Document:

EX-10.3

Exhibit 10.3

FORM OF INDEMNIFICATION AGREEMENT

     THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of                     , ___, by and between
China Hydroelectric Corporation, a company duly incorporated and validly existing under the laws of
the Cayman Islands (the “Company”), and the director of the Company identified on the signature
page hereto (the “Indemnitee”).

     WHEREAS, the Indemnitee has agreed to serve as a director of the Company and in such capacity
will render valuable services to the Company;

     WHEREAS, in order to induce and encourage highly experienced and capable persons such as the
Indemnitee to serve as directors of the Company, the Board of Directors has determined, that this
Agreement is not only reasonable and prudent, but necessary to promote and ensure the best
interests of the Company and its shareholders; and

     NOW, THEREFORE, in consideration of the premises and mutual agreements hereinafter set forth,
and other good and valuable consideration, including, without limitation, the service of the
Indemnitee, the receipt of which hereby is acknowledged, and in order to induce the Indemnitee to
serve as a director of the Company, the Company and the Indemnitee hereby agree as follows:

     1. Definitions. As used in this Agreement:

          (a) “Board of Directors” shall mean the board of directors of the Company.

          (b) “Change in Control” shall mean a change in control of the Company of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar or successor schedule or form) promulgated under the
United States Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively, the “Act”), whether or not the Company is then subject to
such reporting requirement; provided, however, that, without limitation, such a Change in Control
shall be deemed to have occurred (irrespective of the applicability of the initial clause of this
definition) if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Act, but
excluding any trustee or other fiduciary holding securities pursuant to an employee benefit or
welfare plan or employee share plan of the Company or any subsidiary of the Company, or any entity
organized, appointed, established or holding securities of the Company with voting power for or
pursuant to the terms of any such plan) is or becomes the “beneficial owner” (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the Company’s then outstanding securities
without the prior approval of at least two-thirds of the Continuing Directors (as defined below) in
office immediately prior to such person’s attaining such interest; (ii) the Company is a party to a
merger, consolidation, scheme of arrangement, sale of assets or other reorganization, or a proxy
contest, as a consequence of which Continuing Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors of the Company (or
any successor entity) thereafter; or (iii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board of Directors of the Company
(including for this purpose any new director whose election or nomination for election by the
Company’s shareholders was approved by a vote of at

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 least two-thirds of the directors then still in office who were directors at the beginning of
such period) (such directors being referred to herein as “Continuing Directors”) cease for any
reason to constitute at least a majority of the Board of Directors of the Company.

          (c) “Disinterested Director” with respect to any request by the Indemnitee for indemnification
or advancement of expenses hereunder shall mean a director of the Company who neither is nor was a
party to the Proceeding (as defined below) in respect of which indemnification or advancement is
being sought by the Indemnitee.

          (d) The term “Expenses” shall mean, without limitation, expenses of Proceedings, including
attorneys’ fees, disbursements and retainers, accounting and witness fees, expenses related to the
preparation or service as a witness, travel and deposition costs, expenses of investigations,
judicial or administrative proceedings and appeals, amounts paid in settlement of a Proceeding by
or on behalf of the Indemnitee, costs of attachment or similar bonds, any expenses of attempting to
establish or establishing a right to indemnification or advancement of expenses, under this
Agreement, the Company’s Memorandum of Association and Articles of Association as currently in
effect (the “Articles”), applicable law or otherwise, and reasonable compensation for time spent by
the Indemnitee in connection with the investigation, defense or appeal of a Proceeding or action
for indemnification for which the Indemnitee is not otherwise compensated by the Company or any
third party. The term “Expenses” shall not include the amount of judgments, fines, interest or
penalties, or excise taxes assessed with respect to any employee benefit or welfare plan, which are
actually levied against or sustained by the Indemnitee to the extent sustained after final
adjudication.

          (e) The term “Independent Legal Counsel” shall mean any firm of attorneys reasonably selected
by the Board of Directors of the Company, so long as such firm has not represented the Company, the
Company’s subsidiaries or affiliates, the Indemnitee, any entity controlled by the Indemnitee, or
any party adverse to the Company, within the preceding five (5) years. Notwithstanding the
foregoing, the term “Independent Legal Counsel” shall not include any person who, under applicable
standards of professional conduct then prevailing, would have a conflict of interest in
representing either the Company or the Indemnitee in an action to determine the Indemnitee’s right
to indemnification or advancement of expenses under this Agreement, the Company’s Articles,
applicable law or otherwise.

          (f) The term “Proceeding” shall mean any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, or any other proceeding (including, without
limitation, an appeal therefrom), formal or informal, whether brought in the name of the Company or
otherwise, whether of a civil, criminal, administrative or investigative nature, and whether by, in
or involving a court or an administrative, other governmental or private entity or body (including,
without limitation, an investigation by the Company or its Board of Directors), by reason of (i)
the fact that the Indemnitee is or was a director of the Company, or is or was serving at the
request of the Company as an agent of another enterprise, whether or not the Indemnitee is serving
in such capacity at the time any liability or expense is incurred for which indemnification or
reimbursement is to be provided under this Agreement, (ii) any actual or alleged act or omission or
neglect or breach of duty, including, without limitation, any actual or alleged error or
misstatement or misleading statement, which the Indemnitee commits or suffers while acting in any
such capacity, or (iii) the Indemnitee attempting to

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 establish or establishing a right to indemnification or advancement of expenses pursuant to
this Agreement, the Company’s Articles, applicable law or otherwise.

          (g) The phrase “serving at the request of the Company as an agent of another enterprise” or
any similar terminology shall mean, unless the context otherwise requires, serving at the request
of the Company as a director, officer, employee or agent of another corporation, partnership, joint
venture, limited liability company, trust, employee benefit or welfare plan or other enterprise,
foreign or domestic. The phrase “serving at the request of the Company” shall include, without
limitation, any service as a director of the Company which imposes duties on, or involves services
by, such director with respect to the Company or any of the Company’s subsidiaries, affiliates,
employee benefit or welfare plans, such plan’s participants or beneficiaries or any other
enterprise, foreign or domestic. In the event that the Indemnitee shall be a director, officer,
employee or agent of another corporation, partnership, joint venture, limited liability company,
trust, employee benefit or welfare plan or other enterprise, foreign or domestic, fifty percent
(50%) or more of the ordinary shares, combined voting power or total equity interest of which is
owned by the Company or any subsidiary or affiliate thereof, then it shall be presumed conclusively
that the Indemnitee is so acting at the request of the Company.

     2. Services by the Indemnitee. The Indemnitee agrees to serve as a director of the
Company under the terms of the Indemnitee’s agreement with the Company for so long as the
Indemnitee is duly elected and qualified, appointed or until such time as the Indemnitee tenders a
resignation in writing or is removed as a director; provided, however, that the Indemnitee may at
any time and for any reason resign from such position (subject to any other contractual obligation
or other obligation imposed by operation of law).

     3. Proceeding Other Than a Proceeding By or In the Right of the Company. The Company
shall indemnify the Indemnitee if the Indemnitee is a party to or threatened to be made a party to
or is otherwise involved in any Proceeding (other than a Proceeding by or in the right of the
Company), by reason of the fact that the Indemnitee is or was a director of the Company, or is or
was serving at the request of the Company as an agent of another enterprise, against all Expenses,
judgments, fines, interest or penalties, and excise taxes assessed with respect to any employee
benefit or welfare plan, which are actually and reasonably incurred by the Indemnitee in connection
with such a Proceeding, to the fullest extent permitted by applicable law; provided, however, that
any settlement of a Proceeding must be approved in advance in writing by the Company (which
approval shall not be unreasonably withheld).

     4. Proceedings By or In the Right of the Company. The Company shall indemnify the
Indemnitee if the Indemnitee is a party to or threatened to be made a party to or is otherwise
involved in any Proceeding by or in the right of the Company to procure a judgment in its favor by
reason of the fact that the Indemnitee is or was a director of the Company, or is or was serving at
the request of the Company as an agent of another enterprise, against all Expenses, judgments,
fines, interest or penalties, and excise taxes assessed with respect to any employee benefit or
welfare plan, which are actually and reasonably incurred by the Indemnitee in connection with the
defense or settlement of such a Proceeding, to the fullest extent permitted by applicable law.

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     5. Indemnification for Costs, Charges and Expenses of Witness or Successful Party.
Notwithstanding any other provision of this Agreement (except as set forth in subparagraph 9(a)
hereof), and without a requirement for determination as required by Paragraph 8 hereof, to the
extent that the Indemnitee (a) has prepared to serve or has served as a witness in any Proceeding
in any way relating to (i) the Company or any of the Company’s subsidiaries, affiliates, employee
benefit or welfare plans or such plan’s participants or beneficiaries or (ii) anything done or not
done by the Indemnitee as a director of the Company or in connection with serving at the request of
the Company as an agent of another enterprise, or (b) has been successful in defense of any
Proceeding or in defense of any claim, issue or matter therein, on the merits or otherwise,
including the dismissal of a Proceeding without prejudice or the settlement of a Proceeding without
an admission of liability, the Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by the Indemnitee in connection therewith to the fullest extent permitted by
applicable law.

     6. Partial Indemnification. If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for a portion of the Expenses, judgments, fines,
interest or penalties, or excise taxes assessed with respect to any employee benefit or welfare
plan, which are actually and reasonably incurred by the Indemnitee in the investigation, defense,
appeal or settlement of any Proceeding, but not, however, for the total amount of the Indemnitee’s
Expenses, judgments, fines, interest or penalties, or excise taxes assessed with respect to any
employee benefit or welfare plan, then the Company shall nevertheless indemnify the Indemnitee for
the portion of such Expenses, judgments, fines, interest penalties or excise taxes to which the
Indemnitee is entitled.

     7. Advancement of Expenses. The Expenses incurred by the Indemnitee in any Proceeding
shall be paid promptly by the Company in advance of the final disposition of the Proceeding at the
written request of the Indemnitee to the fullest extent permitted by applicable law; provided,
however, that the Indemnitee shall set forth in such request reasonable evidence that such Expenses
have been incurred by the Indemnitee in connection with such Proceeding, a statement that such
Expenses do not relate to any matter described in subparagraph 9(a) of this Agreement, and an
undertaking in writing to repay any advances if it is ultimately determined as provided in
subparagraph 8(b) of this Agreement that the Indemnitee is not entitled to indemnification under
this Agreement.

     8. Indemnification Procedure; Determination of Right to Indemnification.

          (a) Promptly after receipt by the Indemnitee of notice of the commencement of any Proceeding,
the Indemnitee shall, if a claim for indemnification or advancement of Expenses in respect thereof
is to be made against the Company under this Agreement, notify the Company of the commencement
thereof in writing. The omission to so notify the Company will not relieve the Company from any
liability which the Company may have to the Indemnitee under this Agreement unless the Company
shall have lost significant substantive or procedural rights with respect to the defense of any
Proceeding as a result of such omission to so notify.

          (b) The Indemnitee shall be conclusively presumed to have met the relevant standards of
conduct, if any, as defined by applicable law, for indemnification pursuant to this Agreement and
shall be absolutely entitled to such indemnification, unless a determination by clear and
convincing evidence is made that the Indemnitee has not met such standards by (i) the

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 Board of Directors by a majority vote of a quorum thereof consisting of Disinterested
Directors, (ii) the shareholders of the Company by majority vote of a quorum thereof consisting of
shareholders who are not parties to the Proceeding due to which a claim for indemnification is made
under this Agreement, (iii) Independent Legal Counsel as set forth in a written opinion (it being
understood that such Independent Legal Counsel shall make such determination only if the quorum of
Disinterested Directors referred to in clause (i) of this subparagraph 8(b) is not obtainable or if
the Board of Directors of the Company by a majority vote of a quorum thereof consisting of
Disinterested Directors so directs), or (iv) a court of competent jurisdiction; provided, however,
that if a Change of Control shall have occurred and the Indemnitee so requests in writing, such
determination shall be made only by a court of competent jurisdiction.

          (c) If a claim for indemnification or advancement of Expenses under this Agreement is not paid
by the Company within thirty (30) days after receipt by the Company of written notice thereof, the
rights provided by this Agreement shall be enforceable by the Indemnitee in any court of competent
jurisdiction. Such judicial proceeding shall be made de novo. The burden of proving by clear and
convincing evidence that indemnification or advances are not appropriate shall be on the Company.
Neither the failure of the directors or shareholders of the Company or Independent Legal Counsel to
have made a determination prior to the commencement of such action that indemnification or
advancement of Expenses is proper in the circumstances because the Indemnitee has met the
applicable standard of conduct, if any, nor an actual determination by the directors or
shareholders of the Company or Independent Legal Counsel that the Indemnitee has not met the
applicable standard of conduct shall be a defense to an action by the Indemnitee or create a
presumption for the purpose of such an action that the Indemnitee has not met the applicable
standard of conduct. The termination of any Proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself (i) create a
presumption that the Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in the best interests of the Company and/or its shareholders, and, with respect to
any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was
unlawful or (ii) otherwise adversely affect the rights of the Indemnitee to indemnification or
advancement of Expenses under this Agreement, except as may be provided herein. The Company further
agrees to stipulate in any such judicial proceeding that the Company is bound by all the provisions
of this Agreement and is precluded from making any assertion to the contrary.

          (d) If a court of competent jurisdiction shall determine that the Indemnitee is entitled to
any indemnification or advancement of Expenses hereunder, the Company shall pay all Expenses
actually and reasonably incurred by the Indemnitee in connection with such adjudication (including,
but not limited to, any appellate proceedings). The Indemnitee’s Expenses incurred in connection
with any Proceeding concerning the Indemnitee’s right to indemnification or advancement of Expenses
in whole or in part pursuant to this Agreement shall also be indemnified by the Company, regardless
of the outcome of such a Proceeding, to the fullest extent permitted by applicable law and the
Company’s Articles.

          (e) With respect to any Proceeding for which indemnification or advancement of Expenses is
requested, the Company will be entitled to participate therein at its own expense and, except as
otherwise provided below, to the extent that it may wish, the Company may assume the defense
thereof, with counsel reasonably satisfactory to the Indemnitee. After notice from the Company to
the Indemnitee of its election to assume the defense of a Proceeding, the

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 Company will not be liable to the Indemnitee under this Agreement for any Expenses
subsequently incurred by the Indemnitee in connection with the defense thereof, other than as
provided below. The Company shall not settle any Proceeding in any manner which would impose any
penalty or limitation on the Indemnitee without the Indemnitee’s written consent. The Indemnitee
shall have the right to employ his own counsel in any Proceeding, but the fees and expenses of such
counsel incurred after notice from the Company of its assumption of the defense of the Proceeding
shall be at the expense of the Indemnitee, unless (i) the employment of counsel by the Indemnitee
has been authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense
of a Proceeding, or (iii) the Company shall not in fact have employed counsel to assume the defense
of a proceeding, in each of which cases the fees and expenses of the Indemnitee’s counsel shall be
advanced by the Company. The Company shall not be entitled to assume the defense of any Proceeding
brought by or on behalf of the Company or as to which the Indemnitee has reasonably concluded that
there may be a conflict of interest between the Company and the Indemnitee.

     9. Limitations on Indemnification. No payments pursuant to this Agreement shall be
made by the Company:

          (a) To indemnify or advance funds to the Indemnitee for Expenses with respect to (i)
Proceedings initiated or brought voluntarily by the Indemnitee and not by way of defense, except
with respect to Proceedings brought to establish or enforce a right to indemnification under this
Agreement or any other statute or law or otherwise as required under applicable law or (ii)
Expenses incurred by the Indemnitee in connection with preparing to serve or serving, prior to a
Change in Control, as a witness in cooperation with any party or entity who or which has threatened
or commenced any action or proceeding against the Company, or any director, officer, employee,
trustee, agent, representative, subsidiary, parent corporation or affiliate of the Company, but
such indemnification or advancement of Expenses in each such case may be provided by the Company if
the Board of Directors finds it to be appropriate;

          (b) To indemnify the Indemnitee for any Expenses, judgments, fines, interest or penalties, or
excise taxes assessed with respect to any employee benefit or welfare plan, and sustained in any
Proceeding for which payment is actually made to the Indemnitee under a valid and collectible
insurance policy, except in respect of any excess beyond the amount of payment under such
insurance;

          (c) To indemnify the Indemnitee for any Expenses, judgments, fines, expenses or penalties
sustained in any Proceeding for an accounting of profits made from the purchase or sale by the
Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Act or
similar provisions of any foreign or United States federal, state or local statute or regulation;

          (d) To indemnify the Indemnitee for any Expenses, judgments, fines, interest or penalties, or
excise taxes assessed with respect to any employee benefit or welfare plan, for which the
Indemnitee is indemnified by the Company otherwise than pursuant to this Agreement;

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          (e) To indemnify the Indemnitee for any Expenses (including without limitation any Expenses
relating to a Proceeding attempting to enforce this Agreement), judgments, fines, interest or
penalties, or excise taxes assessed with respect to any employee benefit or welfare plan, on
account of the Indemnitee’s conduct if such conduct shall be finally adjudged to have been
knowingly fraudulent, deliberately dishonest or willful misconduct, including, without limitation,
breach of the duty of loyalty; or

          (f) If a court of competent jurisdiction finally determines that any indemnification hereunder
is unlawful.

     10. Continuation of Indemnification. All agreements and obligations of the Company
contained herein shall continue during the period that the Indemnitee is a director of the Company
(or is or was serving at the request of the Company as an agent of another enterprise, foreign or
domestic) and shall continue thereafter so long as the Indemnitee shall be subject to any possible
Proceeding by reason of the fact that the Indemnitee was a director of the Company or serving in
any other capacity referred to in this Paragraph 10.

     11. Indemnification Hereunder Not Exclusive. The indemnification provided by this
Agreement shall not be deemed to be exclusive of any other rights to which the Indemnitee may be
entitled under the Company’s Articles, any agreement, vote of shareholders or vote of Disinterested
Directors, provisions of applicable law, or otherwise, both as to action or omission in the
Indemnitee’s official capacity and as to action or omission in another capacity on behalf of the
Company while holding such office.

     12. Successors and Assigns.

          (a) This Agreement shall be binding upon, and shall inure to the benefit of, the Indemnitee
and the Indemnitee’s heirs, executors, administrators and assigns, whether or not the Indemnitee
has ceased to be a director, and the Company and its successors and assigns. Upon the sale of all
or substantially all of the business, assets or share capital of the Company to, or upon the merger
of the Company into or with, any corporation, partnership, joint venture, trust or other person,
this Agreement shall inure to the benefit of and be binding upon both the Indemnitee and such
purchaser or successor person. Subject to the foregoing, this Agreement may not be assigned by
either party without the prior written consent of the other party hereto.

          (b) If the Indemnitee is deceased and is entitled to indemnification under any provision of
this Agreement, the Company shall indemnify the Indemnitee’s estate and the Indemnitee’s spouse,
heirs, executors, administrators and assigns against, and the Company shall, and does hereby agree
to assume, any and all Expenses actually and reasonably incurred by or for the Indemnitee or the
Indemnitee’s estate, in connection with the investigation, defense, appeal or settlement of any
Proceeding. Further, when requested in writing by the spouse of the Indemnitee, and/or the
Indemnitee’s heirs, executors, administrators and assigns, the Company shall provide appropriate
evidence of the Company’s agreement set out herein to indemnify the Indemnitee against and to
itself assume such Expenses.

     13. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee,

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who shall execute all documents required and shall do all acts that may be necessary to secure
such rights and to enable the Company effectively to bring suit to enforce such rights.

     14. Severability. Each and every paragraph, sentence, term and provision of this
Agreement is separate and distinct so that if any paragraph, sentence, term or provision thereof
shall be held to be invalid, unlawful or unenforceable for any reason, such invalidity,
unlawfulness or unenforceability shall not affect the validity, unlawfulness or enforceability of
any other paragraph, sentence, term or provision hereof. To the extent required, any paragraph,
sentence, term or provision of this Agreement may be modified by a court of competent jurisdiction
to preserve its validity and to provide the Indemnitee with the broadest possible indemnification
permitted under applicable law. The Company’s inability, pursuant to a court order or decision, to
perform its obligations under this Agreement shall not constitute a breach of this Agreement.

     15. Savings Clause. If this Agreement or any paragraph, sentence, term or provision
hereof is invalidated on any ground by any court of competent jurisdiction, the Company shall
nevertheless indemnify the Indemnitee as to any Expenses, judgments, fines, interest or penalties,
or excise taxes assessed with respect to any employee benefit or welfare plan, which are incurred
with respect to any Proceeding to the fullest extent permitted by any (a) applicable paragraph,
sentence, term or provision of this Agreement that has not been invalidated or (b) applicable law.

     16. Interpretation; Governing Law. This Agreement shall be construed as a whole and
in accordance with its fair meaning and any ambiguities shall not be construed for or against
either party. Headings are for convenience only and shall not be used in construing meaning. This
Agreement shall be governed and interpreted in accordance with the laws of the State of New York
without regard to the conflict of laws principles thereof.

     17. Amendments. No amendment, waiver, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by the party against whom enforcement is
sought. The indemnification rights afforded to the Indemnitee hereby are contract rights and may
not be diminished, eliminated or otherwise affected by amendments to the Company’s Articles, or by
other agreements, including directors’ and officers’ liability insurance policies, of the Company.

     18. Counterparts. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective when one or more
counterparts have been signed by each party and delivered to the other.

     19. Notices. Any notice required to be given under this Agreement shall be directed
to China Hydroelectric Corporation at 420 Lexington Avenue, Suite 860, New York, NY 10170,
Attention: Chief Financial Officer, and to the Indemnitee at his or her address as recorded on the
Company’s register of directors, or to such other address as either shall designate to the other in
writing.

[The remainder of this page is intentionally left blank.]

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     IN WITNESS WHEREOF, the parties have executed this Indemnification Agreement as of the date
first written above.

	 	 	 	 	 
	INDEMNITEE

 	 	 
	
 	 	 
	Name:  	 	 	 
	 	 	 	 
	 
	CHINA HYDROELECTRIC CORPORATION

 	 	 
	By:  	 	 	 
	Name:  	 	 	 
	Title:  	 	 	 

[Signature Page to Indemnification Agreement]EX-10.4

Exhibit 10.4

Sino-Foreign Equity Joint Venture Contract

CHAPTER I GENERAL PROVISIONS

China Hydroelectric Corporation successfully acquired fifty percent (50%) of the equity interests
of Yunhe County Shapulong Hydropower Generation Co., Ltd. held by Yunhe County Yunhe State Assets
Management Co., Ltd. at Zhejiang Property & Stock Exchange on October 12, 2007. In accordance with
the Law of the People’s Republic of China on Sino-Foreign Equity Joint Ventures, the Implementation
Regulations of the Law of the People’s Republic of China on Sino-Foreign Equity Joint Ventures and
other relevant laws and regulations of the People’s Republic of China (the “PRC”), China
Hydroelectric Corporation, Zhejiang Guangning Hydroelectric Development Co., Ltd. and Zhejiang
Province Water Resources and Hydroelectric Investment Group Co., Ltd., after friendly consultations
and on the principles of equality and mutual benefits, have agreed to change the legal form of
Yunhe County Shapulong Hydropower Generation Co., Ltd. into a Sino–foreign equity joint venture.
The Parties hereto have entered into this Contract in Yunhe County, Lishui City, Zhejiang Province
on November 6, 2007.

CHAPTER II PARTIES TO THIS CONTRACT

	 	 	 
	Article 1

	 	Parties to this Contract are as follows:

	 	 	 
	Foreign Party:

	 	China Hydroelectric Corporation (hereinafter referred to as “Party A”)
	 
	 	 
	 

	 	Registered Address: 558 Lime Rock Road, Lime Rock, Connecticut 06039
	 
	 	 
	 

	 	Incorporation Place: Cayman Islands
	 
	 	 
	 

	 	Legal Representative: John D. Kuhns
	 
	 	 
	 

	 	Position: Chairman
	 
	 	 
	 

	 	Nationality: United States of America

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	Chinese Parties:

	 	Zhejiang Guangning Hydroelectric Development Co., Ltd.
(hereinafter referred to as “Party B”)
	 
	 	 
	 

	 	Registered Address: No. 157-1, Liqing Road, Lishui City, China
	 
	 	 
	 

	 	Legal Representative: Lu Ning
	 
	 	 
	 

	 	Position: Chairman
	 
	 	 
	 

	 	Nationality: China
	 
	 	 
	 

	 	Zhejiang Water Resources and Hydroelectric Investment
Group Co., Ltd. (hereinafter referred to as “Party C”)
	 
	 	 
	 

	 	Registered Address: No. 195, Kaixuan Road, Hangzhou City, China
	 
	 	 
	 

	 	Legal Representative: Ling Shi Shan
	 
	 	 
	 

	 	Position: General Manager
	 
	 	 
	 

	 	Nationality: China

CHAPTER III THE JOINT VENTURE COMPANY

	 	 	 
	Article 2

	 	In accordance with the Law of the PRC on Sino-Foreign
Equity Joint Ventures and other relevant laws and
regulations of the PRC, Party A, Party B and Party C have
agreed to change the legal form of Yunhe County Shapulong
Hydropower Generation Co., Ltd. (hereinafter referred to
as the “JV Company”) into a Sino-foreign equity joint
venture.
	 
	 	 
	Article 3

	 	The name of the JV Company is “” in Chinese
and “Yunhe County Shapulong Hydropower Generation Co.,
Ltd.” in English.
	 
	 	 
	 

	 	The legal address of the JV Company is
No. 42, Xinhua Street, Yunhe Town, Yunhe County, Lishui
City, Zhejiang Province.
	 
	 	 
	Article 4

	 	The JV Company shall be a Chinese legal person and all
activities of the JV Company shall be complied with the
laws, decrees and relevant regulations of the PRC.

2

 

	 	 	 
	Article 5

	 	The legal form of the JV Company shall be a limited liability company. The
liability of Party A, Party B and Party C for the debts and obligations of the JV
Company shall be limited to their respective capital contributions to the
registered capital. The profits, risks and losses of the JV Company shall be
shared and borne by the Parties in proportion to their capital contributions to
the registered capital.

CHAPTER IV PURPOSE, SCOPE AND SCALE OF PRODUCTION AND OPERATION

	 	 	 
	Article 6

	 	The purpose of Party A, Party B and Party C in establishing the JV Company shall
be: to enhance economic co-operation and technical exchanges, to reinforce the
operation and management of the JV Company by adopting advanced and scientific
management methods, so as to improve economic results and ensure satisfactory
economic benefits for each investor.
	 
	 	 
	Article 7

	 	The business scope of the JV Company shall be: hydropower generation and operation.
	 
	 	 
	Article 8

	 	The production scale of the JV Company shall be as follows: 
	 
	 

	 	Production Scale: total installed capacity of 25,000 KW (2X12,500 KW).

CHAPTER V TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL

	 	 	 
	Article 9

	 	The total amount of investment of the JV Company shall be RMB 70,000,000.
	 
	 	 
	Article 10

	 	Party A shall procure the equity interests by acquiring 50% of the state-owned

3

 

	 	 	 
	 

	 	equity interests of Yunhe County Shapulong Hydropower Generation Co., Ltd. held
by Yunhe County Yunhe State Assets Management Co., Ltd.
	 
	 	 
	Article 11

	 	The total amount of capital contributions paid by Party A, Party B and Party C is
RMB35,340,000, which shall be the registered capital of the JV Company. Among
which, Party A shall contribute in US Dollars equivalent to RMB17,670,000,
representing 50% of the registered capital of the JV Company, Party B shall
contribute in the amount of RMB13,075,800, representing 37% of the registered
capital of the JV Company, and Party C shall contribute in the amount of
RMB4,594,200, representing 13% of the registered capital of the JV Company.
	 
	 	 
	Article 12

	 	All Parties shall pay their respective capital contributions in cash and the
capital contribution from Party A shall be paid up within 90 days from the
issuance date of the business license of the JV Company.
	 
	 	 
	Article 13

	 	In the event that Party A, Party B or Party C intends to transfer its capital
contributions to the JV Company, in whole or partially, to any third party, the
consent from other Parties and approval from the approval authorities shall be
obtained.
	 
	 	 
	 

	 	Where a Party intends to transfer all or part of its capital
contributions, other Parties shall have the pre-emptive right to purchase such
capital contributions.

CHAPTER VI RESPONSIBILITIES OF THE PARTIES

	 	 	 
	Article 14

	 	Party A, Party B and Party C shall jointly accomplish the following obligations:
	 
	 

	 	To change the legal form from a domestic-funded enterprise into a Sino-foreign
equity joint venture, to apply for approvals and registrations and to procure the
business license etc., from relevant PRC governmental authorities in charge. To
handle other matters authorized by the JV Company.

4

 

CHAPTER VII SALES OF PRODUCTS

	 	 	 
	Article 15

	 	All electric products of the JV Company shall be sold within the domestic
market of the PRC without any export.

CHAPTER VIII BOARD OF DIRECTORS

	 	 	 
	Article 16

	 	The registration date of the JV Company shall be deemed as the
establishment date of the Board of Directors of the JV Company.
	 
	 	 
	Article 17

	 	The Board of Directors of the JV Company shall comprise six (6) directors,
among whom, three (3) directors shall be appointed by Party A, two (2)
directors shall be appointed by Party B, and one (1) director shall be
appointed by Party C. The Chairman of the Board of Directors shall be
appointed by Party A. The Chairman and directors shall serve for a term of
three (3) years and may serve consecutive terms if reappointed by the
Party that originally appointed him/her.
	 
	 	 
	Article 18

	 	The Board of Directors shall be the highest authority of the JV Company
and shall have the power to determine all major decisions pertaining to
the JV Company. The ordinary resolution of the Board of Directors shall
require the approval of more than two thirds of all directors of the Board
of Directors. The unanimous approval of all six (6) directors shall be
required for any of the following matters:
	 
	 	 
	 

	 	1) any amendment to the articles of association of the JV Company;
	 
	 	 
	 

	 	2) the termination or dissolution of the JV Company;
	 
	 	 
	 

	 	3) any increase or decrease of the JV Company’s registered capital;
	 
	 	 
	 

	 	4) the merger or spin-off of the JV Company;
	 
	 	 
	 

	 	5) any external investment by the JV Company;
	 
	 	 
	 

	 	6) any external security provided by the JV Company (excluding the security

5

 

	 	 	 
	 

	 	     provided for the debts of the JV Company).
	 
	 	 
	 

	 	The Board of Directors shall adopt a resolution within three (3) days
after the meeting of the Board of Directors has been held. Any resolution
of the Board of Directors shall not prejudice any legal rights or
interests of the Parties.
	 
	 	 
	Article 19

	 	The Chairman of the Board of Directors shall serve as the legal
representative of the JV Company. In the event that the Chairman of the
Board of Directors or his/her authorized representative is unable to
perform the obligations for any reason, he/she may temporarily authorize
other directors to act as representative.
	 
	 	 
	Article 20

	 	The meeting of the Board of Directors shall be convened at least once each
year, which shall be convened and presided over by the Chairman of the
Board of Directors. Being proposed by more than one third of the
directors, the Chairman of the Board of Directors may convene an interim
meeting. The meeting minutes shall be kept for record.

CHAPTER IX MANAGEMENT ORGANIZATION

	 	 	 
	Article 21

	 	The JV Company shall establish a management organization, which shall be
in charge of the day-to-day operation and management of the JV Company.
The management organization shall have one (1) General Manager and one (1)
Deputy General Manager. General Manager and Deputy General Manager shall
be determined and appointed by the Board of Directors, and the office term
shall be determined by the Board of Directors.
	 
	 	 
	Article 22

	 	General Manager shall exercise his/her powers and take corresponding
responsibilities in accordance with the articles of association of the JV
Company. The Board of Directors shall carry out budget and authorization
management over the management personnel of the JV Company.

6

 

	 	 	 
	Article 23

	 	In case General Manager or Deputy General Manager commits jobbery or
serious dereliction of duty, the Board of Directors may remove him/her at
any time by passing a resolution.

CHAPTER X PROCUREMENT OF EQUIPMENTS

	 	 	 
	Article 24

	 	Under the same terms and conditions, the raw materials, fuels, parts and
components, transportation vehicles and office supplies, etc. required by
the JV Company shall be firstly purchased within China.
	 
	 	 
	Article 25

	 	In case the JV Company entrusts Party A to purchase equipments from the
overseas market, the representatives from other Parties shall be invited
to attend.

CHAPTER XI TECHNOLOGICAL UPGRADING AND INFRASTRUCTURE CONSTRUCTION

	 	 	 
	Article 26

	 	In case the JV Company intends to carry out the technological upgrading,
an Infrastructure Construction Office shall be established under the
leadership of the Board of Directors during the construction period. The
Infrastructure Construction Office shall comprise three (3) members,
including one (1) Director-General and two (2) Deputy Director-General,
all of whom shall be determined and appointed by the Board of Directors.
	 
	 	 
	Article 27

	 	The Infrastructure Construction Office shall be responsible for examining
the project design, drafting the project construction contracting
agreements, organizing the procurement and acceptance of relevant
equipments and materials, etc., formulating the overall schedule for the
project construction, working out the payment schedule, controlling the
financial expenditures and final accounts of the project, formulating
relevant management measures, and keeping and tidying up the documents,
drawings, archives and materials during the construction process, etc.

7

 

	 	 	 
	Article 28

	 	Party A and Party B shall designate several technicians to form
a technician team, which, under the leadership of the
Infrastructure Construction Office, shall be responsible for
the examination, supervision, inspection and acceptance, etc.
of the project design, project quality, equipments and
materials and introduction of technologies.
	 
	 	 
	Article 29

	 	Subject to the consent of the Parties, the organizations,
remunerations and expenditure of the staff of the
Infrastructure Construction Office shall be included in the
project budget.
	 
	 	 
	Article 30

	 	Subject to the approval of the Board of Directors, the
Infrastructure Construction Office shall be dissolved after the
project construction has been completed and the relevant
delivery has been accomplished.

CHAPTER XII LABOUR MANAGEMENT

	 	 	 
	Article 31

	 	In accordance with the Provisions on Labor Management of
Sino-Foreign Equity Joint Ventures of the PRC and its
implementation measures and subject to the scheme formulated by
the Board of Directors, matters relating to the recruitment,
employment, dismissal, resignation, wages, labor insurances,
welfare and rewards and punishment of the employees of the JV
Company shall be stipulated in the labor contracts entered into
by and between the JV Company and its Trade Union or the JV
Company and respective individual employees. After the labor
contracts have been concluded, the JV Company shall file those
contracts with the local labor administration authority for
record.
	 
	 	 
	Article 32

	 	The remunerations of all employees (including senior officers)
of the JV Company shall be determined on the basis of the local
economic and social

8

 

	 	 	 
	 

	 	development level. The Board of Directors shall have the right
to determine the standards for social insurances, welfare and
traveling expenses, etc. of employees of the JV Company.
	 
	 	 
	Article 33

	 	The salaries and other justified income of foreign employees of
the JV Company may be remitted abroad in accordance with the
regulations on foreign exchange control after payment of
individual income tax pursuant to PRC tax laws.

CHAPTER XIII TAXATION, FINANCIAL AFFAIRS, AUDITING AND PROFITS

	 	 	 
	Article 34

	 	The JV Company shall establish its financial and accounting
system in accordance with relevant laws, administrative
regulations and rules issued by the Ministry of Finance of the
State Council.
	 
	 	 
	 

	 	The JV Company shall prepare the financial and
accounting reports at the end of each fiscal year and engage an
accounting firm to do auditing in accordance with law.
	 
	 	 
	 

	 	The
financial and accounting reports shall be prepared in
accordance with laws, administration regulations and rules
issued by the Ministry of Finance of the State Council.
	 
	 	 
	Article 35

	 	When the JV Company distributes its after-tax profits of
current year, it shall allocate 10% of the profits to the
statutory reserve fund of the JV Company. The JV Company may
cease to allocate such fund when the accumulated amount of the
balance of the statutory reserve fund has reached 50% of the
registered capital of the JV Company.
	 
	 	 
	 

	 	In the event that the
statutory reserve fund of the JV Company is not sufficient to
make up the losses of the JV Company suffered in the previous
years, the current year’s profits shall be firstly used to make
up the losses prior to the allocation of the statutory reserve
fund pursuant to the provisions of the preceding paragraph.

9

 

	 	 	 
	 

	 	After the allocation of the statutory reserve fund from the
after-tax profits, the JV Company may, upon the resolution of
the Board of Directors, allocate optional reserve fund from the
after-tax profits.
	 
	 	 
	 

	 	After the losses have been made up and the
reserve funds have been allocated, the remaining profits of the
JV Company shall be distributed in proportion to the respective
capital contributions to the registered capital of the JV
Company.
	 
	 	 
	 

	 	The reserve funds of the JV Company shall be used to
make up losses, expand the production and business scale or
increase the registered capital of the JV Company. However, the
capital reserve fund shall not be used for making up the losses
of the JV Company.
	 
	 	 
	 

	 	Where the statutory reserve fund is used to
increase the registered capital, the balance of the statutory
reserve fund shall be not less than 25 % of the registered
capital prior to such increase.
	 
	 	 
	Article 36

	 	According to the articles of association of the JV Company, the
engagement or dismissal of the accounting firm carrying out the
auditing of the JV Company shall be determined by the Board of
Directors. When the Board of Directors votes on the dismissal
of the accounting firm, such accounting firm shall be allowed
to state its own opinions.
	 
	 	 
	 

	 	The JV Company shall provide to the
accounting firm with genuine and complete accounting vouchers,
account books, financial and accounting reports and other
accounting materials, and shall not refuse, conceal or make any
false statements.
	 
	 	 
	Article 37

	 	Except for the statutory accounting books, the JV Company shall
not set up any other accounting books.
	 
	 	 
	 

	 	The assets of the JV
Company shall not be deposited under any individual’s account.
	 
	 	 
	Article 38

	 	The fiscal year of the JV Company shall be from January 1 to
December 31 of each calendar year. All accounting vouchers,
receipts, statements and books of the

10

 

	 	 	 
	 

	 	JV Company shall be written in Chinese.
	 
	 	 
	Article 39

	 	Within the first three (3) months of each operating year,
General Manager shall organize to prepare for the balance
sheet, profit and loss statement and profit distribution scheme
for the previous year, which shall be submitted to the Board of
Directors for examination. The profits or losses of the JV
Company shall be distributed to the Parties in proportion to
their respective capital contributions to the registered
capital of the JV Company.

CHAPTER XIV BUSINESS DURATION OF THE JV COMPANY

	 	 	 
	Article 40

	 	The business duration of the JV Company shall be thirty (30)
years, commencing from the date on which the business license
of the JV Company is issued. Being proposed by any Party and
approved by more than two thirds of the directors of the Board
of Directors, the JV Company may apply to the Ministry of
Foreign Trade and Economic Cooperation (or its authorized
approval authority) for the extension of the business duration
of the JV Company six (6) months prior to the expiration of the
business duration.

CHAPTER XV DISPOSAL OF ASSETS UPON THE EXPIRATION OF BUSINESS DURATION

	 	 	 
	Article 41

	 	In case of expiration of business duration or early termination
of business duration, liquidation of the JV Company shall be
carried out in accordance with law. After liquidation, the
assets of the JV Company shall be distributed to Party A, Party
B and Party C in proportion to their respective contributions
to the registered capital of the JV Company.

11

 

CHAPTER XVI INSURANCE

	 	 	 
	Article 42

	 	All types of insurances of the JV Company shall be taken out
with insurance companies of China. The insurance types, insured
amount and insurance period, etc. shall be determined by the
Board of Directors of the JV Company in accordance with
relevant regulations of insurance companies of China.

CHAPTER XVII AMENDMENT, MODIFICCATION AND TERMINATION OF THIS CONTRACT

	 	 	 
	Article 43

	 	Any amendment to this Contract and its appendices shall not
come into effect unless such amendment is made in a written
agreement signed by Party A, Party B and Party C and approved
by the approval authority.
	 
	 	 
	Article 44

	 	In the event that this Contract cannot be performed due to an
event of Force Majeure, or the JV Company incurs consecutive
losses and is unlikely to recover, upon the unanimous approval
of the Board of Directors and the approval from the original
approval authority, the business duration of the JV Company can
be terminated and this Contract can be rescinded early.
	 
	 	 
	Article 45

	 	Due to non-performance of obligations under this Contract or
the articles of associations, or material breach of any
provisions of this Contract or the articles of association by
any Party, the JV Company cannot be operated or cannot reach
its business objectives stipulated in this Contract, which
shall be deemed that the breaching Party has severely
terminated this Contract. Except for claiming for compensation
against the defaulting Party, the counterparty shall be
entitled to apply to the original approval authority for the
termination of this Contract in accordance with this Contract.
In the event that all Parties hereto agree to continue the
operation of the JV Company, the defaulting Party shall
compensate the economic losses incurred by the JV Company.

12

 

CHAPTER XVIII LIABILITY FOR BREACH OF CONTRACT

	 	 	 
	Article 46

	 	Where any Party fails to pay its capital contribution within
the time limit and in the amount prescribed in Chapter V
hereof, commencing from the first overdue month, the defaulting
Party shall pay 1% of its capital contribution to the
non-defaulting Party (ies) as liquidated damages for each
overdue month. In the event that the defaulting Party fails to
pay the overdue capital contribution up to three (3) months,
besides requiring the defaulting Party to pay the accumulated
1% of its capital contribution to the non-defaulting Party
(ies) as liquidated damages, the non-defaulting Party shall be
entitled to terminate this Contract in accordance with Article
45 hereof and claim against the defaulting Party for
compensation for the losses.
	 
	 	 
	Article 47

	 	Where this Contract and its appendices cannot be performed due
to any Party’s default, the defaulting Party shall assume the
liabilities for breach of contract; where all Parties are in
breach, on the basis of the actual situation, each Party shall
be liable for breach of contract in proportion to its fault.

CHAPTER XIX FORCE MAJEURE

	 	 	 
	Article 48

	 	Due to the occurrence of Force Majeure events, including
without limitation to earthquakes, typhoons, flood, fire, war
or any other incidents which cannot be foreseen and the
occurrence and results of which cannot be prevented or avoided,
the performance of this Contract is directly influenced or
cannot be performed in accordance with the provisions hereof,
the Party claiming the occurrence of Force Majeure shall
promptly inform the other Party (ies) by telegram, and within
fifteen (15) days thereafter, it shall provide details of the
Force Majeure and supporting documents which are sufficient to
evidence that this Contract cannot be performed, or part of
this Contract cannot be performed, or the performance of this
Contract needs to be postponed. The aforesaid supporting
documents shall be issued by the public notary organization
located at the place

13

 

	 	 	 
	 

	 	where the Force Majeure event occurs. On the basis of the
influence of the Force Majeure event on the performance of this
Contract, the Parties shall negotiate with each other to
determine whether to terminate this Contract or to partially
release the Party claiming the occurrence of Force Majeure from
the obligations of performing this Contract, or to postpone the
performance of this Contract.

CHAPTER XX APPLICABLE LAW

	 	 	 
	Article 49

	 	The formation, validity, interpretation and performance of this
Contract, and resolution of any dispute, shall be governed by
the PRC law.

CHAPTER XXI RESOLUTION OF DISPUTES

	 	 	 
	Article 50

	 	Any dispute arising out of or in connection with this Contract
shall firstly be resolved through friendly consultation. In the
event that the dispute cannot be resolved through consultation,
any Party may submit such dispute to China International
Economic and Trade Arbitration Commission for arbitration in
accordance with its then prevailing arbitration rules. The
arbitration place shall be in Shanghai, China.
	 
	 	 
	Article 51

	 	During the arbitration process, this Contract shall be
continued to be performed except for the matters under dispute.

CHAPTER XXII LANGUAGE

	 	 	 
	Article 52

	 	This Contract is written in both the Chinese language and the
English language which shall have the same legal effect. In
case of any inconsistency between the Chinese text and the
English text, the Chinese text shall prevail.

14

 

CHAPTER XXIII EFFECTIVENESS AND MISCELLANEOUS

	 	 	 
	Article 53

	 	This Contract shall be subject to the approval by the Ministry
of Foreign Trade and Economic Cooperation of the PRC (or its
authorized approval authority), and shall come into effect from
the approval date.
	 
	 	 
	Article 54

	 	This Contract was entered into by and among the legal
representatives or authorized representatives of Party A, Party
B and Party C in Yunhe County, Lishui City, Zhejiang Province,
China on November 6, 2007.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

15

 

Signing Page:

Party A: China Hydroelectric Corporation

Authorized Representative: (Signature)

Party B: Zhejiang Guangning Hydroelectric Development Co., Ltd.

Legal Representative or Authorized Representative: (Signature)

Party C: Zhejiang Province Water Resources and Hydroelectric Investment Group Co., Ltd.

Legal Representative or Authorized Representative: (Signature)

16

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