clearly indicated in the
recording book, and such materials shall be provided in time if required by Sanming Local
Dispatching Agency. The operation records of the Power Plant shall be kept for record
according to the requirements for files management.
	 
	7.10	 	The electric power output metering devices of the Power Plant shall be normally put into
operation, and the tele-transmission of the data recorded in the electric power output
metering devices of the Power Plant to the electric power output metering system of Party A
could be realized; and Sanming Local Dispatching Agency shall considered the power output data
collected by the electric power output metering system as the reference for the statistics and
power output settlement. In case of any default to the electric power output metering devices
of the Power Plant, such condition shall be reported to Party A and the withdrawal application
for such default shall be submitted as well. In addition, the Power Plant shall resolve the
default as soon as possible.

CHAPTER VIII EQUIPMENT OVERHAUL AND MAINTENANCE

	8.1	 	The annual overhaul plan of the Power Plant shall be submitted according to the relevant
regulations of Sanming Local Dispatching Agency, which shall be reported to Sanming Local
Dispatching Agency through email before the 15th day of October in each year. Upon
the examination and approval of Sanming Local Dispatching Agency, the annual overhaul plans
for the equipments within the dispatching area of

21

 

	 	 	Local Dispatching shall be released. The
Power Plant shall carry out the preliminary work for the equipment overhaul to ensure the
completion of the equipment overhaul plan on schedule.

	8.2	 	The Power Plant shall submit the overhaul plan for the next month to Sanming Local
Dispatching Agency through email before the 20th day of each month according to the
regulations of Dispatching Regulations. In addition, after the arrangement, Sanming Local
Dispatching Agency shall formulate the monthly dispatching plan in light of the released
annual overhaul plan and the monthly overhaul plan and the actual operation conditions of
the power grid provided by the Power Plant.
	 
	8.3	 	The Power Plant shall arrange the planned overhaul of the equipment according to the schedule
of the monthly dispatching plan. The Power Plant shall file an application to Sanming Local
Dispatching Agency for any planned equipment overhaul in accordance with the stipulations of
the Dispatching Regulations and Sanming Local Dispatching Agency shall reply to such
application within the time limit provided in the Dispatching Regulations.
	 
	8.4	 	In case of the requirement of any material testing project after the general overhaul or
technological improvement to the equipments of the Power Plant, the Power Plant shall provide
Sanming Local Dispatching Agency with the testing plan not less than five (5) days in advance,
including the equipment parameters, testing projects and testing procedures, and submit the
testing start-up application in advance according to the Dispatching Regulations.
	 
	8.5	 	In case of the requirement of Unplanned Outage or derated output due to the default of the
equipments, the Power Plant shall submit the application to Sanming Local Dispatching Agency
in advance according to the Dispatching Regulations (excluding urgent accidents). After the
approval of such application, Sanming Local Dispatching 

22

 

	 	 	Agency shall amend the dispatching
plan and arrange the equipment outage or derated output.

	8.6	 	In case of any repeated outage of the main equipments for power transmission and
transformation (including the lines, switch, busbar and main transformer) due to the reason of
the Power Plant itself, Sanming Local Dispatching Agency shall carry out
the annual examination for repeated outage.

CHAPTER IX POWER GENERATION PLAN

	9.1	 	The Power Plant shall strictly abide by the Daily Generation Dispatching Plan Curve
(including the curve which is amended by the on-duty dispatcher temporarily) and the
dispatching directions released by Sanming Local Dispatching Agency, and modulate the active
and reactive outputs of the generator units in a timely fashion and arrange the production
operation of the Power Plant.
	 
	9.2	 	Under normal conditions, Sanming Local Dispatching Agency shall arrange the generation plan
of the Power Plan for the next day according to the generation dispatching plan curve for the
next day of Shaxi water valley released by the Provincial Dispatching and the conditions of
the power grid in relation to the safety restrictions and generation output balance.
	 
	9.3	 	In case of any deviation of the water from the upper reaches from the arrangement of the
daily generation plan, the Power Plant shall submit the application for the amendment to the
daily generation plan more than two hours in advance to Sanming Local Dispatching Agency and
implement the amended curve upon the approval of such application.

23

 

	9.4	 	In case of any outage or urgent derated output due to the default, the Power Plant shall
notify Sanming Local Dispatching Agency the outage and the derated capacity as soon as
possible; if such outage or derated output could not recover immediately, application shall be
made up as soon as possible and Sanming Local Dispatching Agency may amend the generation plan
accordingly.

CHAPTER X RESERVOIR DISPATCHING

	10.1	 	Reservoir Flood Dispatching

	 	10.1.1	 	The Power Plant shall copy the flood dispatching scheme of the Power Plant, which shall
be submitted at the end of March in each year, to Sanming Local Dispatching Agency, then
shall submit the approved flood dispatching scheme, flood control plan measures, pre-plan
for the control of the flood exceeding the standard to Sanming Local Dispatching Agency
for record and filing within ten (10) days commencing from the arrival of such documents.
Sanming Local Dispatching Agency carries out the reservoir generation dispatching in
accordance with the reservoir flood control dispatching scheme released by the people’s
government.
	 
	 	10.1.2	 	The Power Plant shall make the analysis for the flood dispatching within one (1) week
from the leaving of the flood, and copy it to Sanming Local Dispatching Agency when such
analysis is submitted to relevant authorities.
	 
	 	10.1.3	 	The Power Plant shall complete the summary of the annual flood control work within one
(1) month after the completion of the flood control, and copy it to Sanming Local
Dispatching Agency when such summary is submitted to relevant authorities.
	 
	 	10.1.4	 	In case of any changes to the anticipated water volume entering into the reservoir, the
Power Plant shall report to Sanming Local Dispatching Agency in advance 

24

 

	 	 	 	for a timely
adjustment of the loading in order to improve the utilization rate of the water energy.

	10.2	 	The Reservoir Dispatching Plan, Statement and Summary

	 	10.2.1	 	The Reservoir Generation Dispatching Plan

	 	10.2.1.1	 	The Reservoir Daily Generation Plan.
	 
	 	 	 	Before 9:00 of the normal working day, the Power Plant shall submit the
anticipated average water volume entering into the reservoir, anticipated
generation output and the output of the hydropower station available for
dispatching for the next day to Sanming Local Dispatching Agency (and in case
of holidays and vacations, such applications for the next three or ten days
shall be submitted).
	 
	 	10.2.1.2	 	The Reservoir Monthly Generation Plan
	 
	 	 	 	The Power Plant shall submit the generation plan recommendation for the next
month to Sanming Local Dispatching Agency and relevant authorities before the
20th day of each month.
	 
	 	10.2.1.3	 	The Reservoir Annual Generation Plan
	 
	 	 	 	The Power Plant shall submit the control and utilization recommendation of the
reservoir for the next year to Sanming Local Dispatching Agency and relevant
authorities before the end of October in each year, the main content of which
shall include monthly water volume, generation output, controlled water level
at the end of each month and other requirements of the departments utilizing
the water.

	 	10.2.2	 	The Monthly Reservoir Dispatching Statement
	 
	 	 	 	The Power Plant shall fill out the monthly water and electric power dispatching
statements (in accordance with the standard form provided by Sanming Local Dispatching
Agency and relevant authorities) prior to the third day of each month 

25

 

	 	 	 	and send it to
the dispatching and communication center and Sanming Local Dispatching Agency through
email, and send the originals by mail.

	 	10.2.3	 	Relevant Summary for the Reservoir Dispatching

	 	10.2.3.1	 	The Power Plant shall submit the annual summary for the operation of water
automatic monitoring and reporting system to Sanming Local Dispatching Agency before
the 10th of October in each year.
	 
	 	10.2.3.2	 	The Power Plant shall submit the annual reservoir dispatching summary and the
operation summary for the water dispatching automatization system of the sub-centre of
the Power Plant of the last year to Sanming Local Dispatching Agency before the
10th of January in each year.

	10.3	 	The Water Automatic Monitoring and Reporting System and Water Dispatching Automatization
System

	 	10.3.1	 	In case of any default to the water automatic monitoring and reporting system of the
Power Plant and the water dispatching automatization system of the sub-centre of the
Power Plant, the Power Plant shall recover such system in time and report to Sanming
Local Dispatching Agency, in order to provide services for the improvement of the Power
Plant’s economy operation level and the assurance of the flood control for the up and
down stream safety of the reservoir through collecting the real-time water and rain
conditions of the water valley of the reservoir.
	 
	 	10.3.2	 	In the event that the overhaul or equipment maintenance of the water automatic
monitoring and reporting system of the Power Plant and the water dispatching
automatization system of the sub-centre of the Power Plant might cause the outage of the
monitoring and reporting system, such overhaul or equipment maintenance shall be approved
by Sanming Local Dispatching Agency.
	 
	 	10.3.3	 	The transformation and upgrading scheme of the water automatic monitoring and reporting
system of the Power Plant and the water dispatching automatization system of the
sub-centre of the Power Plant must be submitted 

26

 

	 	 	 	to the Provincial Dispatching or Sanming Local Dispatching Agency for examination.

	10.4	 	The Liability Affirmation for Breach of Reservoir Dispatching
	 
	 	 	In case of the occurrence of any of the following events, Party B shall assume the
liability of breach in accordance with the provisions of Chapter 16 to Party A:

	 	(1)	 	The outage which has not been reported to Sanming Local Dispatching Agency in
time, due to the occurrence of overhaul or equipment maintenance of the water
automatic monitoring and reporting system of the Power Plant and the water dispatching
automatization system of the sub-centre of the Power Plant, causes mistaken
dispatching of Sanming Local Dispatching Agency;
	 
	 	(2)	 	The Power Plant has not in time filled out and reported the water and
electric power dispatching monthly statement twice within one year;
	 
	 	(3)	 	Any transformation or upgrading scheme of the water automatic monitoring and
reporting system of the Power Plant and the water dispatching automatization system of
the sub-centre of the Power Plant has been carried out without the examination and
approval of the Provincial Dispatching and Sanming Local Dispatching Agency.

CHAPTER XI RELAY PROTECTION AND AUTOMATIC SAFETY DEVICES

	11.1	 	Party A shall strictly abide by the regulations and rules concerning the design, operation
and management of relay protection and automatic safety devices, take charge of the setting
calculation and operation of the relay protection and automatic safety devices within the
range of its dispatching, and make analysis and valuation for the equipment running conditions
for such devices. The setting values for the 

27

 

	 	 	relay protection and automatic safety devices of
the Power Plant within the range under the dispatching of Sanming Local Dispatching Agency
shall be released by Sanming Local Dispatching Agency, and setting values of other relay
protection and automatic safety devices of the Power Plant could be calculated and set by the
Power Plant itself, which shall be filed with Sanming Local Dispatching Agency, however, the
setting values for the boundaries shall be examined and approved by Sanming Local Dispatching
Agency.

	11.2	 	Party B shall strictly abide by the regulations and rules concerning the design, operation
and management of relay protection and automatic safety devices and counter-accident measures
of the relay protection, the regulation of Sanming Local Dispatching Agency for the assurance
of the safe operation of the power grid, and take charge of operation management of relay
protection and automatic safety devices under the dispatching of Sanming Local Dispatching
Agency, and conform to the following requirements:

	 	(1)	 	The calculation of the setting value of the relay protection and automatic
safety devices under the ownership of the Power Plant and dispatching of Sanming Local
Dispatching Agency shall be carried out by the qualified unit and personnel appointed
by the Power Plant, and Party B shall be responsible for the correctness and
completeness of the setting values, the letter of which shall be examined by Sanming
Local Dispatching Agency.
	 
	 	(2)	 	Party B shall take responsibility for the field setting of the value, the
operation maintenance of the relay protection and automatic safety devices under the
ownership of the Power Plant, make the corresponding devices running analysis and
valuation and ensure the correctness and completeness of such analysis and valuation.
	 
	 	(3)	 	Upon the running of the relay protection and automatic safety devices of the
Power Plant, Party B shall notice the on-duty dispatcher of Sanming Local Dispatching
Agency immediately, make analysis and settlement according to the regulations, the
relevant materials of which will be submitted to Sanming Local 

28

 

	 	 	 	Dispatching Agency as required.

	 	(4)	 	In case of any missing running of or defect to the relay protection and
automatic safety devices of the Power Plant, Party B shall immediately report to the
on-duty dispatcher of Sanming Local Dispatching Agency, take measures in accordance
with the regulations, make analysis and take precaution measures promptly.
	 
	 	(5)	 	In case of any occurrence of the running of the relay protection and
automatic safety devices within the Power Plant in given month, Party B shall submit
the operation analysis report for the relay protection (including the line protection,
transformer protection, generators protection, busbar protection and etc.) and
automatic safety devices to the local team of Sanming Local Dispatching Agency through
email two (2) days before next month..

	11.3	 	The technology improvement scheme for any technology improvement to the relay protection and
automatic safety devices of the Power Plant’s equipment under the dispatching of Sanming Local
Dispatching Agency (including the equipment under the direct dispatching and permitted
equipment) must be examined and approved by Party A.
	 
	11.4	 	In case of any trip of the switch of the generator units or lines of Party B due to the relay
protection, the Power Plant shall submit the relevant default conditions of the equipments set
forth below to Sanming Local Dispatching Agency within twenty four (24) hours, mainly
including but not limited to:

	 	(1)	 	The equipment turning-on condition and the operation mode of the primary
equipment during the occurrence of such trip;
	 
	 	(2)	 	The signal of the visual annuciator in the supervisory control panel and the
trip condition of the breaker;
	 
	 	(3)	 	Signal of face plate for the protection devices;

29

 

	 	(4)	 	The printed report for the default of the microcomputer protection device;
	 
	 	(5)	 	The default report of the microcomputer default recorder.

	11.5	 	In order to enhance the stability of the electric power system, both Parties shall carry out
the equipment renewal and transformation.

	 	(1)	 	Both Parties shall cooperate with each other to carry out renewal and
transformation of the relay protection and automatic safety devices in order to
ensure the coordination of the equipment of each Party.
	 
	 	(2)	 	The improved equipment shall not be put into operation according to the
regulated procedures until the completion of the testing acceptance and qualification
confirmation.

	11.6	 	Both Parties shall appoint certain staff for the operation maintenance work of the relay
protection and automatic safety devices to ensure the normal operation of the relay protection
and automatic safety devices.

CHAPTER XII DISPATCHING AUTOMATIZATION

	12.1	 	Party A shall strictly abide by the regulations and rules concerning the design, operation
and management of the dispatching automatization system, take charge of the operation and
maintenance for the dispatching automatization system at the dispatching end, and conform to
the following requirements:

	 	(1)	 	To supervise the reliable operation of the dispatching automatization system,
be responsible for the monitoring of operation condition of the dispatching
automatization system and coordinate the major problems arising out of the operation.

30

 

	 	(2)	 	To facilitate the connection of automatization signals of the Power Plant
according to the design requirements.
	 
	 	(3)	 	To make a timely analysis of the reasons for the default of the dispatching
automatization system, and take relevant precaution measures.
	 
	 	(4)	 	To direct and assist Party B in the operation maintenance of the dispatching
automatization system, and cooperate with Party B in the investigations of accidents.
	 
	 	(5)	 	The computer monitoring and control system shall conform to the Regulations
on Safe Protection of Computer Monitoring and Control Systems and Dispatching Data
Networks of Power Grids and Power Plants (No.30 Decree issued by the State Economic
and Trade Commission).

	12.2	 	Party B shall strictly abide by the regulations and rules concerning the design, operation
and management of the dispatching automatization system, and the relevant regulations
formulated by Sanming Local Dispatching Agency, take charge of operation and maintenance for
the dispatching automation system at the Power Plant end, and conform to the following
requirements:

	 	(1)	 	The tele-control data and the electric energy metering data of the monitoring
and control system, electric power collection and transmission measures of the Power
Plant shall be transmitted to the dispatching automation system and the electric
energy metering system of Sanming Local Dispatching Agency according to the
transmission regulations and agreements in line with the national standards or
industry standards. The electric energy metering system shall pass the testing by a
qualified testing agency approved by both Parties, so as to ensure the accuracy of
data transmission. The quantity and accuracy of the real time messages concerning the
operation equipments of the Power Plant shall satisfy the relevant regulations of the
State and the operation requirements of Sanming Local Dispatching Agency.
	 
	 	(2)	 	To make a timely analysis of the reasons for the default of the dispatching

31

 

	 	 	 	automatization system under the dispatching of Local Dispatching, and take relevant
precaution measures.

	 	(3)	 	To assist Party A in the operation maintenance of the dispatching
automatization system, and cooperate with Party A in the investigations on accidents.

	 	(4)	 	The computer monitoring and control system shall conform to the Regulations
on Safe Protection of Computer Monitoring and Control Systems and Dispatching Data
Networks of Power Grids and Power Plants (No.30 Decree issued by the
State Economic and Trade Commission); to assure the effective quarantine for the
computer monitoring and controlling system of the Power Plant from the information
management system and office automatization system, and the physical quarantine of the
dispatching specified data net from the comprehensive information net and outer
internet.

	12.3	 	Both Parties shall operate and maintain the automatization equipments in accordance with the
Dispatching Regulations and relevant regulations concerning the dispatching automatization
system, and shall not withdraw or shut down the equipments at random.
	 
	12.4	 	In case of any technology improvement to the equipment, which is within the range under the
dispatching control of Sanming Local Dispatching Agency (including the equipment within the
direct dispatching range and permitted equipment), dispatching automatization and electric
power communication equipment of the Power Plant, the design of such technology improvement
must pass the examination organized by Sanming Local Dispatching Agency.
	 
	12.5	 	In case of any biding for grid connection of the power generation party as required by the
national polices or governmental regulations, the Power Plant shall establish and utilize
relevant technology support system according to relevant regulations, which is ready for
effective communication with relevant system of Sanming Local 

32

 

	 	 	Dispatching Agency.

	12.6	 	Both Parties shall appoint certain staff for operation maintenance of the dispatching
automatization system to ensure the normal operation of the dispatching automatization system.
	 
	12.7	 	Party B shall establish its corresponding computer data net in light of the requirements of
the dispatching production control and production management, and connect such net with
dispatching data special net and dispatching information net respectively.

CHAPTER XIII DISPATCHING COMMUNICATION

	13.1	 	Party A shall strictly abide by the regulations and rules concerning the design, operation
and management of the dispatching communication system, take charge of the operation and
maintenance for the dispatching communication system at the dispatching end, and conform to
the following requirements:

	 	(1)	 	To supervise the reliable operation of the dispatching communication system,
be responsible for the monitoring of operation condition of the dispatching
communication system and dispatching command, and coordinate the major problems
arising out of the operation.
	 
	 	(2)	 	To take charge of the operation maintenance of the communication equipments
and communication lines at the dispatching end and assure their reliable operation.
	 
	 	(3)	 	To make a timely analysis of the reasons of the default of the dispatching
communication system, and take relevant precaution measures.

33

 

	 	(4)	 	To direct and assist Party B in the operation maintenance of the dispatching
communication system, and cooperate with Party B in the investigations on accidents.

	13.2	 	Party B shall strictly abide by the regulations and rules concerning the design, operation
and management of the dispatching communication system, take charge of the operation
maintenance for the dispatching communication system at the Power
Plant end, and conform to the following requirements:

	 	(1)	 	To take charge of the operation and maintenance of the dispatching
communication system at the Power Plant end and ensure the reliable operation.
	 
	 	(2)	 	To make a timely analysis of the reasons of the default of the dispatching
communication system, and take relevant precaution measures.
	 
	 	(3)	 	To assist Party A in the operation maintenance of the dispatching
communication system, and cooperate with Party A in the investigations on accidents.

	13.3	 	The model selections and configurations for the communication equipments of Party B which
will be connected to the power communication network of Party A shall be compatible and
consistent with each other.
	 
	13.4	 	In order to assure the reliability of the information transmission, the interconnected
transmission net of both Parties shall be equipped with two different and independent
communication transmission routes (physical media) to ensure the specified dispatching and the
transmission channel for the automatization system, relay protection and automatic safety
devices.
	 
	13.5	 	As required by the business of the power grid production, both Parties shall be equipped
accordingly with the complete connection and auxiliary facilities, etc. for 

34

 

	 	 	the systems in
relation to data exchange, dispatching and executive exchange, communication monitoring and
controlling, and other communication system.

	13.6	 	In order to ensure the influent connection of the communication net, the parameters of the
communication equipment of Party B, including the frequency requirements (which refer to the
carrier wave of the electric power lines and wireless frequencies), which is connected to the
electric power communication net of Party A, shall be approved by Party A in writing.
	 
	13.7	 	The overhaul and outage (retirement ) of the system equipment of the power plant or
hydropower station, which is connected to the provincial electric power communication
interconnection net, shall comply with the management regulation and examination and approval
procedures of Party A.
	 
	13.8	 	The interconnected units must be equipped with the corresponding staff for the daily
operation maintenance of the system equipments of the power plant or hydropower station, which
is connected to the provincial electric power communication interconnection net, in order to
ensure the twenty four (24) hours available field maintenance for any default to the
interconnected electric power lines; in addition, such staff shall strictly obey the
directions, communication net management and maintenance cooperation of Sanming Local
Dispatching Agency.
	 
	13.9	 	In case of any overhaul without going through any examination and approval procedures, or the
implementation that is not complied with the communication dispatching directions, and the
requirements of the cooperation between the net management and maintenance, which are due to
Party B’s Reason and cause mistaken operation, mistaken judgment and mistaken direction of the
communication dispatching and operation maintenance, Party B shall be responsible for the
corresponding liabilities for the aforesaid mistakes which lead to the delayed 

35

 

	 	 	settlement and overtime block of the interconnected communication net.

	13.10	 	Both Parties shall prepare a standby communication system to ensure the communication
uninterrupted in case of any Emergencies occurred to the power grid or the Power Plant.
	 
	13.11	 	Party A shall carry out the arrangement for value for the interconnection between the
provincial electric power communication net and the two communication transmission net lines
of Party B, which are of different operation modes, different wideband and different signal
contents, on the basis of the two different communication transmission routes owned by Party
B, and connect the corresponding signals to the Provincial (Local) Dispatching.
	 
	13.12	 	Both Parties shall respectively appoint staff to take charge of the operation and
maintenance of the dispatching communication system within their respective jurisdictions, and
ensure the normal operation of the dispatching communication system.

CHAPTER XIV ACCIDENT MANAGEMENT AND INVESTIGATION

	14.1	 	Sanming Local Dispatching Agency and the Power Plant shall, within their respective
jurisdictions and in accordance with relevant regulations of the Dispatching Regulations and
the Power Plant field operation regulations, handle the accidents in a correct and prompt
manner and inform each other of the settlement situation immediately.

36

 

	14.2	 	The accidents occurred to the equipments within the dispatching jurisdiction of Sanming Local
Dispatching Agency shall be handled strictly in accordance with the directions of the on-duty
dispatchers of Sanming Local Dispatching Agency (excluding the conditions that can be handled
without dispatching directions as clearly specified in the field regulations).
	 
	14.3	 	Upon the occurrence of the equipment trip, derated output of the generator units or
other abnormal condition or accident to any equipments within the dispatching jurisdiction,
the Power Plant shall strictly abide by the provisions of the Dispatching Regulations to
make clear the reasons of such abnormality or accidental trip, and report the actual
conditions accurately, obey the directions of Sanming Local Dispatching Agency, and resolve
the default of the equipments.
	 
	14.4	 	In case of any switch trip to generator units or lines in the Power Plant, the staff of the
Power Plant shall report to Sanming Local Dispatching Agency by phone with the relevant
conditions of the Power Plant in relation to the equipment default set forth below, including
but not limited to:

	 	(1)	 	The occurrence of the trip of the breaker;
	 
	 	(2)	 	The status of the breaker (close or open);
	 
	 	(3)	 	The duration for the trip;
	 
	 	(4)	 	Any information that may be helpful for judging the reasons for such breaker
trip;
	 
	 	(5)	 	The times of the breaker trip for default;
	 
	 	(6)	 	The output recording of the default recorder.

	 	 	The staff of Power Plant shall report the conditions provided in the aforesaid Items (1),
(2) and (3) immediately, and the information concerning the Items (4), (5) and (6) could be
reported upon the completion of the preparation work of the field as soon as 

37

 

	 	 	possible. In
case of any abnormality to the tele-transmission capability of the default recorder, the
information of Item (6) shall be provided to Sanming Dispatching Agency within twenty four
(24) hours.

	14.5	 	Sanming Local Dispatching Agency shall, according to the Guides on Safety and Stability for
Power System (DL 755-2001), the Dispatching Regulations and other relevant regulations, and
considering the grid structure, the operation characteristics
and the specific conditions of the Power Plant, formulate principles for accident
management and specific counter-accident measures, and advance specified requirements on
the requisite measures which shall be taken by the Power Plant.

	 	14.5.1	 	In case of any Emergencies that threaten the security of the power grid, the on-duty
dispatchers of Sanming Local Dispatching Agency could take necessary measures to ensure
and restore the safe operation of the power grid, including the adjustment of the power
generation output of the Power Plant, the releasing of the generator on-off direction, and
the Disconnection of the Power Plant, etc.
	 
	 	14.5.2	 	In case that the Power Plant or any of the units has to be disconnected, Sanming Local
Dispatching Agency shall, after the termination or remedy of the Emergencies, restore the
connection and operation of the Power Plant or the unit.
	 
	 	14.5.3	 	Sanming Local Dispatching Agency shall explain to Party B the reasons for disconnecting
the Power Plant or the units after the accident.

	14.6	 	The generation curve of the Power Plan (reactive and active), the voltage value of the
voltage examination point and the system frequency curve or the power value of the connection
line shall be determined in accordance with the data collected by the dispatching
automatization system of Sanming Local Dispatching Agency. In case of any different opinion to
the data collected by the dispatching automatization system of Sanming Local Dispatching
Agency, evidences shall be provided in time and relevant testing and confirmation shall be
jointly carried out by both Parties.

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	14.7	 	The Party or both Parties suffering from accident(s) shall carry out accident investigation
according to the Codes of Investigation for Electric Power Production Accidents. The
conclusions of the investigation shall include: causes of accident, responsible party for the
accident and the liabilities, and the counter-accident measures to prevent similar accidents.
The responsible party for the accident shall assume the liabilities according to the
investigation conclusion, and implement the counter-accident measures in time.

	 
	 	14.7.1	 	During the grid accident investigation and analysis carried out by Party A, Party B
shall be invited to participate when it is involved. Party B shall provide support to the
work of Party A and cooperation in the field investigation, and provide accident analysis
materials such as the fault recording diagrams, the operation conditions during accident
and relevant data, etc.
	 
	 	14.7.2	 	During the investigation and analysis for the accident occurred to the Power Plant
carried out by Party B, Party A shall be invited to participate when it is involved. Party
A shall provide support to the work of Party B and cooperation in the field investigation,
and provide accident analysis materials such as fault recording diagram, the operating
conditions during the accident and relevant data, etc.
	 
	 	14.7.3	 	As for the accidents to the grid and the Power Plant involving both Parties, if both
Parties cannot reach agreement within a short period of time concerning the cause of such
accident, a special investigation panel shall be set up according to relevant regulations
of the State to carry out the investigations.
	 
	 	14.7.4	 	The investigation report of any Party shall be published, which shall cover the cause of
the accident, settlement procedures of the accident, responsible party for the accident
and the corresponding liabilities, the rectification scheme and accident precaution
measures, etc.
	 
	 	14.7.5	 	The responsible party for the accident shall timely correct the default and implement
the rectification scheme and accident precaution measures. In case the other Party is
involved in such rectification scheme and accident precaution measures, the consent of the
other Party shall be obtained.

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CHAPTER XV FORCE MAJEURE

	15.1	 	If the occurrence of any Force Majeure event completely or partially impedes one Party from
fulfilling any obligation under this Agreement, such Party may be exempted from or postpone to
perform its contractual obligations, provided that:

	 	(1)	 	the scope and duration of the exempted or postponed performance shall not
extend beyond the reasonable needs of eliminating the impact of Force Majeure.
	 
	 	(2)	 	the Party affected by Force Majeure shall continue to perform its other
obligations hereunder which have not been affected by the Force Majeure.
	 
	 	(3)	 	in case the events of Force Majeure come to an end, the Party claiming Force
Majeure shall resume the performance of this Agreement as soon as possible.

	15.2	 	In the event that any Party is unable to perform this Agreement due to Force Majeure, such
Party shall promptly inform the other Party, and shall send a written notice to the other
Party within three (3) days thereafter. Such written notice shall indicate the date of the
occurrence of Force Majeure, the anticipated duration, the nature of the events, the impact on
its performance of this Agreement and the measures it has taken to mitigate the impact of such
Force Majeure events.
	 
	 	 	Upon the other Party’s request, the Party affected by the Force Majeure shall furnish the
other Party with an evidential document issued by the competent local notary public where
the Force Majeure event occurs within thirty (30) days commencing from the date when the
Force Majeure event occurs (in the event of communication interruption, from the
restoration date of the communication).
	 
	15.3	 	The Parties affected by the Force Majeure shall take reasonable measures to mitigate the
losses incurred by either or both Parties caused by Force Majeure. The Parties

40

 

	 	 	shall immediately consult with each other to formulate and implement a remedy plan and reasonable
alternative measures to minimize or eliminate the impact of Force Majeure
	 
	 	 	In the event that the Party affected by the Force Majeure fails to use all endeavors to
take reasonable measures to mitigate the impact of Force Majeure, that Party shall be
responsible for the enlarged losses arising therefrom.

	15.4	 	In the event that the Force Majeure has prevented a Party from performing its obligations
under this Agreement for a continuous period of over sixty (60) days, the Parties
hereto shall consult with each other to determine the conditions for continuing the
performance of this Agreement or to terminate this Agreement. If the Parties hereto fail to
reach agreement concerning the conditions for continuing the performance of this Agreement or
the termination of this Agreement within ninety (90) days after the occurrence of Force
Majeure, any Party shall be entitled to terminate this Agreement with a notice to the other
Party, unless otherwise provided herein.

CHAPTER XVI LIABILITIES FOR BREACH OF AGREEMENT

	16.1	 	Either Party’s violation of the provisions of this Agreement shall be deemed as a breach of
agreement, and the other Party shall be entitled to require the breaching Party to assume the
liabilities for breach of agreement.

	16.2	 	Party A, in case of any of the following breach of contract, shall assume the liabilities for
breach of contract to Party B in the manner provided in Clause 16.3 hereof:

	 	(1)	 	Failure to perform the obligations provided in Chapter III, which has caused
direct economic losses to Party B.

41

 

	 	(2)	 	Violation of the Dispatching Regulations, which has caused direct economic
losses to Party B.
	 
	 	(3)	 	Requirement released for the operation of the Power Plant (units) beyond its
operation capacity, which has caused direct economic losses to Party B.
	 
	 	(4)	 	Default setting to or default controlling of the primary and secondary
equipments of the power grid due to Party A’s Reason, which has caused direct economic
losses to Party B.
	 
	 	(5)	 	Default to the relay protection and automatic safety devices, dispatching
automatization system and dispatching communication system caused by Party A’s Reason,
which has caused direct economic losses to Party B.

	16.3	 	For each breach of agreement, Party A shall assume the liabilities for breach of agreement by
the following methods:

	 	(1)	 	Party A shall pay the electric power output of 5,000 kwh in a lump to Party B
as compensation for its breach.
	 
	 	(2)	 	In case of any direct economic loss of Party B which cannot be fully
compensated by electric power output paid in a lump provided in Item (1) hereof, the
electric power output converted from the direct expenses and costs of Party B for
repairing the equipments and restoring the normal operations shall be supplied by
Party A (the conversion shall be conducted in accordance with the on-grid tariff).

	16.4	 	Party B, in case of any of the following breaches of agreement, shall assume the liabilities
for breach of agreement to Party A in the methods provided in 16.5:

	 	(1)	 	Failure to perform the obligations provided in Chapter III, which has caused
direct economic losses to Party A.
	 
	 	(2)	 	Abnormity or default to the primary and secondary equipments of the Power

42

 

	 	 	 	Plant related to the grid operation due to Party B’s Reason, which has caused direct
economic losses to Party A or any third party.
	 
	 	(3)	 	Violation of the relevant overhaul management regulations provided in the
Dispatching Regulations;
	 
	 	(4)	 	Alteration to the maintenance duration due to Party B’s Reason, which has
caused direct economic losses to Party A.
	 
	 	(5)	 	Failure to report to Sanming Local Dispatching Agency the actual conditions
of the equipments of the Power Plant (such as generators, turbines, boilers and
electric equipments) and relevant facilities accurately.
	 
	 	(6)	 	Violation of the relevant dispatching operation management regulations
provided in the Dispatching Regulations, which threatens the safety and stable
operation of the power grid.
	 
	 	(7)	 	Default or incorrect running of the relay protection and automatic safety
devices caused by Party B’s Reason, which has resulted in accidents or enlargement of
accidents, and has caused direct economic losses to Party A.
	 
	 	(8)	 	Default to the power dispatching automatization system of the Power Plant
caused by Party B’s Reason, which has resulted in accidents or enlargement of
accidents, and has caused direct economic losses to Party A.
	 
	 	(9)	 	Default to the dispatching communication system of the Power Plant caused by
Party B’s Reason, which has resulted in accidents or enlargement of accidents, and has
caused direct economic losses to Party A.
	 
	 	(10)	 	Violation of the reservoir dispatching provisions provided in Article 10.4
hereof.

	16.5	 	In case of breach of agreement, Party B shall assume the liabilities in accordance with the
following methods:

	 	16.5.1	 	For each breach of agreement provided from Item (1) to Item (10) of Article 16.4,

43

 

	 	 	 	Party B shall assume the liabilities for such breach by the following methods:

	 	(1)	 	Party B shall pay the electric power output of 5,000 kwh in
a lump to Party A as compensation for its breach.
	 
	 	(2)	 	In case of any direct economic loss of Party A which cannot be
fully compensated by electric power output paid in a lump provided in Item (1)
hereof, the electric power output converted from the direct expenses and costs of
Party A for repairing the equipments and restoring the normal operations shall be
supplied by Party B (the conversion shall be conducted in accordance with the
on-grid tariff); in case of any economic loss to any third party, compensation
shall be paid by Party B.

	16.6	 	In case of any of the following serious breaches of agreement of Party B, Party A may take
enforcement measures to the extent of disconnecting the Power Plant (units), and Party B has
no right to claim for compensations from Party A for any loss caused by such Disconnection.

	 	(1)	 	The Power Plant arbitrarily starts up for grid connection or shuts down for
Disconnection without being approved by Sanming Local Dispatching Agency.
	 
	 	(2)	 	In case of Emergencies, the Power Plant violates the provisions of Article
7.1.1.
	 
	 	(3)	 	In case of Emergencies, the Power Plant fails to report to Sanming Local
Dispatching Agency the actual conditions of the equipments of the Power Plant (such as
generators, electric equipments and etc.) and relevant facilities accurately.

	16.7	 	Unless otherwise provided in this Agreement, in case of any breach of agreement, the
non-defaulting Party shall immediately notify the defaulting Party to stop the breach, and
shall furnish a written notice as quickly as possible to the breaching Party, requiring it to
correct the breach of agreement and assume the liabilities arising

44

 

	 	 	therefrom pursuant to the provisions of this Agreement.

	16.8	 	The breaching Party shall immediately take measures to correct, and confirm its breach of
agreement and assume the liabilities arising therefrom pursuant to the provisions of
this Agreement.

	 	(1)	 	The electric power output for the breach of agreement paid in a lump shall be
paid, upon the confirmation of such breach, at the settlement for the monthly electric
power output of the Power Plant.
	 
	 	(2)	 	The electric power output, corresponding to the balance between the electric
power output for the breach of agreement paid in a lump and the direct economic
losses, shall be paid, upon the confirmation of such losses, at the settlement for the
monthly electric power output of the Power Plant.

	16.9	 	In the event that either Party explicitly expresses or indicates by its own actions that it
will not perform its obligations hereunder prior to the expiration of the performance duration
specified herein, the other Party may require it to assume the liabilities for breach of
agreement.

CHAPTER XVII EFFECTIVENESS AND VALID TERM

	17.1	 	This Agreement shall come into effect upon being signed by the legal representatives or
authorized representatives of both Parties and affixed with their official stamps. The valid
term of this Agreement shall be two (2) years commencing from the effectiveness date.
	 
	17.2	 	Within two (2) months before the expiration of this Agreement, both Parties shall

45

 

	 	 	negotiate with each other about the renewal of this Agreement. In case of no objection, this
Agreement shall be extended automatically with the valid term of one year each time.

CHAPTER XVIII MODIFICATION, ASSIGNMENT AND TERMINATION

OF THIS AGREEMENT

	18.1	 	Any modification, amendment or supplement to this Agreement shall be conducted in written
form, with the conditions of effectiveness same as those specified in Article 17.1 hereof.
	 
	18.2	 	Both Parties explicitly express that neither Party shall be entitled to assign all or part of
its rights or obligations hereunder to any third party without the written consent of the
other Party.
	 
	18.3	 	Within the valid term of this Agreement, both Parties agree to adjust or amend this Agreement
accordingly in case of the occurrence of any of the following circumstances:

	 	(1)	 	Alteration of relevant laws and regulations, rules and policies of the State;
	 
	 	(2)	 	Any content of this Agreement conflicting with any relevant compulsory rules,
administrative measures and regulations issued by the national electric power
regulatory authority;
	 
	 	(3)	 	Any alteration to the line connection form of the power grid or the line
connection form of the Power Plant.

	18.4	 	Termination of Agreement

46

 

	 	 	In the event that any of the following events occurred to any Party, the other Party shall
be entitled to terminate this Agreement sixty (60) days after serving a notice of
termination:

	 	(1)	 	Either Party goes bankrupt or is subject to liquidation, or the business
license or power business permit of either Party or the Power Plant is revoked.
	 
	 	(2)	 	The Party is merged with the other Party or all or majority parts of its
assets have been transferred to another entity, and the surviving enterprise cannot
assume all its obligations under this Agreement.

CHAPTER XIX DISPUTE RESOLUTION

	19.1	 	Any dispute arising out of the performance of this Agreement and in relation to this
Agreement may be resolved by the Parties through consultations, or submitted to the power
regulatory authority for mediation. If such dispute cannot be resolved through consultation or
mediation, any Party may submit the said dispute to the people’s court for resolution through
judicial proceedings.

CHAPTER XX APPLICABLE LAW

	20.1	 	The formation, effectiveness, interpretation, performance and dispute resolution of this
Agreement shall be governed by the laws of the People’s Republic of China.

CHAPTER XXI MISCELLANEOUS

	21.1	 	Confidentiality

47

 

	 	 	Both Parties warrant to maintain confidential all information and documents which are
procured from the other Party and may not be procured from the public. Without the prior
approval from the original provider of such information and documents, the other Party
shall not disclose to any third party all or part of the information and documents, unless
otherwise provided by the regulations of the State.

	21.2	 	Appendices
	 
	 	 	Appendix I: Diagram for Main Connection Lines of Banzhu Hydropower Plant (including the
diagrams for the on-grid points and the demarcation for the equipment maintenance)
	 
	 	 	Appendix II: Technical Parameters of Banzhu Hydropower Plant
	 
	 	 	The Appendices to this Agreement (including Special Provisions) shall constitute an
integral part of this Agreement, and shall have the same legal effect as this Agreement.
In case of any discrepancies between this Agreement and its appendices, according to the
nature of discrepancy, the content most related to and dealing more deeply with the point
of dispute shall prevail. In case that the discrepancy and contradiction still exist after
applying the aforesaid principle, both Parties shall, on the principle of good faith,
consult with each other to make the determination according to the purpose of this
Agreement.

	21.3	 	Entire Agreement
	 
	 	 	This Agreement (including Special Provisions) and the appendices hereto constitute the
entire agreement between both Parties pertaining to the subject matter of this Agreement,
and shall replace all prior discussions, negotiations, contracts and agreements conducted
by both Parties in respect of this Agreement.

48

 

	21.4	 	Notification and Service
	 
	 	 	Any notification or document pertaining to this Agreement shall be conducted in written
form. A notification shall be deemed as having been served upon the confirmation with
signature by the recipient when delivered by way of registered mail, express mail or in
person, or upon confirmation as being received when sent via fax or
email. All notifications and documents shall come into effect upon service and receipt. All
notifications shall be delivered to the following addresses as provided in this Agreement
or to a modified address when either Party has notified the other Party with a written
notice.

	 	 	 
	Party A: Fujian Province Sanming Power Industry Bureau
	 
	 	 
	Attention:
	 	Wu Lu Wu
	 
	 	 
	Telephone Number:
	 	0598-8203319
	 
	 	 
	Facsimile Number:
	 	0598-8202248
	 
	 	 
	Post Code:
	 	365000
	 
	 	 
	Mail address:
	 	Power Dispatching Station, No.1032,
 Liedong Street, Sanming City, Fujian
 Province
	 
	 	 
	Party B: Sanming Zhongyin Banzhu Hydroelectric Co., Ltd.
	 
	 	 
	Attention:
	 	Zhou Chang Liang
	 
	 	 
	Telephone Number:
	 	8350130
	 
	 	 
	Mobile Phone Number:
	 	13328593899
	 
	 	 
	Post Code:
	 	365000
	 
	 	 
	Mail address:
	 	Building 160, Qianlong New Village,
 Xinshi North Road, Sanming City

49

 

	21.5	 	No Waiver
	 
	 	 	Any waiver of any of its rights under this Agreement of any Party, which is not conducted
in a written statement, shall not be deemed as a waiver thereof. Either Party’s failure to
exercise any of its rights under this Agreement shall not be deemed as
a waiver of any of its aforesaid rights or a waiver of any of its aforesaid rights in the
future.
	 
	21.6	 	Continuous Effectiveness
	 
	 	 	The provisions with respect to arbitration and confidentiality of this Agreement shall
remain effective after the termination of this Agreement.
	 
	21.7	 	Text
	 
	 	 	This Agreement comprises thirty eight (38) pages, and is executed in four (4)
counterparts. Each Party shall hold two (2) counterparts.

50

 

	 	 	 
	Party A (Stamp):

	 	Party B:
	 
	 	 
	Fujian Province Sanming Power Industry
 Bureau

	 	Sanming Zhongyin Banzhu Hydroelectric
Co., Ltd.
	 
	 	 
	(Stamp)

	 	(Stamp)
	Legal Representative:

	 	Legal Representative:
	 
	 	 
	Signing Date: September 22, 2006

	 	Signing Date: September 22, 2006
	 
	 	 
	Signing Place: Sanming City
	 	 

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APPENDIX I: DIAGRAM FOR THE MAIN CONNECTION LINES OF BANZHU HYDROPOWER PLANT (including the

diagrams for the on-grid points and the demarcation for the equipment maintenance)

Note:

	1.	 	All primary equipments listed out in the Diagram are within the control of Local Dispatching;
	 
	2.	 	The property right of Banlie Line and Banchen Line belongs to Banzhu Power Station, and the
power transmission department of Fujian Province Sanming Power Industry Bureau will be in
charge of the maintenance;
	 
	3.	 	1# to 3# units are within the licensing output range of the

52

 

The Equipments under the Dispatching Control of the Local Dispatching shall include:

	1	 	No.1 Generator unit, No.2 generator unit and No.3 generator unit;
	 
	2	 	The 6kv busbar and its equipments in sections I and II;
	 
	3	 	No.1 and No.2 main transformers, and the switch equipments located in the intervals of both
sides of the aforesaid transformers;
	 
	4	 	The 35kv busbar and its equipments;
	 
	5	 	343 switch and lines of 35kv Banlie Line, 344 switch and lines of Banchen Line;
	 
	6	 	35kv Chenda Line, 35kv equipments of Chenda Substation;
	 
	7	 	The secondary equipments affiliated to the primary equipments, and the fixed value of Gaozhou
switch off generator.
	 
	The Equipments under the Control of Banzhu Hydropower Station shall include the electric
utilization system for the Power Plant.

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APPENDIX II: TECHNICAL PARAMETERS FOR THE POWER PLANT

	1.	 	Nameplate Parameters for the Generator Units of the Power Plant

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Rated Capacity	 	Active Power	 	Rated Power	 	Rated Speed
	Unit No.	 	Type	 	(MVA)	 	(MW)	 	Factor	 	(r/min)
	1	 	SFWG15-68/5700
	 	16666	 	15	 	0.9	 	 	88.2	 
	2	 	SFWG15-68/5700
	 	16666	 	15	 	0.9	 	 	88.2	 
	3	 	SFWG15-68/5700
	 	16666	 	15	 	0.9	 	 	88.2	 

	2.	 	Connection lines connecting the Power Plant to the power grid of Party A

	 	(1)	 	Name of the line: Banlie Line, Banchen Line and Chenda Line (specifically,
Sanming Power Industry Bureau owns the property right of Chenda Line).
	 
	 	(2)	 	Voltage level: 35kv.

	3.	 	Main Technical Parameters

	 	(1)	 	Normal Operation Output Range
	 
	 	 	 	The maximum output for the normal operation of No.1, No.2 and No.3 Generator
Units of the Power Plant shall be 105% of the rated capacity, and the
minimum output for the normal operation shall be 40% of the rated capacity.
	 
	 	(2)	 	Under the condition of the operation of small-sized grid, subject to the frequency
modulation and voltage regulations according to dispatching directions, the minimum
output of No.1, No.2 and No.3 Generator Units of the Power Plant is
50% of the rated capacity;
	 
	 	(3)	 	Power regulation rate of units during the normal operation

54

 

	 	 	 	No.1, No.2 and No.3 Generator units are respectively 4 MW/min.
	 
	 	(4)	 	The shortest duration for the generator units from receiving a dispatching
direction to reaching the rated output is fifteen (15) min.
	 
	 	(5)	 	The shortest shutdown duration from full load output to zero load after receiving a
dispatching direction is seven (7) min.

55EX-10.41

CONFIDENTIAL

Exhibit 10.41

BETWEEN

GUANGDONG QINGNENG POWER GENERATION

GROUP CO., LTD.

YAO LIN FU

AND

ZHEJIANG PROVINCE JINGNING YINGCHUAN

HYDROELECTRIC DEVELOPMENT CO., LTD.

SHARE TRANSFER CONTRACT

For

LONGQUAN RUIYANG CASCADE II HYDROELECTRIC

CO., LTD.

Page 1 of 46

 

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CONTENTS

	 	 	 	 	 
	CHAPTER I DEFINITIONS AND INTERPRETATIONS
	 	 	5	 
	 
	Article 1 Definitions
	 	 	5	 
	 
	 	 	 	 
	CHAPTER II THE SALE EQUITY STAKE
	 	 	7	 
	 
	Article 2 Transfer of Sale Equity Stake
	 	 	8	 
	Article 3 Share Transfer Price
	 	 	8	 
	Article 4 Conditions Precedent for the Payment of the Transfer Price
	 	 	11	 
	Article 5 Payment
	 	 	12	 
	Article 6 Taxes Payable Under the Transfer of Sale Equity Stake
	 	 	14	 
	 
	 	 	 	 
	CHAPTER III REPRESENTATIONS AND WARRANTIES BY ALL PARTIES
	 	 	15	 
	 
	Article 7 Representations and Warranties by All Parties
	 	 	15	 
	 
	 	 	 	 
	CHAPTER IV DISCLOSURES, REPRESENTATIONS AND WARRANTIES BY THE
TRANSFERORS
	 	 	15	 
	 
	Article 8 Disclosures, Representations and Warranties by the Transferors
	 	 	15	 
	Article 9 General Representations and Warranties by the Transferors
	 	 	17	 
	Article 10 Ownership
	 	 	18	 
	Article 11 The Company and the Hydropower Station Project
	 	 	19	 
	 
	 	 	 	 
	CHAPTER V DISCLOSURES, REPRESENTATIONS AND WARRANTIES BY THE
TRANSFEREE
	 	 	28	 
	 
	Article 12 Disclosures, Representations and Warranties by the Transferee
	 	 	28	 
	 
	 	 	 	 
	CHAPTER VI DELIVERY
	 	 	28	 
	 
	Article 13 Delivery
	 	 	28	 
	 
	 	 	 	 
	CHAPTER VII CREDITOR’S RIGHT AND DEBT AND EMPLOYEES
ARRANGEMENT
	 	 	32	 
	 
	Article 14 Creditor’s Right and Debt Arrangement
	 	 	32	 
	Article 15 Employees Arrangement
	 	 	33	 
	 
	 	 	 	 
	CHAPTER VIII CONFIDENTIALITY
	 	 	34	 
	 
	Article 16 Confidentiality
	 	 	34	 
	 
	 	 	 	 
	CHAPTER IX BREACH of CONTRACT
	 	 	35	 
	 
	Article 17 Liability for Breach of a Representation or Warranty
	 	 	35	 
	Article 18 Liability for Breach of Contract
	 	 	36	 
	 
	 	 	 	 
	CHAPTER X FORCE MAJEURE
	 	 	37	 
	 
	Article 19 Force Majeure
	 	 	37	 
	 
	 	 	 	 
	CHAPTER XI RESOLUTION OF DISPUTES
	 	 	38	 
	 
	Article 20 Arbitration
	 	 	38	 
	Article 21 Validity of the Arbitration Award
	 	 	39	 
	Article 22 Continuation of Rights and Obligations
	 	 	39	 
	 
	 	 	 	 
	CHAPTER XII APPLICABLE LAW
	 	 	39	 
	 
	Article 23 Applicable Law
	 	 	39	 
	 
	 	 	 	 
	CHAPTER XIII MISCELLANEOUS
	 	 	40	 
	 
	Article 24 Waiver
	 	 	40	 

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	Article 25 Transfer
	 	 	40	 
	Article 26 Amendment
	 	 	40	 
	Article 27 Severability
	 	 	40	 
	Article 28 Language
	 	 	41	 
	Article 29 Validity of the Text and Appendices
	 	 	41	 
	Article 30 Notification
	 	 	41	 
	Article 31 The Entire Agreement
	 	 	42	 
	 
	 	 	 	 
	APPENDIX I EXISTING DEBTS OF THE COMPANY
	 	 	44	 
	 
	 	 	 	 
	APPENDIX II LIST OF SECURITY
	 	 	45	 
	 
	 	 	 	 
	APPENDIX III ASSETS LIST OF THE COMPANY
	 	 	46	 

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SHARE TRANSFER CONTRACT

This Share Transfer Contract (hereinafter referred to as “this Contract”) was
executed by and among the following Parties in Beijing, China on August 11, 2009.

	(1)	 	Party A: Zhejiang Province Jingning Yingchuan Hydroelectric Development Co.,
Ltd. (hereinafter referred to as the “Transferee”), a wholly foreign-owned
enterprise registered and established in accordance with the laws of the People’s
Republic of China, with its registration number of 331100400000390, the registered
address at Huangyangkou Village, Yingchuan Town, Jingning She Ethnic Autonomous
County, the legal representative of which is John D. Kuhns, whose nationality is
United States of America;
	 
	(2)	 	Party B: Guangdong Qingneng Power Generation Group Co., Ltd., a limited
liability company registered and established in accordance with the laws of the
People’s Republic of China, with its registration number of 441625000003740, the
registered address at Xiantang Mujing Management Zone, Dongyuan County, the legal
representative of which is Shi Guosong, whose nationality is Chinese;
	 
	(3)	 	Party C: Yao Linfu, a PRC citizen with the PRC ID card number of
330124195205240012, and domicile at Room 1402, Unit 2, Building 4 of Zhongrong
City Garden, West Lake District, Hangzhou City.

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

WHEREAS:

	(1)	 	Longquan Ruiyang Cascade II Hydroelectric Co., Ltd. (hereinafter referred to
as the “Company”) is a company incorporated in China, conducting the business of
hydropower generation with its registration number of 331181000002027, both the
registered capital and the paid-up capital of which are RMB 56,500,000;

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	(2)	 	Party B holds ninety percent (90%) of the equity stake of the Company, and can
exercise all of its full rights as a shareholder;
	 
	(3)	 	Party C holds ten percent (10%) of the equity stake of the Company, and can
exercise all of his full rights as a shareholder;
	 
	(4)	 	Subject to the terms and conditions set out in this Contract, Party B is
willing to transfer ninety percent (90%) of the equity stake of the Company held
by it, and Party C is willing to transfer ten percent (10%) of the equity stake of
the Company held by him to the Transferee, both of which represent one hundred
percent (100%) of the equity stake of the Company (hereinafter referred to as the
“Sale Equity Stake”);
	 
	(5)	 	Party B and Party C both agree to waive their pre-emptive rights over the Sale
Equity Stake;
	 
	(6)	 	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 Contract.

Therefore, after friendly consultations, on the principles of equality and mutual
benefit, all Parties to this Contract 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

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

The “Company” refers to Longquan Ruiyang Cascade II Hydroelectric Co., Ltd., a
limited liability company registered and established in accordance with the laws
of China, with its registration number being 331181000002027, registered capital
(paid-up capital) being RMB56,500,000 and registered address at Jin Village,
Xiaomei Town, Longquan City.

The “Hydropower Station Project” refers to Ruiyang Cascade II Hydropower Station
Project with the installed capacity of 32,000 KW, which is legally owned and
operated by the Company.

“Claims” refers to all the claims, actions, demands, proceedings judgments
liabilities, damages amounts, costs and expenses (including but not limited to
attorney fees) whatsoever and howsoever arising.

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

“Effective Date” refers to the date on which this Contract comes into effect.

“Completion Date of Delivery” refers to the date provided in Article 13.8 hereof.

“Bank Accounts Designated by the Transferors” refer to the bank accounts
respectively opened by the Transferors in accordance with law under their own
names for the purpose of this Contract to receive the Transfer Price (as defined
in Art. 3.1 hereof) for the Sale Equity Stake.

“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 Sale
Equity Stake;

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	(2)	 	the right or power created or otherwise arising in or over the Sale 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 Sale Equity Stake for the payment of a debt or any
other monetary obligations or the performance of any other obligations.

“Material Adverse Change” refers to

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

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

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

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

“PRC” or “China” refers to the People’s Republic of China, and insofar as this
Contract is concerned, shall exclude Hong Kong, Macao and Taiwan.

Chapter II The Sale Equity Stake

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Article 2 Transfer of Sale Equity Stake

	 	 	 	Pursuant to the terms stipulated in this Contract, the Transferors agree
to transfer to the Transferee and the Transferee agrees to accept from the
Transferors the Sale 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 Sale 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 the Transferee, after consultations, have finally
determined that the price for the Sale Equity Stake shall be RMB 160,000,000
(hereinafter referred to as the “Transfer Price”). Specifically, the amount
respectively payable to the Transferors shall be as follows:
	 
	 	 	 	Party B: RMB 144,000,000;
	 
	 	 	 	Party C: RMB 16,000,000.
	 
	 	3.2	 	The Transfer Price shall be paid in three (3) instalments:

	 	(1)	 	The initial instalment of the Transfer Price in the amount of RMB
100,000,000 shall be paid to the Transferors within three (3) Business
Days after all conditions precedent stipulated in Article 4.1 hereof have
been fully satisfied as scheduled. Considering the deposit, in the amount
of RMB 10,000,000 as agreed for the transaction contemplated herein, has
been paid by Party A to the bank account of Party B on June 8, 2009, this
deposit shall be set off as part of the Transfer Price paid to Party B and
thus, the Transferee only needs to pay to the Transferors the price in the
amount of RMB 90,000,000. Specifically, the amount respectively payable to
the Transferors shall be as follows:

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	 	 	 	Party B: RMB 80,000,000;
	 
	 	 	 	Party C: RMB 10,000,000.
	 
	 	(2)	 	After all conditions precedent stipulated in Article 4.2 hereof have
been fully satisfied as scheduled, the second instalment of the Transfer
Price in the amount of RMB 55,200,000 shall be paid to the Transferors on
the Completion Date of Delivery. Specifically, the amount respectively
payable to the Transferors shall be as follows:
	 
	 	 	 	Party B: RMB 49,680,000;
	 
	 	 	 	Party C: RMB 5,520,000.
	 
	 	(3)	 	The rest of the Transfer Price, namely, RMB 4,800,000, shall be
served as the guarantee fund for the warranty and indemnity by the
Transferors for the following items: (a) the warranty of the quality of
the Hydropower Station Project and the performance of this Contract; (b)
the indemnity for all taxes and fees requisite for the conversion of the
allocated land currently used for office building and dormitory building
of the Company (the number of the land certificate: Zhe Long Guo Yong
[2007] Zi No.4268) into the granted land. Upon the expiration of the
guarantee fund, no matter whether such conversion has been made or not,
the Transferee shall directly deduct RMB 500,000 from such guarantee fund
for which the Transferors shall not request the Transferee to refund and
the Transferee shall not claim for any other indemnity for the grant of
such land; (c) the Transferors undertake and warrant that as of the
Second Payment Date, the Company has fully paid off all taxes and fees
required by the PRC laws and regulations (including but not limited to
enterprise income tax and value-added tax), and there has been no tax
evasion, tax dodging and other illegal activities. The Transferors
undertake and warrant that they will accomplish the clearance of the tax
of the Company in accordance with law prior to April 30, 2010 and all
expenses and costs in

Page 9 of 46

 

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	 	 	 	relation to such tax clearance shall be borne by the Transferors
themselves, for which the Company and/or the Transferee shall not be
held liable. In the event that the Company and/or the Transferee
incurs any expense or cost, then the Company and/or the Transferee
shall be entitled to directly deduct it from the guarantee fund, for
which the Transferors shall not request for refund. In addition, in
the event that the Company and/or the Transferee suffers any damage
or loss due to the unpaid taxes and/or fees, the Company and/or the
Transferee shall be entitled to directly deduct it from the guarantee
fund, for which the Transferors shall not request for refund; and (d)
the warranty for the completion of the dam registration of the
reservoir of the Hydropower Station Project in accordance with
relevant PRC laws and regulations and provision of the Dam
Registration Certificate to the Transferee by the Transferors.
However, as the local governmental authority has not carried out such
registration, therefore, in the event that, during the guarantee
period, the local governmental authority begins to accept such
registration, then the Transferors shall be responsible for the
procurement of Dam Registration Certificate. Any expense or cost in
relation to such registration shall be directly deducted from the
guarantee fund and the Transferors shall not request for refund. The guarantee period is six (6) months commencing from the Completion
Date of Delivery. During the guarantee period, in the event that the
Company suffers from any damage or loss due to the quality problems
of the Hydropower Station Project, or the Transferors are in breach
of any provisions of this Contract, or any representations or
warranties made by the Transferors under this Contract are proved to
be untrue, inaccurate or misleading, the Transferee is entitled to
deduct corresponding amount directly from the aforesaid guarantee
fund as compensation to the Company and/or the Transferee until the
exhaustion of this guarantee fund. 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 fund (if any)
shall be refunded to the Transferors within ten (10) Business Days
after the expiration of the guarantee period; however, if,

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	 	 	 	upon the expiration of the aforesaid guarantee period, the
Transferors fail to complete the aforesaid tax clearance pursuant to
the above-mentioned requirements, then the aforesaid guarantee period
shall be naturally extended to the date when the Transferors have
completed the aforesaid tax clearance. Under such circumstances, the
balance of the aforesaid guarantee fund (if any) shall be refunded
within ten (10) Business Days after the Transferors have completed
the aforesaid tax clearance.

Article 4 Conditions Precedent for the Payment of the Transfer Price

	 	4.1	 	Under this Contract, the conditions precedent for the payment of the first
instalment of the Transfer Price in the amount of RMB 100,000,000 by the
Transferee are: (1) this Contract has been executed by all Parties and become
effective; (2) Longquan City Administration for Industry and Commerce has
officially accepted the alteration registration application concerning the
transfer of Sale Equity Stake contemplated hereunder; and (3) there has been
no Material Adverse Change to the Company from the Signing Date of this
Contract to the First Payment Date (as defined in Article 5.2).
	 
	 	4.2	 	Under this Contract, the conditions precedent for the payment of the
second instalment of the Transfer Price in the amount of RMB 55,200,000 by the
Transferee is: (1) the alteration registration of the Sale Equity Stake with
the local administration for industry and commerce has been completed and the
Sale Equity Stake has been legally registered under the name of the
Transferee; (2) the new business license of the Company has been issued; (3)
the delivery stipulated in Chapter VI of this Contract has been fully
completed, and the Transferee and the Transferors have finally signed and
confirmed in written form regarding the completion of the Delivery; and (4)
there has been no Material Adverse Change to the Company from the First
Payment Date to the Second Payment Date (as defined in Article 5.2).
	 
	 	4.3	 	Under this Contract, the conditions precedent for the repayment of the
guarantee fund (if any), by the Transferee is: (1) during the guarantee
period, the Hydropower Station Project does not have any quality problem, and
the

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	 	 	 	Transferors do not violate any provisions of this Contract; and (2) the
Transferors have completed the tax clearance of the Company in accordance
with Item (3) of Article 3.2 hereof.
	 
	 	4.4	 	In the event that any of the conditions set out in the above-mentioned
Article 4.1 and/or Article 4.2 and/or Article 4.3 has not been fulfilled or
satisfied, and the Transferee has not indicated its waiver of the said
conditions or any one of them in writing, the Transferee shall not be obliged
to pay the Transfer Price to the Transferors and shall not be deemed as breach
of contract.
	 
	 	4.5	 	The Parties hereby confirm that, in the event that the alteration
registration regarding the Sale Equity Stake contemplated hereunder has not
been completed within seven (7) Business Days after the date when Longquan
City Administration for Industry and Commerce has officially accepted the
application, then the Transferors shall refund the principal of the first
instalment of the Transfer Price in the amount of RMB100,000,000 and all
interests accrued thereon to the bank account designated by the Transferee on
the day when the aforesaid seven-Business-Days period is due. In addition, the
Transferee shall be entitled to rescind this Contract.
	 
	 	4.6	 	The Transferors and the Transferee agree that they shall use all their
best efforts to complete the requisite alteration registration procedure with
the competent administration for industry and commerce and the filing
procedure with the competent commercial authority for the transfer of the Sale
Equity Stake.

Article 5 Payment

	 	5.1	 	The Transferee shall remit RMB 90,000,000 of the first instalment of the
Transfer Price to the escrow account jointly designated by the Transferee and
the Transferors (the “Escrow Account”) within ten (10) Business Days from the
Signing Date of this Contract. The Escrow Account shall be opened in the name
of the Transferee with Bank of China, Lishui Branch. The Transferee will leave
its official seal and the Transferors will leave their personal seals.

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	 	 	 	The Transferors and the Transferee hereby confirm that all interests on
the Escrow Account shall be owned by the Transferee. In the event that
all conditions precedent provided in Article 4.1 have not been satisfied
as scheduled, then the Transferee shall be entitled to revoke the Escrow
Account and the Transferors shall cooperate unconditionally.
	 
	 	5.2	 	The First Payment Date shall be within three (3) Business Days after all
conditions precedent listed out in Article 4.1 hereof have been completed as
scheduled. The total amount of the first instalment of the Transfer Price
shall be RMB 100,000,000. The Transferee agrees that, on the First Payment
Date, the Transfer Price in the amount of RMB 90,000,000 shall be remitted
from the Escrow Account to the Bank Accounts Designated by the Transferors,
among which, RMB 80,000,000 shall be remitted to the bank account designated
by Party B, and RMB 10,000,000 shall be remitted to the bank account
designated by Party C, in the meanwhile, the deposit in the amount of RMB
10,000,000 remitted by the Transferee to the bank account of Party B on June
8, 2009 shall offset the Transfer Price paid to Party B.
	 
	 	 	 	The Second Payment Date shall be the Completion Date of Delivery after all
conditions precedent listed out in Article 4.2 hereof have been completed
as scheduled. The Transferee shall, on the Second Payment Date, remit the
Transfer Price in the amount of RMB 55,200,000 to the Bank Accounts
Designated by the Transferors, among which, RMB 49,680,000 shall be
remitted to the bank account designated by Party B, and RMB 5,520,000
shall be remitted to the bank account designated by Party C.
	 
	 	 	 	After the deduction of guarantee liabilities and indemnity assumed by the
Transferors in accordance with PRC laws and regulations and this Contract,
if there is a balance of the guarantee fund as stipulated in Item (3) of
Article 3.2 hereof, the Transferee shall pay such balance to the
Transferors in accordance with Item (3) of Article 3.2 of this Contract.
	 
	 	5.3	 	The Transferors shall, within three (3) Business Days after the conclusion
of this Contract, provide the Transferee in written form with the detailed

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	 	 	 	information in relation to the Bank Accounts Designated by the
Transferors, otherwise, in the event that the Transferors fail to provide
the detailed information of the bank accounts in a timely fashion, or the
Transferors fail to provide the documents, seals or procedures necessary
for the transfer of the fund in the Escrow Account in a timely fashion,
or due to the reasons of the accounts opening banks of the Transferors,
the Transferee cannot remit or cannot remit the Transfer Price as
scheduled, the Transferee shall not assume any liability arising
therefrom.
	 
	 	5.4	 	The Transferors shall issue to the Transferee the evidential documents for
the payment received within three (3) Business Days after receiving each
instalment of the Transfer Price paid by the Transferee. In the event that the
Transferors fail to issue the evidential documents for the payment received
within the prescribed time limit, the Transferee shall be entitled to
correspondingly delay in paying the rest Transfer Price, which shall not be
deemed as breach of contract. In the event that the evidential documents for
the payment 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 on the Transferee and/or the Company.
	 
	 	5.5	 	The obligations of the Transferee shall be deemed as having been fully
accomplished upon the remittance of the Transfer Price into the Bank Accounts
Designated by the Transferors and the Transferee shall not take any
responsibilities or obligations thereafter.

Article 6 Taxes Payable under the Transfer of Sale Equity Stake

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

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Chapter III Representations and Warranties by All Parties

Article 7 Representations and Warranties by All Parties

	 	7.1	 	Prior to the signing of this Contract, if the signing party is a company,
such company shall provide a power of attorney which authorizes its
representative to sign this Contract; 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.
	 
	 	7.2	 	When signing this Contract, the Transferors and the Transferee hereby
state that the documents and information provided to any other Party or their
agencies (including, without limitation, the lawyers, valuers, financial
staff, etc.) before the Signing Date are still valid and authentic, and
confirm that where there is any discrepancy therein with the terms of this
Contract, this Contract shall prevail.
	 
	 	7.3	 	The Transferors and the Transferee hereby agree that upon this Contract
coming into effect, the contracts or documents pertaining to the transfer of
the Sale Equity Stake entered into between the Transferors and the Transferee
prior to this Contract shall lapse automatically.
	 
	 	7.4	 	All Parties to this Contract agree to strive jointly in coordinating the
work pertaining to the transfer of the Sale Equity Stake, including but not
limited to registration and filing for 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 8 Disclosures, Representations and Warranties by the Transferors

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

	 	8.1	 	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 Contract 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 Contract, 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.
	 
	 	8.2	 	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 Contract or fulfil their
obligations under this Contract.
	 
	 	8.3	 	As of the Signing Date, the Transferors have informed the Third Party the
whole matter of the transfer of the Sale Equity Stake under this Contract who
are related to the Sale Equity Stake and the Company; and in case of any
requirement for the consent of such Third Party, the Transferors have already
procured the corresponding written consent from such Third Party.
	 
	 	8.4	 	The Transferors hereby jointly undertake that neither of them will take
any action after the Signing Date that will cause any adverse impact on the
Company.
	 
	 	8.5	 	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 staff, etc.) prior to the Signing Date, the
Transferors hereby undertake that:

	 	8.5.1	 	all copies made from original documents are true and complete and
that such original documents are authentic and complete;

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	 	8.5.2	 	all originals supplied to the Transferee and/or the Transferee’s
agencies are authentic and complete;
	 
	 	8.5.3	 	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
	 
	 	8.5.4	 	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 Contract.

	 	8.6	 	At any moment of present or in the future, upon the request of the
Transferee, the Transferors shall, on their own expenses, use all efforts to
carry out and/or sign in a way which is satisfactory to the Transferee, or to
impel the Third Party to carry out and/or sign 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 Contract.

     Article 9 General Representations and Warranties by the Transferors

	 	9.1	 	Party B is a legal entity that has been duly established according to the
laws and regulations of China and it is validly and legally in existence and
also operating normally in accordance with the laws and regulations of China.
Signing this Contract and fulfilling all of its obligations stipulated herein
by Party B 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 its
articles of association or internal rules, 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 is a
party to or is bound by.

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	 	9.2	 	Party C is a PRC citizen with all civil abilities to enter into this
Contract and fulfil all of his obligations stipulated herein. Signing this
Contract and fulfilling all of his obligations stipulated herein by Party C
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
C is a party to or is bound by.

Article 10 Ownership

	 	10.1	 	The Transferors hereby jointly and severally undertake and warrant that:
the Transferors are the legal owners of the Sale Equity Stake and have full
authority and right to transfer the Sale Equity Stake to the Transferee and
the Sale Equity Stake does not involve any state-owned assets and interests.
In the event that the Transferee and/or the Company suffer from any damage or
loss due to the reason that the Sale Equity Stake involves state-owned assets
and interests, the Transferors shall assume joint liability for the full
compensation on the Transferee and/or the Company.
	 
	 	10.2	 	The Transferors hereby jointly and severally undertake and warrant that:
up to the First Payment Date (inclusive), the Sale 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 Sale 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).
	 
	 	10.3	 	All obligations as the shareholders of the Company which shall be born by
the Transferors for the benefit of the Company and Third Party have been fully
fulfilled by the Transferors. Any Third Party or any level of the governmental
authorities of the PRC shall not, due to the Transferors’ failure to perform

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	 	 	 	their due obligations as the shareholders of the Company, claim against
the Company and/or the Transferee or adopt administrative acts which are
unfavourable to the Company and/or the Transferee, including but not
limited to imposition of fine, revocation of the business license,
requiring to make additional payment for the taxes or ordering to stop
production, etc.
	 
	 	10.4	 	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
that will materially affect the Transferors’ ability to sign this Contract or
fulfil the Transferors’ obligations under this Contract.
	 
	 	10.5	 	The Transferors hereby jointly and severally undertake and warrant to
provide all relevant materials which should be provided by the Transferors and
are requisite for carrying out the alteration registration of the Sale Equity
Stake, including but not limited to the tax clearance certificate issued by
the competent taxation authority.

     Article 11 The Company and the Hydropower Station Project

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

	 	11.1	 	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.
	 
	 	11.2	 	The registered capital of the Company has been fully paid up as
scheduled. 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.

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	 	11.3	 	The Company is the legal owner of the Hydropower Station Project and can
enjoy the full and complete ownership, operation right and right to profit of
the Hydropower Station Project.
	 
	 	11.4	 	The development, construction and operation of the Hydropower Station
Project have procured all requisite approvals issued by relevant governmental
authorities and are complied with all relevant PRC laws and regulations and
the approvals, permits and licenses issued by relevant governmental
authorities, and there is no violation of the PRC laws and regulations and
approvals, permits and licenses issued by relevant governmental authorities,
or conditions which result in or may result in the revocation or withdrawal of
such approvals, permits or licenses. In the event that the Transferee and/or
the Company suffer from any damage or loss arising out of any violation and/or
revocation and/or withdrawal, the Transferors shall be jointly liable for the
full compensation on the Transferee and/or the Company.
	 
	 	11.5	 	Prior to the date of the delivery of the assets, every aspect of the
Hydropower 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 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 Completion Date of Delivery, the Transferors shall be jointly
liable for the full compensation on the Transferee and/or the Company.
	 
	 	11.6	 	Up to the First Payment Date, the Company has never suffered and is not
currently suffering from 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 Sale Equity Stake. Up to the Signing Date, the Transferors
have fully disclosed in written form to the Transferee all information in
respect of

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	 	 	 	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
(including but not limited to water resources fees), charges, penalties
and expenses payable to or being required to be paid 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 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 Sale Equity Stake, the Transferors
shall be jointly liable for the full compensation on the Transferee
and/or the Company.
	 
	 	11.7	 	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 in
Appendix III to this Contract. Except for the securities disclosed in Appendix
II to this Contract, 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. Prior to the Completion Date of Delivery
(inclusive), all material aspects of all buildings, dams, 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 twenty-four (24) months after the Signing Date
due to the causes existed prior to the Completion Date of Delivery
(inclusive). The Transferors hereby warrant and undertake that commencing from
the Signing Date, the real estate and movable assets mentioned above will not
suffer from

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	 	 	 	any loss or damage due to the reasons of the Transferors or any Third
Party existing prior to the Completion Date of Delivery (inclusive). In
the event that such real estate and movable assets suffer from any loss
or damage 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.
	 
	 	11.8	 	The production, operation, construction and business of the Company are
complied with all applicable PRC laws and regulations, including but not
limited to those laws and regulations in relation to hydropower generation,
environmental protection, water and soil conservation, flood prevention plan,
construction of water resources projects, bidding, utilization of woodland,
woods cutting, fire-prevention, work 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, safe
production authority, development and reform authority and other governmental
authorities will not punish the Company due to the issues of environmental
protection, water and soil conservation, water drawing, flood prevention plan,
design and construction of hydro projects, bidding, power generation,
utilization of woodland, woods cutting, fire-prevention, work 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, safety
production authority, development and reform 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.
	 
	 	11.9	 	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.

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	 	11.10	 	Prior to the signing of this Contract, the Transferors have already
disclosed all information about 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 Contract, and as of the Second Payment Date, all due
principal and accrued interests of the debts listed out in Appendix I hereto
have been fully paid off. The Transferors shall assume joint liabilities to
fully compensate the Transferee and/or the Company for any undisclosed debts
or unpaid due principal and interests, so as to hold the Transferee and/or the
Company harmless.
	 
	 	11.11	 	As for the bank loans listed in Appendix I to this Contract, the
Transferors shall do their utmost to assist the Transferee in negotiating with
the lender, so as to make sure there will be no adverse change of the terms
and conditions of the existing bank loans of the Company.
	 
	 	11.12	 	The Company can legally own the land use right of all the land and all
the buildings currently used by the Company, free from being sued, arbitrated,
punished or suffering from other damage or loss due to the problems of land
and/or buildings. 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 buildings,
the Transferors shall assume joint liabilities to fully compensate the
Transferee and/or the Company.
	 
	 	11.13	 	The procurement of the land use right (allocated) with the State-owned
Land Use Right Certificates (the certificate No.: Long Guo Yong (2004) Zi No.
0628005, Long Guo Yong (2004) Zi No. 0627001, Zhe Long Guo Yong (2007) Zi No. 4268) for the land currently used by the Company is
in full compliance with the PRC laws and regulations, and all relevant
taxes and fees have been fully paid off in accordance with law. In the
event that the Transferee and/or the Company suffer from any
punishment, damage or loss due to the land, the Transferors shall
assume joint liabilities to fully compensate the Transferee and/or the
Company.

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	 	11.14	 	The procurement of the land use rights (granted) with the State-owned
Land Use Right Certificates (the certificate No.: Zhe Long Guo Yong (2007) Zi
No. 4267 and the certificate No: Long Guo Yong (2004) Zi No. 0628006 ) for the
land currently used by the Company is in full compliance with the 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 punishment, damage or loss due to the said land,
the Transferors shall assume joint liabilities to fully compensate the
Transferee and/or the Company.
	 
	 	11.15	 	After the Signing Date, the Transferors shall normally operate and
manage the Company until the Completion Date of Delivery and warrant that
there will be no Material Adverse Change to the operation, business and
conditions of the Company.
	 
	 	11.16	 	As of the Second Payment Date, the Company has not carried out any
equity investment or any other investment in any other companies, enterprises
and other economic organizations. In the event that the Company suffers from any damage or loss due to such undisclosed equity
investment or other investment, the Transferors shall assume joint
liabilities to fully compensate the Transferee and/or the Company.
	 
	 	11.17	 	As of the Second Payment Date, there has been no pledge or other
restrictions on the right to the collection of the electricity fees and
operation right of the Company. In the event that the Company and/or the
Transferee suffers from any damage or loss due to such pledge or right
restrictions, the Transferors shall assume joint liabilities to fully
compensate the Transferee and/or the Company.
	 
	 	11.18	 	As of the Second Payment Date, except for the securities listed out in
Appendix II to this Contract, 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

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	 	 	 	(including but not limited to mortgage, pledge and guarantee) for any
other companies, enterprises, economic entities or any individuals. In
the event that the Transferee and/or 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.
	 
	 	11.19	 	The Company has conducted valid tax registration and procured the valid
Tax Registration Certificate. The Company has filed the tax declaration in
accordance with the requirements of the laws and regulations of the PRC, and
all contents declared have been real and complete. 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, urban maintenance and construction tax and 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.
	 
	 	11.20	 	All construction projects (whether completed or under construction) of
the Company 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 have been no violations
thereof. In the event that after the completion of the transfer of the Sale
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.
	 
	 	11.21	 	The effectiveness of this Contract shall not cause any Third Party to
terminate the contracts or agreements concluded with the Company prior to the
Effective Date of this Contract (inclusive) which are still effective on the
Effective Date, and will not create any security or Encumbrance in any other
form favourable to the Third Party on the assets of the Company.

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	 	11.22	 	The effectiveness of this Contract shall not cause any adverse impact
on the development, operation and assets of the Hydropower Station Project of
the Company, and will not cause the Company to lose the development right,
operation right, ownership or right to profit of the Hydropower Station
Project which have been owned by the Company prior to the Effective Date of
this Contract (inclusive).
	 
	 	11.23	 	The originals of all contracts (including but not limited to contracts
relating land requisition, loan, security, insurance, design, construction,
supervision, procurement, grid connection principle agreement, grid
connection and dispatching agreement and grid connection economic agreement)
concluded by the Company prior to the Effective Date of this Contract
(inclusive) have been preserved by the Company in complete form and there
have been no violations thereof, and as far as the Transferors know, there
does not exist any condition which may lead to the violation by the Company.
In case of such circumstances, the Transferors have disclosed it to the
Transferee in written form.
	 
	 	11.24	 	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, know-how, etc. In the event that the Company suffers from any
punishment, damage or loss due to any above-mentioned issues, the Transferors
shall assume joint liabilities to fully compensate the Company and/or the
Transferee.
	 
	 	11.25	 	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 registration of the social insurance for the
employees of the Company has been legally and validly taken out. The various
social insurance premiums and housing provident fund, 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 been no payment for the
employees’ social insurance premiums, housing

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	 	 	 	provident fund, wages, 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 circumstance which may lead 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.
	 
	 	11.26	 	As of the Second Payment Date, the Company does not lease any real
estate or movable assets such as land, buildings, machines and equipments,
etc.
	 
	 	11.27	 	The Company has taken out requisite insurances usually purchased by
other enterprises within the same industry based on reasonable requirements of
its production and operation, all policies of which are still valid, all 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 led to or may lead to
the invalidity of the aforesaid insurance policies. The aforesaid insurance
policies are free from any special or unusual restrictions. As of the Second
Payment Date, there have been no circumstances under which the Company could
claim for compensation against the insurer in accordance with the aforesaid
policies.
	 
	 	11.28	 	The Transferors undertake and warrant that, on the Completion Date of
Delivery provided in Chapter 6 hereof, the water level of the reservoir of the
Hydropower Station Project shall not be lower than the average water level of
August for the most recent four (4) years of the Hydropower Station Project,
namely, 523 meters. In the event that the water level of the reservoir is
lower than the aforesaid standard over 10%, then the Transferors shall make
corresponding indemnity on the Transferee and/or the Company, provided that
the decline is not due to the Force Majeure as defined in Chapter 10.

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	 	11.29	 	All representations and warranties made by the Transferors under this
Article 11 shall be valid for two (2) years commencing from the Signing Date
of this Contract.

Chapter V Disclosures, Representations and Warranties by the Transferee

Article 12 Disclosures, Representations and Warranties by the Transferee

The Transferee hereby represents and warrants to the Transferors that:

	 	12.1	 	The Transferee is a legal entity that has been duly established according
to the laws of the PRC and it is validly and legally in existence and also
operating normally in accordance with the laws and regulations of the PRC.
	 
	 	12.2	 	Signing this Contract 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.
	 
	 	12.3	 	No lawsuits, arbitrations, or other legal or administrative proceedings
or governmental investigations, etc. are on-going against the Transferee that
will materially affect its ability to sign this Contract or fulfil its
obligations under this Contract.

Chapter VI Delivery

Article 13 Delivery

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	 	13.1	 	The delivery provided in this Chapter shall include, without limitation,
the delivery of the production, operation and management of the Company and
the Hydropower Station Project, financial affairs, assets, files and
documents, certificates and licenses, approval documents, official stamps and
the project constructions from the Transferors to the Transferee.
	 
	 	13.2	 	The Parties hereby confirm that, the income derived from power generation
of the Company during the period between the First Payment Date (inclusive)
and the Second Payment Date (exclusive), after deducting all expenses and
costs, shall be owned by the Transferors, however, all interests accrued on
the first instalment of the Transfer Price in the amount of RMB 100,000,000
during such period shall be owned by the Transferee and the applicable annual
interest rate is 6.53%. The Transferors shall remit the aforesaid interests to
the bank account designated by the Transferee on the Second Payment Date; in
the event that electricity fees of the Company have not been settled on the
Completion Date of Delivery, then the Transferee shall remit the aforesaid
income, after deducting all costs and expenses, to the Transferors within
seven (7) Business Days after the receipt of the electricity fees generated
during the period between the First Payment Date (inclusive) and the Second
Payment Date (exclusive). From the Second Payment Date (inclusive), all
income derived from power generation of the Company shall be owned by the
Transferee.
	 
	 	13.3	 	During the period between the Signing Date of this Contract and the
Completion Date of Delivery as prescribed in this Chapter:

	 	(1)	 	The Transferors shall continue to operate the Company in general and
usual way; the Transferors shall not (or shall not agree to) require the
Company to make any payment to any Third Party, however, excluding the
payment which needs to be made for the general operation purpose and the
determined expenditure programme (in the event that such payment exceeds
RMB50,000, it shall be subject to the prior written consent of the
Transferee); the Transferors shall not terminate any

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	 	 	 	agreements or arrangements which have significant value to the
Company, or give up any rights which have significant value;
	 
	 	(2)	 	In the event that the Company intends to enter into any contract,
agreement or memorandum, etc., of which the price, value, liability or
debt (including contingent debt) exceeds the amount of RMB 50,000, the
prior written consent from the Transferee must be procured;
	 
	 	(3)	 	Without the prior written consent of the Transferee, the Transferors
shall not make any material amendments to the financing, loan or security
arrangements of the Company;
	 
	 	(4)	 	The Transferors shall take all reasonable actions to preserve and
protect the assets of the Company; and shall not create any pledge,
mortgage and other type of securities on the assets of the Company, or
provide guarantee or other security to any Third Party in the name of the
Company;
	 
	 	(5)	 	The Transferors shall not, on behalf of the Company, settle, release
or terminate any material lawsuits, arbitrations or other legal
proceedings, or any material legal liabilities and claims, or give up the
rights relating to the foregoing;
	 
	 	(6)	 	The Transferors shall not release or write off any debt owed by the
debtor specified in the accounting books of the Company;
	 
	 	(7)	 	The Transferors shall ensure the Company will not enter into any
cooperation, joint venture or other forms of outward equity investment or
debt investment arrangements;
	 
	 	(8)	 	In case of any Material Adverse Change or other conditions which may
cause the representations, warranties or undertakings made by the
Transferors to be false, inaccurate, unrealizable or misleading, the
Transferors shall inform the Transferee in written form within
twenty-four

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	 	(24)	 	hours and provide reasonable and detailed information and
explanation; and
	 
	 	(9)	 	The Transferors and/or the Company will not take any actions which may
violate the provisions of this Contract or may influence the fulfilment of
the obligations hereunder or the transfer of the Sale Equity Stake
contemplated herein.

	 	13.4	 	The Transferors shall deliver the production, operation and management of
the Company and the Hydropower Station Project to the Transferee in accordance
with the requirements of the Transferee.
	 
	 	13.5	 	The Transferors shall deliver all assets of the Company and the
Hydropower Station Project to the Transferee in accordance with the Assets
List in Appendix III hereto. The Transferors shall warrant making a full and
complete delivery and there shall be no derogation between the Company’s
assets delivered to the Transferee and those listed out in the Assets List in
Appendix III hereto, otherwise, the Transferors shall make full compensation
on the Transferee and/or the Company for any damage or loss.
	 
	 	13.6	 	The Transferors shall deliver to the Transferee all documents and file
materials in accordance with the list of documents and materials jointly
confirmed by the Transferee and the Transferors in written form, including,
without limitation, all stamps of the Company, such as the official stamp,
financial stamp and contract stamp, the originals of all account opening
documents and specimen chops for all bank accounts of the Company, the
originals of all approvals, certificates, permits, customer information,
building ownership certificates, state-owned land use right certificates and
other materials, the originals of all project drawings, contracts, agreements
of the Hydropower Station Project, the originals of all financial accounting
books, financial vouchers and the accounting files of the Company. The
Transferors shall make a full and complete delivery and there shall be no
derogation between the documents and files materials of the Company and the
Hydropower Station Project delivered to the Transferee and those listed out in
the list of documents

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	 	 	 	and materials jointly confirmed by the Transferee and the Transferors in
written form, otherwise, the Transferors shall make full compensation on
the Transferee and/or the Company for any damage or loss.
	 
	 	13.7	 	The Transferors shall deliver to the Transferee relevant information
concerning technology and the units contracting the construction works of the
Hydropower Station Project, equipment manufacturer, design, project
supervision, quality examination and transmission lines, etc.
	 
	 	13.8	 	The delivery shall be fully completed within ten (10) Business Days from
the First Payment Date. The date of the final signing of the confirmation by
the Transferee and the Transferors shall be the Completion Date of Delivery.
	 
	 	13.9	 	After the Completion Date of Delivery, the Transferors shall provide
active cooperation when the Transferee reasonably requires further delivery in
writing.
	 
	 	13.10	 	The Transferors shall make sure the continuity, stability and safety of
the production and operation of the Company during the process of the
delivery.
	 
	 	13.11	 	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 Sale
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.

Chapter VII Creditor’s Right and Debt and Employees Arrangement

Article 14 Creditor’s Right and Debt Arrangement

	 	14.1	 	All Parties confirm that, as of the First Payment Date, the total amount
of the debt of the Company was RMB 108,000,000. After the completion of the

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	 	 	 	transfer of the Sale Equity Stake contemplated herein, such debt shall
continue to be born by the Company.
	 
	 	14.2	 	After the completion of the transfer of the Sale Equity Stake
contemplated herein, all creditor’s rights enjoyed by the Company and all
debts assumed by the Company prior to the Second Payment Date shall be enjoyed
and assumed by the Transferors (except for the bank loan set out in Appendix I
hereto, but all due interest of such loan prior to the Second Payment Date
shall still be paid by the Transferors.).

Article 15 Employees Arrangement

	 	15.1	 	Upon the completion of the transfer of the Sale Equity Stake, The
Transferee shall be entitled to choose to re-employ excellent employees from
the current employees of the Company. The terms and conditions of their
employment shall be determined by reference to the standards applied in the
other domestic project companies currently owned by the Transferee in
principle and implemented in accordance with the Labour Law of the PRC, the
Labour Contract Law of the PRC and other relevant PRC laws and regulations. The
Company will execute new labor contracts with the employees and the
Transferors shall be responsible for the relocation of those employees
who are not re-employed by the Company.
	 
	 	15.2	 	The Transferors undertake and warrant that they will properly relocate
the employees who are fired or not re-employed by the Company and shall ensure
that such employees will not make trouble against the Company, nor will apply
for arbitration, bring lawsuit or any other administrative or judicial
proceedings against the Company. The Transferors shall make sure that the
Company will not be punished by any competent governmental authority or incur
any other adverse effect due to the relocation of the aforesaid employees.
	 
	 	15.3	 	The Transferors undertake and warrant that all compensation, indemnity,
costs and any other expenses in connection with the relocation of the
employees of the Company shall be assumed by the Transferors themselves. In
the event that

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	 	 	 	the Company and/or the Transferee suffer from any damage or loss, the
Transferors shall be jointly liable for the full compensation on the
Company and/or the Transferee.

Chapter VIII Confidentiality

Article 16 Confidentiality

	 	16.1	 	All Parties agree unless otherwise provided for in another relevant
confidentiality agreement that 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 Contract pertaining to their respective
businesses, or financial situations and other confidential matters, all
Parties to this Contract which have received the aforesaid confidential
information (including written information and non-written information,
hereinafter referred to as “Confidential Information”) shall:

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

	 	16.2	 	The provisions of the aforesaid Article 16.1 shall not apply to
Confidential Information:

	 	16.2.1	 	which was available to the receiving Party from the written records
procured by the receiving Party from the disclosing Party before the
disclosing Party disclosed the information to the receiving Party;

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	 	16.2.2	 	which has become public information by means not attributable to
any breach by the receiving Party;
	 
	 	16.2.3	 	which was obtained, by the receiving Party from a Third Party not
subject to any confidentiality obligation affecting the said Confidential
Information.

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

Chapter IX Breach of Contract

Article 17 Liability for Breach of a Representation or Warranty

	 	17.1	 	If any representation or warranty made by any Party to this Contract 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 Contract 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, 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.
	 
	 	17.2	 	Each representation and warranty set out in this Contract is to be
construed independently.

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	 	17.3	 	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.

Article 18 Liability for Breach of Contract

	 	18.1	 	In the event of a breach committed by any Party to this Contract, the
said defaulting Party shall be liable to the other Party (ies) in accordance
with the provisions of this Contract and the PRC laws and regulations. In the
event all Parties hereof commit breach of the contract, each Party shall be
liable to the other Party (ies) for the losses and damages or any other
liabilities arising out of its breach of contract.
	 
	 	18.2	 	In the event that the undisclosed issues by the Transferors prior to the
signing of this Contract which may influence the legal existence of the
Company and the Hydropower Station Project, after the completion of the Sale
Equity Stake, actually influence the legal existence of the Company or the
Hydropower Station Project, the Transferee is entitled to terminate this
Contract and to require the Transferors (1) to refund the full amount of the
Transfer Price paid by the Transferee; (2) to pay three percent (3%) of the
Transfer Price as liquidated damages, and (3) is entitled to enjoy other legal
claims and compensations in accordance with other provisions hereof and PRC
laws and regulations.
	 
	 	 	 	After all conditions precedent for the payment of the first and second
instalments of the Transfer Price by the Transferee have been satisfied,
in the event that the Transferee fails to pay the corresponding Transfer
Price in accordance with the time limit provided in this Contract and such
delayed payment has exceeded thirty (30) Business Days from the time limit
provided in this Contract, then the Transferors shall be entitled to
rescind this Contract, and request the Transferee (1) to return the Sale
Equity Stake, (2) to pay three percent (3%) of the Transfer Price as
liquidated damages, and (3) is entitled to enjoy other legal claims and
compensations in accordance with other provisions hereof and PRC laws and
regulations.

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	 	18.3	 	Any violation of the obligations, representations and warranties under
this Contract by any Party of the Transferors or Transferee shall constitute a
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.
	 
	 	18.4	 	Any delayed performance of the obligations, representations and
warranties under this Contract 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 the Contract 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 the Contract over thirty (30) Business
Days, the non-defaulting Party (ies) is entitled to terminate the
Contract, and to require the defaulting Party to pay one percent (1%) of
the Transfer Price as liquidated damages. The procurement of the
liquidated damages shall not prejudice the non-defaulting Party (ies)
right to claim for other legal remedies in accordance with other
provisions of this Contract and the PRC laws and regulations.
	 
	 	18.5	 	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 Contract committed by any of the Transferors.

Chapter X Force Majeure

Article 19 Force Majeure

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	 	19.1	 	“Force Majeure” refers to earthquake, typhoon, flood, fire, war,
political unrest and such special incidents or events that are deemed to be
Force Majeure occurrences under the provisions of relevant PRC laws and
regulations.
	 
	 	19.2	 	In the event of the occurrence of a Force Majeure event, the obligations
of the Party to this Contract 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 Contract and to which the affected party is subject shall automatically
be extended by a period equal to the term or period of the Force Majeure
event, the period of extension shall be the same as the period of cessation of
the obligations by reason 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 Contract for the duration of
the Force Majeure.
	 
	 	19.3	 	The Party claiming the occurrence of a Force Majeure event shall promptly
inform the other Party (ies) in writing, and within seven (7) Business Days
thereafter, it shall provide sufficient evidence (issued by the notary
organization or the competent authorities) of the occurrence and the
continuity of the Force Majeure event. It shall also do its best to eliminate
the adverse effect of the Force Majeure event.

Chapter XI Resolution of Disputes

Article 20 Arbitration

	 	20.1	 	Any dispute arising out of or in connection with this Contract between the
Parties to this Contract shall firstly be resolved through friendly
consultation.
In the event that sixty (60) Business 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

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	 	 	 	Trade Arbitration Commission in Beijing for arbitration in accordance
with its prevailing valid arbitration rules. The arbitration place shall
be in Beijing.
	 
	 	20.2	 	The arbitration tribunal shall be constituted by three (3) arbitrators,
and the arbitration procedure shall be conducted in Chinese.

Article 21 Validity of the Arbitration Award

The arbitration award shall be final and binding on all Parties to this
Contract. All Parties to this Contract agree to be bound by the said award,
and to act according to the terms of the said award.

Article 22 Continuation of Rights and Obligations

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

Chapter XII Applicable Law

Article 23 Applicable Law

The laws and regulations of the PRC shall govern and be binding on the
establishment, validity, interpretation and execution of this Contract. All
disputes arising out of or in connection with this Contract 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 Contract, reference
shall be made to general international business practices.

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Chapter XIII Miscellaneous

Article 24 Waiver

The non-exercise or delay in the exercise of an entitlement stipulated in this
Contract by any Party to this Contract 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 25 Transfer

Unless otherwise described and prescribed in this Contract, without being
agreed upon by all other Parties in written form, or without being approved by
relevant examination and approval authorities in case such approval is
required by relevant laws, none of the Parties to this Contract shall transfer
or assign all or any part of this Contract or transfer or assign that Party’s
entitlement or obligations as stipulated in this Contract.

Article 26 Amendment

	 	26.1	 	This Contract has been executed for the benefit of all Parties to this
Contract and their respective lawful successor(s) and assignees, and shall
have legal binding effect on them.
	 
	 	26.2	 	This Contract may not be amended verbally. Only by signing a written
document by all Parties indicating their consent to such amendment, the
amendment may come into effect.

Article 27 Severability

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

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     Article 28 Language

This Contract 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 29 Validity of the Text and Appendices

	 	29.1	 	This Contract shall come into effect after being signed and sealed with
stamps of all Parties. The Chinese text of this Contract shall be signed in
six (6) sets of original. Each Party shall hold one (1) set of original, and
one (1) set of original shall be sent to the competent Administration for
Industry and Commerce and any other governmental authorities as required
respectively. The remaining originals shall be kept for record by the Company.
	 
	 	29.2	 	The English text of this Contract shall be signed in four (4) sets of
original and each Party shall hold one (1) set of original. The remaining
originals shall be kept for record by the Company.
	 
	 	29.3	 	The Appendices to this Contract shall form an integral part of this
Contract, and shall have the same legal effect as this Contract.

Article 30 Notification

	 	30.1	 	Unless otherwise specified and prescribed, any Party issuing any
notification or written communication to the other Party (ies) according to
the provisions of this Contract 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 to the courier service company. Any notification or written
communication sent in accordance with the stipulations of this Contract shall
be deemed to be

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	 	 	 	served on the date of receipt. If they 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.
	 
	 	30.2	 	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 Distric,
Beijing China.
	 
	 	 
	Telephone Number:

	 	86-10-6492-8483
	Facsimile Number:

	 	86-10-6496-1540
	Attention:

	 	Chen Fang
	 
	 	 
	Party B’s Address:

	 	11th Floor, Capital Time Square, No.88, Chang’an
West Avenue, Xicheng District, Beijing City
	Telephone Number:

	 	010-83914567
	Facsimile Number:

	 	010-83914666
	Attention:

	 	Li Hong
	 
	 	 
	Party C’s Address:

	 	Room 1402, Unit 2, Building 4 of Zhongrong City
Garden, West Lake District, Hangzhou City
	Telephone Number:

	 	15858139588
	Post Code:

	 	310012
	Attention:

	 	Yao Linfu

Article 31 The Entire Agreement

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

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

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IN WITNESS WHEREOF, the duly authorised representatives of Party A and Party B
have signed this Contract with Party C on the date first above written.

	 	 	 
	Party A:

	 	Zhejiang Province Jingning Yingchuan Hydroelectric Development Co., Ltd.
	 
	 	 
	 

	 	(Stamp)
	 
	 	 
	Signature:

	 	                    
	 
	 	 
	Position:

	 	                    
	 
	 	 
	Party B:

	 	Guangdong Qingneng Power Generation Group Co., Ltd.
	 
	 	 
	 

	 	(Stamp)
	 
	 	 
	Signature:

	 	                    
	 
	 	 
	Position:

	 	                    
	 
	 	 
	Party C:

	 	Yao Linfu
	 
	 	 
	Signature:

	 	                    

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Appendix I Existing Debts of the Company

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Balance of	 	 	 	 	 	 
	Loan	 	 	 	the Loan	 	 	 	 	 	 
	Contract	 	 	 	Principal	 	Loan	 	Interest	 	 
	Number	 	Lender	 	(RMB)	 	Term	 	Rate	 	Mortgaged Assets
	2007 Nian
Long Zhong
Yin Jie Zi
No. D014
 

	 	Bank of
China,
Longquan
City Sub-branch
	 	 	108,000,000	 	 	From
August 29,
2007 to
August 28,
2016
	 	Floating
interest rate
with an
annual
interest rate
of 7.56%,
and the
interest rate
shall be
fixed each
year
	 	The real estate and
movable properties
of the Hydropower
Station Project

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Appendix II List of Security

List of Security

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

	 	 	 	 	 	 	 
	 	 	 	 	Type of	 	Mortgaged
	Security Contract Number	 	Creditor	 	Security	 	Assets
	2007 Nian Long Zhong Yin Di Zi
No. D006

	 	Bank of China, Longquan
City Sub-branch 	 	Maximum
Amount
Mortgage 	 	All real estate
and movable
properties of
the
Hydropower
Station Project

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Appendix III Assets List of the Company

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