Document:

exv4w70

Exhibit 4.70

BETWEEN

DEHONG QINRUI (GROUP) POWER INVESTMENT AND

DEVELOPMENT CO., LTD.

AND

YUNNAN HUABANG ELECTRIC POWER DEVELOPMENT

CO., LTD.

SHARE TRANSFER CONTRACT

For

YINGJIANG COUNTY QINRUI HUSAHE POWER CO., LTD.

 

 

CONTENT

	 	 	 	 	 

	CHAPTER I DEFINITIONS
	 	 	4	 
	Article 1 Definitions
	 	 	4	 
	 
	 	 	 	 
	CHAPTER II SALE EQUITY STAKE
	 	 	5	 
	Article 2 Transfer of the Sale Equity Stake
	 	 	5	 
	Article 3 Transfer Price
	 	 	5	 
	Article 4 Conditions Precedent for the Payment for the Transfer Price
	 	 	6	 
	Article 5 Payment
	 	 	8	 
	Article 6 Taxes Payable under the Transfer of Sale Equity Stake
	 	 	9	 
	 
	 	 	 	 
	CHAPTER III REPRESENTATIONS AND WARRANTIES BY BOTH PARTIES
	 	 	9	 
	Article 7 Representations and Warranties by both Parties
	 	 	9	 
	 
	 	 	 	 
	CHAPTER IV DISCLOSURES, REPRESENTATIONS AND WARRANTIES BY THE TRANSFEROR
	 	 	9	 
	Article 8 Disclosures, Representations and Warranties by the Transferor
	 	 	9	 
	Article 9 General Representations and Warranties by The Transferor
	 	 	10	 
	Article 10 Ownership
	 	 	11	 
	Article 11 The Company and the Hydropower Station Project
	 	 	11	 
	 
	 	 	 	 
	CHAPTER V DISCLOSURES, REPRESENTATIONS AND WARRANTIES BY THE TRANSFEREE
	 	 	17	 
	Article 12 Disclosures, Representations and Warranties by The Transferee
	 	 	17	 
	 
	 	 	 	 
	CHAPTER VI DELIVERY
	 	 	18	 
	Article 13 Delivery
	 	 	18	 
	 
	 	 	 	 
	CHAPTER VII DEBT ARRANGEMENT AND EMPLOYEE RELOCATION
	 	 	21	 
	Article 14 Debt Arrangement
	 	 	21	 
	Article 15 Employees Relocation
	 	 	21	 
	 
	 	 	 	 
	CHAPTER VIII CONFIDENTIALITY
	 	 	22	 
	Article 16 Confidentiality
	 	 	22	 
	 
	 	 	 	 
	CHAPTER IX BREACH OF CONTRACT
	 	 	22	 
	Article 17 Liability for Breach of a Representation or Warranty
	 	 	22	 
	Article 18 Liability for Breach of Contract
	 	 	23	 
	 
	 	 	 	 
	CHAPTER X FORCE MAJEURE
	 	 	24	 
	Article 19 Force Majeure
	 	 	24	 
	 
	 	 	 	 
	CHAPTER XI RESOLUTION OF DISPUTES
	 	 	24	 
	Article 20 Arbitration
	 	 	24	 
	Article 21 Effect of Arbitral Award
	 	 	25	 
	Article 22 Continuation of Rights and Obligations
	 	 	25	 

1

 

	 	 	 	 	 

	CHAPTER XII APPLICABLE LAW
	 	 	25	 
	Article 23 Applicable Law
	 	 	25	 
	 
	 	 	 	 
	CHAPTER XIII MISCELLANEOUS
	 	 	25	 
	Article 24 Waiver
	 	 	25	 
	Article 25 Transfer
	 	 	25	 
	Article 26 Amendment
	 	 	26	 
	Article 27 Severability
	 	 	26	 
	Article 28 Language
	 	 	26	 
	Article 29 Validity of the Text and Appendices
	 	 	26	 
	Article 30 Notification
	 	 	27	 
	Article 31 The Entire Agreement
	 	 	27	 
	Appendix 1 Assets List of the Company
	 	 		 
	Appendix 2 List of Security
	 	 		 

2

 

SHARE TRANSFER CONTRACT

This Share Transfer Contract (hereinafter referred to as this “Contract”) was entered into by
and between the following parties in Beijing City and Luxi City China on March 2, 2010.

	(1)	 	Party A: Yunnan Huabang Electric Power Development Co., Ltd. (hereinafter referred as the
“Transferee”), a wholly foreign owned enterprise registered and established in accordance with
the laws of the People’s Republic of China, with the registration number of Qi Du Dian De Zong
Zi No. 000126, the registered address at Xingba (within Binglangjiang Power Station), Xincheng
Township, Yingjiang County, the legal representative of which is John D. Kuhns, whose
nationality is United States of America;
	 
	(2)	 	Party B: Dehong Qinrui (Group) Power Investment and Development Co., Ltd. (hereinafter
referred to as the “Transferor”), a limited liability company registered and established in
accordance with the laws of the People’s Republic of China, with the registration number of
533100100004182, the registered address at No.3, Upper Section of Bingwu Road (within the yard
of the original Dehong Prefecture Grain and Oil Machinery Plant), Mangshi Town, Luxi City, the
legal representative of which is Mr. Li Ziheng, whose nationality is Chinese.

The Transferor and the Transferee are hereinafter collectively referred to as “both Parties”, and
each of them is referred to as “a Party”.

WHEREAS:

	(1)	 	Yingjiang County Qinrui Husahe Power Co., Ltd. (hereinafter referred to as the “Company”) is
a company conducting the business of hydropower generation in China, with its registration
number of 533123100000579, the registered capital and the paid-up capital of which amount to
RMB 91,870,000;
	 
	(2)	 	The Transferor holds one hundred percent (100%) of the equity stake of the Company, and can
exercise all its rights as shareholder;
	 
	(3)	 	The Transferor is willing to transfer one hundred percent (100%) of the equity stake of the
Company held by it to the Transferee subject to the terms and conditions set out in this
Contract (hereinafter referred to as the “Sale Equity Stake”);
	 
	(4)	 	The Transferee is willing to acquire one hundred percent (100%) of the equity stake of the
Company held by the Transferor subject to the terms and conditions set out in this Contract.

For this purpose, after friendly consultations, on the principles of equality and mutual benefit,
both Parties hereto have reached the following agreements 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 China.

3

 

CHAPTER
I DEFINITIONS

Article 1 Definitions

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 Yingjiang County Qinrui Husahe Power Co., Ltd., a company registered
and established in accordance with the laws of China, with the registration number of
533123100000579, the registered capital and the paid-up capital of which amount to RMB
91,870,000, the registered address of which is at Mangxian Village (the former Husahe Cascade
IV Power Station), Nongzhang Town, Yingjiang County.

“Hydropower Station Project” refers to three (3) operating hydropower stations, namely, Husahe
Cascade III Hydropower Station, Husahe Cascade IV Hydropower Station and Mangxian Hydropower
Station, which are legally owned and operated by the Company, with the total installed capacity
of 18.7MW, among which, the installed capacity of Husahe Cascade III Hydropower Station is
3.2MW, the installed capacity of Husahe Cascade IV Hydropower Station is 14MW, and the
installed capacity of Mangxian Hydropower Station is 1.5MW.

“Claims” refer to claims, actions, demands, liabilities pronounced by judgments, damages
amounts, costs and expenses (including but not limited to legal costs and disbursements)
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 13.5 hereof.

“Transferor’s Bank Account” refers to the bank account opened by the Transferor in accordance
with the law under its own name for the purpose of this Contract to receive the transfer price
(as defined in Article 3.1 hereof) for the Sale Equity Stake.

“Encumbrance” means 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:

	 	(1)	 	Any interest or right granted or reserved in or over or affecting the Sale
Equity Stake for Transfer; or
	 
	 	(2)	 	The interest or right 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 form of encumbrance; or
	 
	 	(3)	 	Any security over the Sale Equity Stake for Transfer for the payment of a debt
or any other monetary obligation or the performance of any other obligation.

“Material Adverse Change” refers to

4

 

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

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

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

“Working Day” 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 SALE EQUITY STAKE

Article 2 Transfer of the Sale Equity Stake

Pursuant to the terms stipulated in this Contract, the Transferor agrees to transfer to the
Transferee and the Transferee agrees to accept from the Transferor the Sale Equity Stake
being one hundred percent (100%) of the equity stake of the Company with all the rights and
obligations of and attached to the Sale Equity Stake including, without limiting the
generality thereof, all the rights to receive dividends and receive or subscribe the bonus
stock or shares paid or issued by the Company and free of any Claims or Encumbrances.

Article 3 Transfer Price

	3.1	 	The Transferor and the Transferee after consultations have finally determined that
the price for the Sale Equity Stake shall be agreed at RMB 106,000,000 (hereinafter
referred to as the “Transfer Price”).
	 
	3.2	 	The Transfer Price shall be paid in three (3) installments:

	 	(1)	 	Within seven (7)Working Days after all conditions precedent prescribed in
Article 4.1 hereof have been fully satisfied, the Transferee shall pay the first
installment of the Transfer Price in the amount of RMB 53,000,000 to the Transferor.
Considering the deposit, in the amount of RMB 1,000,000 as agreed for the transaction
contemplated herein, has been paid by the Transferee to the bank account of the
Transferor, this deposit shall be set off as part of the Transfer Price and thus, the
Transferee only needs to pay to the Transferor the price in the amount of RMB
52,000,000.
	 
	 	(2)	 	Within twenty (20) Working Days after all conditions precedent prescribed in

5

 

	 	 	 	Article 4.2 hereof have been fully satisfied, the Transferee shall pay the second
installment of the Transfer Price in the amount of RMB50,000,000 to the Transferor. In
the event the Transferee fails to pay the second installment within twenty (20)
Working Days, the Transferee shall pay interest to the Transferor calculated on 110%
of the one-year national loan interest of the same period commencing from the date of
deferred payment. Furthermore, the maximum period for the deferred payment shall not
exceed three (3) months.
	 
	 	(3)	 	The balance of the Transfer Price in the amount of RMB3,000,000 shall serve
as the guarantee fund for securing the Transferor’s implementation of all its
obligations under this Contract, with the guarantee period expiring after all
conditions precedent prescribed in Article 4.3 hereof having been fully satisfied. As
of the expiration date of the guarantee period, the Transferee shall refund such
balance to the Transferor.

Article 4 Conditions Precedent for the Payment for the Transfer Price

	4.1	 	Under this Contract, the conditions precedent for the Transferee to pay the first
installment of the Transfer Price in the amount of RMB 53,000,000 are as follows:

	 	(1)	 	The application documents of alteration registration for the Sale Equity
Stake have been submitted to the competent administration for industry and commerce
and the acceptance document issued in accordance with law by the competent
administration for industry and commerce has been procured; and
	 
	 	(2)	 	During the period between the Signing Date and the First Payment Date (as
defined in Article 5.1 hereof), there is no Material Adverse Change to the Company.

	4.2	 	Under this Contract, the conditions precedent for the Transferee to pay the second
installment of the Transfer Price in the amount of RMB50,000,000 are as follows:

	 	(1)	 	The Sale Equity Stake has been legally registered under the name of the
Transferee and the new business license of the Company has been issued;
	 
	 	(2)	 	The security provided by the Company for securing the loan (as of the Signing
Date, the balance of the principal of the loan is in the amount of RMB34,000,000)
borrowed by the Transferor from the Agricultural Bank of China, Dehong Prefecture
Branch (“Dehong ABC”) has been discharged, and all assets and rights of the Company
are free from any security or other restrictions;
	 
	 	(3)	 	The Transferor has completed the alteration registrations for the five (5)
State-owned Land Use Right Certificates (with the certificate number of Ying Guo Yong
(2009) No. 695, Ying Guo Yong (2009) No. 696, Ying Guo Yong (2009) No. 697, Ying Guo
Yong (2009) No. 698 and Ying Guo Yong (2009) No. 699), which are currently registered
under the name of the Transferor but actually should be owned and registered under the
name of the Company, and provided the originals of the altered State-owned Land Use
Right Certificates to

6

 

	 	 	 	the Transferee. All taxes and fees relating to the aforesaid alteration registrations
shall be solely born by the Transferor and fully paid off;
	 
	 	(4)	 	The delivery prescribed in Chapter VI hereof is being in the process and the
Transferor has procured the written confirmation letter issued by the Transferee
regarding the progress of the delivery; and
	 
	 	(5)	 	There has been no Material Adverse Change to the Company during the period
between the First Payment Date and the Second Payment Date.

	4.3	 	Under this Contract, the conditions precedent for the Transferee to pay the balance
of the Transfer Price, namely the balance of the guarantee fund (if any), are as follows:

	 	(1)	 	During the guarantee period, the Hydropower Station Project does not have any
quality problem (excluding normal maintenance and repair, and technical overhaul
required by the grid company) and the Transferor does not have any behaviors or
situations violating any provisions of this Contract;
	 
	 	(2)	 	As for all those buildings currently used or occupied by the Company, the
Transferor shall assist the Transferee in the procurement of Building Ownership
Certificates under the Company’s name and the expenses arising therefrom shall be
borne by the Transferor;
	 
	 	(3)	 	The Transferor shall, on its own expenses, complete the tax clearance of the
Company prior to April 30, 2010, and provide to the Transferee with supporting
documents certifying that the relevant tax clearance has been completed according to
law;
	 
	 	(4)	 	The Transferor has, on its own expenses, procured the Social Insurance
Registration Certificate under the name of the Company and provided the original to
the Transferee;
	 
	 	(5)	 	The Transferor has, on its own expenses, negotiated with the insurer and
altered the insured on the insurance policies of the comprehensive property insurance
and additional machinery breakdown insurance for the Hydropower Station Project from
the Transferor to the Company, and provided the originals of relevant documents after
alteration to the Transferee;
	 
	 	(6)	 	The Transferor shall provide the Transferee with all originals and copies of
relevant governmental approvals obtained during the purchase of the assets; and
	 
	 	(7)	 	The Transferor has, on its own expenses, entered into the Supplemental
Agreement on Power Purchase Contract for 2010 in the name of the Company with Yunnan
Grid Dehong Power Supply Co., Ltd. and provided the original to the Transferee.

	4.4	 	In the event that any condition prescribed in the aforesaid Article 4.1, Article 4.2
and/or Article 4.3 has not been implemented or fulfilled, and the Transferee has not

7

 

	 	 	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 Transferor, which, however, shall not
be deemed as breach of contract.
	 
	4.5	 	Both the Transferor and the Transferee shall use their best efforts to complete the
requisite alteration registration procedure with the competent administration for industry and
commerce and the filing procedure for the transfer of the Sale Equity Stake.

Article 5 Payment

	5.1	 	The First Payment Date shall be within seven (7) Working Days after all conditions
precedent prescribed in Article 4.1 hereof have been fully satisfied. The Transferor and the
Transferee hereby confirm that, the deposit in the amount of RMB1,000,000 paid by the
Transferee to the escrow account shall be discharged escrow and set off against part of the
first installment of the Transfer Price; the balance in the amount of RMB52,000,000 shall be
paid to the Transferor’s Bank Account by the Transferee. The Transferor shall immediately pay
RMB34,000,000 to Dehong ABC for the repayment of the loan and release the security provided by
the Company for this loan.
	 
	 	 	The Second Payment Date shall be within twenty (20) Working Days after all conditions
precedent prescribed in Article 4.2 hereof have been fully satisfied. In the event the
Transferee fails to pay the second installment within twenty (20) Working Days, the
Transferee shall pay interest to the Transferor calculated on 110% of the one-year national
loan interest of the same period commencing from the date of deferred payment. Furthermore,
the maximum period for the deferred payment shall not exceed three (3) months.
	 
	 	 	In case of any balance of the guarantee fund (in case of no deduction, then the balance
shall be the full amount of the guarantee fund.) prescribed in item (3) of Article 3.2
hereof, the Transferee shall pay such balance to the Transferor after all conditions
precedent prescribed in Article 4.3 hereof have been fully satisfied.
	 
	5.2	 	Both Parties hereby confirm that, during the period between the First Payment Date
and the Second Payment Date, the tariff proceeds of the Company shall be allocated between
both Parties in proportion to the Transferee’s actual payment amount of the Transfer Price,
and commencing from the Second Payment Date (inclusive), all proceeds of the Company shall be
enjoyed by the Transferee.
	 
	5.3	 	The Transferor shall, within three (3) Working Days after the execution of this
Contract, provide in written form to the Transferee the detailed information of the
Transferor’s Bank Account. In the event that the Transferor fails to provide the detailed
information of the bank account in a timely fashion, or due to the reasons of the account
opening bank of the Transferor, the Transferee cannot remit or cannot remit the Transfer Price
as scheduled, the Transferee shall not assume any liability arising therefrom.
	 
	5.4	 	After receiving each installment of the Transfer Price paid by the Transferee, the
Transferor shall, within three (3) Working Days after receiving each installment,

8

 

	 	 	issue to the Transferee a legal receipt. In case the Transferor fails to issue
such receipt within prescribed time limit, the Transferee shall be entitled to
postpone its payment for the following payable installment(s) of the Transfer
Price, which, however, shall not be deemed as breach of contract.

Article 6 Taxes Payable under the Transfer of Sale Equity Stake

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

CHAPTER
III REPRESENTATIONS AND WARRANTIES BY BOTH PARTIES

Article 7 Representations and Warranties by both Parties

	7.1	 	Prior to the signing of this Contract, if the signing party is a company, it shall provide
the other Party with a power of attorney authorizing its relevant personnel to represent it to
sign this Contract.
	 
	7.2	 	At the time of signing this Contract, both Parties hereby state that the documents and
information provided to the other Party or its agencies (including without limitation the
legal counsel, valuers, financial staff, etc.) prior to the Signing Date are still valid and
confirm that, should discrepancies occur between the latter and the terms of this Contract,
this Contract shall prevail.
	 
	7.3	 	The Transferor and the Transferee hereby agree that any contracts or documents pertaining to
the transfer of the Sale Equity Stake entered into between both Parties prior to this Contract
shall lapse automatically upon this Contract coming into effect.
	 
	7.4	 	Both Parties agree to strive jointly in coordinating the work pertaining to the transfer of
the Sale Equity Stake, including but not limited to the registration and filing for record,
etc., and that the expenses arising therefrom shall be borne by the Parties in accordance with
their respective responsibilities.

CHAPTER
IV DISCLOSURES, REPRESENTATIONS AND WARRANTIES BY

THE TRANSFEROR

Article 8 Disclosures, Representations and Warranties by the Transferor

	 	 	The Transferor hereby represents and warrants to the Transferee that:

9

 

	8.1	 	All information and facts relating to the Company that is in the possession of the Transferor
or is known to the Transferor which will have a substantive and adverse effect on the
Transferor’ ability to fulfill any of its obligations in this Contract or when disclosed to
the Transferee shall have a substantive effect on the willingness of the Transferee to sign
and fulfill its obligations under this Contract, have been disclosed to the Transferee and the
information provided by the Transferor 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 Transferor that will materially affect its ability to
sign this Contract or fulfill its obligations under this Contract.
	 
	8.3	 	As of the Signing Date, the Transferor has informed any Third Party relating to the Sale
Equity Stake and the Company of all matters concerning the Sale Equity Stake hereunder; and in
case of any requirement for the consent of such Third Party, the Transferor has already
procured the corresponding written consent from such Third Party.
	 
	8.4	 	The Transferor hereby undertakes that it will not 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 Transferor to the Transferee and/or
the Transferee’s agencies (including without limitation the legal counsel, valuers, financial
staff, etc.) prior to the Signing Date, the Transferor hereby undertakes that:

	 	8.5.1.	 	all copies made from original documents are true and complete and that such original
documents are authentic and complete;
	 
	 	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 Transferor has drawn to the attention of The Transferee and/or of The
Transferee’s agents on all matters that are material for The Transferee to proceed
with the transaction as contemplated in this Contract.

Article 9 General Representations and Warranties by The Transferor

	9.1	 	The Transferor is a legal entity that has been duly established according to the laws and
regulations of the PRC; it is validly and legally in existence and operating normally in
accordance with such laws and regulations. Signing this Contract and fulfilling all of its
obligations stipulated herein by the Transferor shall not contravene or result in the
violation of or constitute a failure to or an inability to fulfill any of the stipulations of
its articles of association or internal rules or of any laws, regulations, stipulations,
authorization or approval from any government body or department or the stipulations of any
contract or agreement to which the

10

 

	 	 	Transferor is a party or is bound by.

Article 10 Ownership

	10.1	 	The Transferor hereby undertakes and warrants that the Transferor is the legal owner of the
Sale Equity Stake, and that it has 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 loss or damage
due to the Sale Equity Stake’s involvement of any state-owned assets or interests, the
Transferor shall assume the liability and fully compensate the Transferee and/or the Company.
	 
	10.2	 	The Transferor hereby undertakes and warrants 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 that there is no interest present and no agreement or undertaking
in existence that may result in or create any such claim or encumbrance (including but not
limited to the aforesaid any form of option, acquisition right, mortgage, pledge, guarantee,
lien or any other forms of Third Party rights) on the Sale Equity Stake.
	 
	10.3	 	All obligations borne by the Transferor as the shareholder of the Company to the benefit of
the Company and/or that of any Third Party have been fully fulfilled by the Transferor. Any
Third Party or any level of the authorities of the People’s Republic of China shall not, due
to the Transferor’ failure to perform its due obligations as the shareholder of the Company,
claim against the Company and/or the Transferee or adopt administrative acts which are
unfavorable to the Company and/or the Transferee, including but not limited to the imposition
of fines, the revocation of the business license, any requirement to make additional payments
for taxes, any order to cease production, etc.
	 
	10.4	 	The Transferor hereby undertakes and warrants that, no lawsuits, arbitrations, or other legal
or administrative proceedings or governmental investigations are on-going against the
Transferor that will materially affect its ability to sign this Contract or fulfill its
obligations under this Contract.
	 
	10.5	 	The Transferor hereby undertakes and warrants providing all relevant materials to be provided
by the Transferor as requisite for alteration registration of the Sale Equity Stake with the
administration of industry and commerce.

Article 11 The Company and the Hydropower Station Project

	 	 	The Transferor hereby represents and warrants 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

 

	11.2	 	The registered capital of the Company has been fully paid up as scheduled. The Transferor has
fully fulfilled its capital contribution obligations, which have been legally verified in
accordance with relevant PRC laws. There is no withdrawal of the registered capital by the
Transferor. In case the Company is punished by the competent administration for industry and
commerce due to the reasons prior to the Second Payment Date, the Transferor shall compensate
the Transferee and/or the Company for all the losses and damages suffered therefrom.
	 
	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
liable for the full compensation on the Transferee and/or the Company.
	 
	11.5	 	Prior to the Completion Date of Delivery, 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,
excluding normal operation losses and technological advancement.
	 
	11.6	 	Up to the Second 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 Transferor 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 Transferor has fully disclosed in written
form to the Transferee all information in respect of environmental protection, water and soil
conservation, flood prevention plan, utilization of land (woodland), woods cutting, power
generation, emigrants relocation, fire-prevention and work safety of the

12

 

	 	 	Company, etc. In addition, the Transferor hereby warrants 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 Second
Payment Date, the Transferor shall be 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 I 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, movable assets or electricity fees collection right.
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). The Transferor hereby
warrants and undertakes that commencing from the Signing Date, the real estate and movable
assets mentioned above will not suffer from any loss or damage resulting from the actions of
the Transferor or any Third Party. In the event that such real estate and movable assets
suffer from any loss or damage due to the actions of the Transferor or any Third Party, the
Transferor shall be 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 Transferor
warrants that the environmental protection authority, water resources authority, electricity
regulatory authority, construction authority, forestry authority, fire-prevention authority,

13

 

	 	 	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 Transferor shall
fully compensate the Transferee and/or the Company so as to hold the Transferee and/or the
Company harmless.
	 
	11.9	 	Prior to the signing of this Contract, the Transferor has 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 Second Payment Date, the Company has no
debt. The Transferor shall assume 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.
	 
	11.10	 	The Company can legally own the land use right of all the land and the ownership of all the
buildings and structures 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 the
buildings and/or the structures. 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 or structures,
the Transferor shall assume liabilities to fully compensate the Transferee and/or the Company.
	 
	11.11	 	All land use rights currently used by the Company by way of allocation are in full
compliance with the PRC laws and regulations. In the event that the Transferee and/or the
Company suffer from any punishment, damage or loss due to the land use right, the Transferor
shall assume liabilities to fully compensate the Transferee and/or the Company. In the event
that relevant PRC governmental authorities require to or the Transferee initiatively change
all or part of the allocated land use rights currently used by the Company to granted land use
rights in the future, the Transferor shall fully cooperate and provide all necessary materials
and assist the Transferee in conducting relevant approval procedures to accomplish the legal

14

 

	 	 	alteration of the type of such land use rights. The land premium and relevant taxes and
fees shall be assumed by the Transferee.
	 
	11.12	 	After the Signing Date, the Transferor 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.
	 
	11.13	 	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 Transferor shall assume liabilities to fully compensate
the Transferee and/or the Company.
	 
	11.14	 	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 (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 suffer from any damage or loss due to such undisclosed security,
the Transferor shall assume liabilities to fully compensate the Transferee and/or the Company.
The Transferor shall discharge the security (including but not limited to mortgage, pledge and
lien) on the assets and rights of the Company according to relevant provisions hereunder.
	 
	11.15	 	The Company has conducted valid tax registration and procured the valid Tax Registration
Certificates. 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 Transferor shall assume
liabilities for any unpaid taxes to the Transferee and/or the Company so as to hold the
Transferee and/or the Company harmless.
	 
	11.16	 	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 the Company is punished by any
governmental authority as a result of any

15

 

	 	 	above-mentioned issues existing prior to the Second Payment Date, the Transferor shall
assume liabilities to fully compensate the Company and/or the Transferee.
	 
	11.17	 	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 favorable to the Third Party on the assets of the
Company.
	 
	11.18	 	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).
	 
	11.19	 	The originals of all contracts (including but not limited to contracts relating to land
requisition, loan, security, insurance, design, construction, supervision, procurement,
substituted operation management contract, grid connection and dispatching agreement and power
purchase and sale agreement) concluded by the Company prior to the Signing 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 Transferor knows, there does not exist any condition
which may lead to the violation by the Company. In case of such circumstances, the Transferor
has disclosed it to the Transferee in written form.
	 
	11.20	 	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
Transferor shall assume liabilities to fully compensate the Company and/or the Transferee.
	 
	11.21	 	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
provident fund, wages, and other welfares provided in PRC laws and the Company’s internal

16

 

	 	 	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 Transferor shall assume liabilities to fully
compensate the Transferee and/or the Company.
	 
	11.22	 	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.
	 
	11.23	 	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.
	 
	11.24	 	All accounts, books, ledgers and financial records of the Company which should be formulated
in accordance with the accounting procedures and principles provided by the accounting system
of China have been fully, adequately and accurately recorded and completed, which do not
include any major errors or mistakes of any kind, and truly and fairly reflect all
transactions relating to the Company and indicate the financial, contractual and other
business conditions of the Company during each financial period.

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 Transferor:
	 
	12.1	 	The Transferee is a limited liability company that has been duly established according to the
laws of China and it is validly and legally in existence and also operating normally in
accordance with the laws and regulations of China.

17

 

	12.2	 	The Transferee in 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 fulfill
or an inability to fulfill 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 are on-going against the Transferee that will materially affect its ability to
sign this Contract or fulfill its obligations under this Contract.

          Prior to the acquisition of the Sale Equity Stake and during the process of signing this
Contract, the Transferee has conducted due diligence on the Transferor and the Hydropower Station
Project and is fully aware of the basic information of Husahe Cascade III and IV and Mangxian
Hydropower Station, the quality of the assets, the governmental approvals, and has known that the
Hydropower Station Project is acquired by means of pulbic auction. In the course of the
investigation on the basic information of Husahe Cascade III and IV and Mangxian Hydropower
Station, the Transferee has basic information with respect to the environmental protection,water
and soil conservancy, water drawing, flood prevention plan, design and construction of water
resources projects, bidding, power generation, woodland utilization, wood-cutting, fire-prevention,
work safety, relocation of residents, etc. The Transferee shall have understanding regarding the
aforesaid historical issues.

CHAPTER
VI DELIVERY

Article 13 Delivery

	13.1	 	After the Signing Date, the Transferor and the Transferee shall establish a delivery team and
actively and jointly carry out the preparation work for the delivery of the Company and the
Hydropower Station Project, which shall include, without limitation, the delivery of the
production, operation and management, financial affairs, assets, files and documents,
certificates and licenses, approval documents and official stamps, etc. from the Transferors
to the Transferee.
	 
	13.2	 	During the period between the Signing Date and the Completion Date of Delivery as prescribed
in this Chapter:

	 	(1)	 	The Transferor shall continue to operate the Company in general and usual
way; the Transferor 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 program (in the event
that such payment exceeds RMB50,000, it shall be subject to the prior written consent
of the Transferee); the Transferor

18

 

	 	 	 	shall not terminate any 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 Transferor shall not
make any material amendments to the financing, loan or security arrangements of the
Company;
	 
	 	(4)	 	The Transferor 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 Transferor 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 Transferor shall not release or write off any debt owed by the debtor
specified in the accounting books of the Company;
	 
	 	(7)	 	The Transferor 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 Transferor to be false,
inaccurate, unrealizable or misleading, the Transferor shall inform the Transferee in
written form within twenty-four (24) hours and provide reasonable and detailed
information and explanation; and
	 
	 	(9)	 	The Transferor and/or the Company will not take any actions which may violate
the provisions of this Contract or may influence the fulfillment of the obligations
hereunder or the transfer of the Sale Equity Stake contemplated herein.

19

 

	13.3	 	The Transferor 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 I hereto, otherwise, the Transferor shall make full compensation
on the Transferee and/or the Company for any damage or loss.
	 
	13.4	 	The delivery shall include without limitation:

	 	(1)	 	delivery of the production and operation management of the Company;
	 
	 	(2)	 	delivery of all stamps of the Company, such as the official stamp, financial
stamp and contract stamp, etc. to the Transferee;
	 
	 	(3)	 	delivery of originals of all account opening documents and seals for all bank
accounts of the Company;
	 
	 	(4)	 	checking and counting of all assets (including but not limited to real estate
and movable assets) of the Company by the Transferor and Transferee, formulating the
Company’s assets list and conducting the delivery thereof upon being signed by the
Transferor and Transferee on site for confirmation; during the assets sorting and
counting proceedings, the Transferor shall compensate basing on the appraisal value
for the derogated assets;
	 
	 	(5)	 	delivery of originals of all approvals, certificates and licenses, permits,
customer information, and other materials to the Transferee;
	 
	 	(6)	 	delivery of the originals of all project drawings, agreements (including but
not limited to grid connection and dispatching agreement, power sale and purchase
contract, project contract, equipment contract, installation contract, supervision
contract, procurement contract, loan contract, and mortgage contract) and other files
and documents to the Transferee;
	 
	 	(7)	 	delivery of originals of all financial books, financial vouchers and the
accounting files to the Transferee;
	 
	 	(8)	 	the Transferor shall deliver to the Transferee relevant technology
information concerning the units contracting the construction works of the
Hydroelectric Station Project, equipment manufacture, design, project supervision,
quality examination and transmission lines and other project contracting units one by
one; and

20

 

	 	(9)	 	delivery of all other materials and files of the Company.

	13.5	 	The delivery shall be fully completed within ten (10) Working Days from the Second Payment
Date. The completion of such delivery shall be subject to the written confirmation of the
Transferee. The Completion Date of Delivery shall be the date on which the Transferee issues
the written confirmation.
	 
	13.6	 	After the Completion Date of Delivery, the Transferor shall provide active cooperation when
the Transferee reasonably requires further delivery in writing.
	 
	13.7	 	The Transferor shall make sure the continuity, stability and safety of the production and
operation of the Company during the process of delivery.
	 
	13.8	 	The Transferor shall fully cooperate so as to complete the delivery.

CHAPTER
VII DEBT ARRANGEMENT AND EMPLOYEE RELOCATION

Article 14 Debt Arrangement

	14.1	 	After the completion of the transfer of the Sale Equity Stake contemplated hereunder, all
debts born by the Company prior to the Second Payment Date, without the consent from the
Transferee, shall be borne by the Transferor. In the event the Transferee and/or the Company
suffer from any loss or damage arising therefrom, the Transferor shall fully compensate the
Transferee and/or the Company. Any debt incurred after the Second Payment date shall be borne
by the Transferee.

Article 15 Employees Relocation

	15.1	 	The relocation of the employees shall be conducted in accordance with the principle of
“employees going with assets” jointly confirmed by the Parties. The employees include
thirty-four (34) operation and management staff. The Transferor shall not temporarily dispatch
new staff to the Hydropower Station Project. The Transferee is entitled to reject the
employment of those employees who have not worked for the Hydropower Station Project for more
than six (6) months.
	 
	15.2	 	After the payment of the second installment of the Transfer Price, the Transferor shall hand
over the employees to the Transferee in accordance with the register of employees. The
Transferee shall continue to employee those employees and the terms and conditions of their
employment shall be determined in principle by reference to the standards applied in the other
domestic project companies currently owned by the Transferee and implemented in accordance
with the Labour Law of the PRC, the Labour Contract Law of the PRC and its implementation
regulations

21

 

	 	 	and other relevant PRC laws and regulations. The Company shall execute new labor contracts
with the employees.

CHAPTER
VIII CONFIDENTIALITY

Article 16 Confidentiality

	16.1	 	The Parties agree that, unless otherwise provided for in another relevant confidentiality
agreement, with regard to the confidential and exclusive information that have been disclosed
to or may be disclosed to the other Party pertaining to their respective businesses, financial
situations or other confidential matters, both 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,
neither Party 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 record before the
disclosing Party disclosed such information to the receiving Party;
	 
	 	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 of this Contract shall remain binding on it.

CHAPTER
IX BREACH OF CONTRACT

Article 17 Liability for Breach of a Representation or Warranty

22

 

	17.1	 	If any representation or warranty made by either Party to this Contract is found to be a
material error, or if any fact that has or is likely to have a major or substantial effect on
the signing of this Contract by either Party has been omitted, or if any representation or
warranty is found to be misleading or untrue in any material respect, the other Party shall be
entitled to claim to the Party 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 in breach or arising from any other breach of any representation and warranty given by
the Party in breach.
	 
	17.2	 	Each representation and warranty set out in this Contract is to be construed independently.

Article 18 Liability for Breach of Contract

	18.1	 	In the event of a breach committed by either Party to this Contract, the said defaulting
Party shall assume the liability for breach of contract to the other Party in accordance with
the provisions of this Contract and the laws and regulations of China. In the event that both
Parties to this Contract are in breach, each defaulting Party shall be liable separately to
the other Party for the losses and damages or any other liabilities arising out of their
respective breach of contract.
	 
	18.2	 	In the event that the undisclosed issues by the Transferor 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 shall be entitled to
terminate this Contract and to require the Transferor to refund the full amount of the
Transfer Price already paid by the Transferee and to pay three percent (3%) of the Transfer
Price as liquidated damages.
	 
	18.3	 	Any violation of the obligations, representations and warranties under this Contract by the
Transferor or Transferee shall constitute a breach of contract, and the defaulting Party 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 the Transferor 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; in the event that
the defaulting Party delays to perform the Contract over thirty (30) Working Days, the
non-defaulting Party shall be entitled to terminate the Contract, and to require the
defaulting Party to pay three percent (3%) of the Transfer Price as liquidated damages. The
procurement of the liquidated damages shall not prejudice the non-defaulting Party’s right
to claim for other legal remedies in accordance with other provisions of this Contract and
the PRC laws and regulations.

23

 

CHAPTER
X FORCE MAJEURE

Article 19 Force Majeure

	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 the relevant laws and regulations of China.
	 
	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 assume any
liability for breach of contract as provided in this Contract.
	 
	19.3	 	The Party claiming the occurrence of a Force Majeure event shall promptly inform the other
Party in writing, and within seven (7) days thereafter, it shall provide sufficient evidence
issued by notary organization or relevant competent authority 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 thirty
(30) days after the commencement of the friendly consultations, the dispute cannot be resolved
through such means, either Party may submit the dispute to the arbitration committee
recognized by the Parties for arbitration in accordance with its prevailing valid arbitration
rules.
	 
	20.2	 	The arbitration tribunal shall be constituted by three (3) arbitrators, and the arbitration
procedure shall be conducted in Chinese.

24

 

Article 21 Effect of Arbitral Award

	 	 	The arbitration award shall be final and binding on the Parties and the Parties agree to be
bound thereby and to act accordingly.

Article 22 Continuation of Rights and Obligations

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

CHAPTER XII APPLICABLE LAW

Article 23 Applicable Law

	 	 	The laws and regulations of the People’s Republic of China shall govern and be binding on
the establishment, validity, interpretation and execution of this Contract. All disputes
arising out of this Contract shall be determined according to the laws of China.

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, if 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 its entitlement or
obligations as stipulated in this Contract.

25

 

Article 26 Amendment

	26.1	 	This Contract has been executed for the benefit of all Parties to this Contract and their
respective lawful successors 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.

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 both
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.

26

 

	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 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) Working 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 served on the date of receipt. If they
are sent by facsimile, the date of receipt shall be deemed to be three (3) Working 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 District, 
Beijing, China.
	 

	 	Telephone Number:
	 	86-10-6492-8483
	 

	 	Facsimile Number:
	 	86-10-6496-1540
	 

	 	Attention:
	 	Li Weiwei
	 
	 	 	 	 
	 

	 	Party B’s Address:
	 	No.3 Bingwu Road, Luxi City, Dehong, Yunnan
	 

	 	Telephone Number:
	 	0692-8887827
	 

	 	Facsimile Number:
	 	0692-2122159
	 

	 	Attention:
	 	Yang Chonghe

Article 31 The Entire Agreement

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

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

27

 

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

			
	Party A:	 	Yunnan Huabang Electric Power Development Co., Ltd.

(Stamp)

Signature: /s/ John D. Kuhns 

Position:                     

			
	Party B:	 	Dehong Qinrui (Group) Power Investment and Development Co., Ltd.

(Stamp)

Signature: /s/ Li Ziheng 

Position: Chairman of the Board 

28exv4w71

Exhibit 4.71

BETWEEN

YUNNAN MINFA HYDROELECTRIC DEVELOPMENT GROUP CO., LTD.

XIAMEN MINRUI INVESTMENT CO., LTD.

AND

FUJIAN HUABANG HYDROELECTRIC INVESTMENT CO., LTD.

SHARE TRANSFER CONTRACT

For

FUGONG COUNTY HENGDA HYDROPOWER GENERATION CO., LTD.

(ALUHE HYDROPOWER STATION&ZILENGHE HYDROPOWER STATION)

1/46

 

CONTENTS

	 	 	 	 	 

	CHAPTER I DEFINITIONS
	 	 	5	 
	 
	Article 1 Definitions
	 	 	 5	 
	 
	CHAPTER II SALE EQUITY STAKE
	 	 	8	 
	 
	Article 2 Sale Equity Stake
	 	 	 8	 
	Article 3 Share Transfer Price
	 	 	 8	 
	Article 4 Conditions Precedent for the Payment of the Transfer Price
	 	 	 8	 
	Article 5 Payment
	 	 	10	 
	Article 6 Taxes Payable under the Transfer of the Sale Equity Stake
	 	 	13	 
	 
	CHAPTER III REPRESENTATIONS AND WARRANTIES BY ALL PARTIES
	 	 	13	 
	 
	Article 7 Representations and Warranties by All Parties
	 	 	13	 
	 
	CHAPTER IV DISCLOSURES, REPRESENTATIONS AND WARRANTIES BY THE TRANSFERORS
	 	 	14	 
	 
	Article 8 Disclosures, Representations and Warranties by the Transferors
	 	 	14	 
	Article 9 General Representations and Warranties by the Transferors
	 	 	16	 
	Article 10 Ownership
	 	 	16	 
	Article 11 The Company and the Hydroelectric Project
	 	 	18	 
	 
	CHAPTER V DISCLOSURES, REPRESENTATIONS AND WARRANTIES BY TRANSFEREE
	 	 	28	 
	 
	Article 12 Disclosures, Representations and Warranties by Transferee
	 	 	28	 
	 
	CHAPTER VI DELIVERY
	 	 	29	 
	 
	Article 13 Delivery
	 	 	29	 
	 
	CHAPTER VII DEBT ARRANGEMENT AND EMPLOYEES RELOCATION
	 	 	32	 
	 
	Article 14 Debts Arrangement
	 	 	32	 
	Article 15 Relocation of Employees
	 	 	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
	 	 	38	 
	Article 22 Continuation of Rights and Obligations
	 	 	38	 
	 
	CHAPTER XII APPLICABLE LAW
	 	 	39	 
	 
	Article 23 Applicable Law
	 	 	39	 
	 
	CHAPTER XIII MISCELLANEOUS
	 	 	39	 

2/46

 

	 	 	 	 	 

	Article 24 Waiver
	 	 	39	 
	Article 25 Transfer
	 	 	39	 
	Article 26 Amendment
	 	 	40	 
	Article 27 Severability
	 	 	40	 
	Article 28 Language
	 	 	40	 
	Article 29 Validity of the Text and Appendices
	 	 	40	 
	Article 30 Notification
	 	 	41	 
	Article 31 The Entire Agreement
	 	 	42	 
	 
	APPENDIX I CONDITIONS PRECEDENT
	 	 	45	 
	 
	APPENDIX II BANKING DEBTS OF THE COMPANY
	 	 	 	 
	 
	APPENDIX III EXISTING SECURITIES OF THE COMPANY
	 	 	 	 
	 
	APPENDIX IV LIST OF REAL ESTATE AND MOVABLE ASSETS
	 	 	 	 

3/46

 

SHARE TRANSFER CONTRACT

This Share Transfer Contract (hereinafter referred to as “this Contract”) is executed by the
following Parties in Xiamen, China on April 14, 2010.

	(1)	 	Party A: Fujian Huabang Hydroelectric Investment 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 350000400003598
and registered address at the 3rd Floor of East Building A, No.349, Guangda Road,
Taijiang District, Fuzhou City, the legal representative of which is John Douglas Kuhns, whose
position is chairman and nationality is the United States of America;
	 
	(2)	 	Party B: Yunnan Minfa Hydroelectric Development 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 530000100030297 and its registered address at Room 201, 2nd Floor,
No. 147, West Renmin Road, Kunming City, the legal representative of which is Zhang Zimin,
whose nationality is the People’s Republic of China; and
	 
	(3)	 	Party C: Xiamen Minrui Investment 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 350200200049718 and its registered address at West No. 10,
Room 3A, No. 57, South Hubin Road, Siming District, Xiamen City, the legal representative of
which is Mao Chengwen, whose nationality is the People’s Republic of China.

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 the “Party”.

WHEREAS:

	(1)	 	Fugong County Hengda Hydroelectric Development Co., Ltd. (hereinafter referred to as the
“Company”) is a company incorporated in China for the purpose of

4/46

 

	 	 	hydroelectric generation and hydroelectric development, which currently owns and operates the
Aluhe Hydropower Station and Zilenghe Hydropower Station;

	(2)	 	Party B owns ninety six percent (96%) of the equity stake of the Company, and can exercise
all of its full rights as a shareholder;
	 
	(3)	 	Party C owns four percent (4%) of the equity stake of the Company, and can exercise all of
its full rights as a shareholder;
	 
	(4)	 	Subject to the terms and conditions set out in this Contract, Party B is willing to transfer
ninety six percent (96%) of the equity stake of the Company held by it, Party C is willing to
transfer four percent (4%) of the equity stake of the Company held by it to the Transferee,
all of which represent one hundred percent (100%) of the equity stake of the Company;
	 
	(5)	 	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.

     For this purpose, 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, Contract Law of the People’s
Republic of China and other relevant laws and regulations of the PRC:

Chapter I Definitions

Article 1 Definitions

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

5/46

 

The “Company” refers to Fugong County Hengda Hydroelectric Development Co., Ltd., a limited
liability company registered and established in accordance with the laws of PRC, with its
registration number being 533323100000137, registered capital (paid-up capital) being RMB
60,000,000 and registered address at Lawu Village, Shangpa Town, Fugong County.

The “Hydroelectric Project” refers to the Aluhe Hydropower Station with the total installed
capacity of 12.6 MW and the Zilenghe Hydropower Station with the total installed capacity of 24 MW
which are legally owned and operated by the Company.

“Sale Equity Stake” refers to one hundred percent (100%) of the equity stake of the Company
transferred by the Transferors to the Transferee.

“New Articles of Association” refers to the new Articles of Association of Fugong County Hengda
Hydroelectric Development Co., Ltd. after the completion of the share transfer contemplated in
this Contract, which has been approved by the Examination and Approval Authority.

The “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.

“Claims” refers to 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 Share Transfer Contract is signed.

“Encumbrance” refers to any mortgage, assignment, lien, charge, pledge, title retention, right to
acquire, security interest, option, pre-emptive right, and any other restriction or conditions
whatsoever including, without limitation:

	 	(1)	 	any interest or right granted or reserved in or over or affecting the Sale Equity
Stake; or

6/46

 

	 	(2)	 	the interest or right created or otherwise arising in or over the Sale Equity
Stake under a fiduciary transfer, charge, lien, pledge, power of attorney or other form
of encumbrance; or
	 
	 	(3)	 	any security over the Sale Equity Stake for the payment of a debt or any other
monetary obligation or the performance of any other obligation.

“Examination and Approval Authority”, refers to the relevant PRC governmental department having
the authority to examine and approve this Contract, the New Articles of Association of the Company
and to grant approval for the share transfer contemplated in this Contract pursuant to the
provisions for the examination and approval of projects which have investments by foreign
investors in the PRC.

“Material Adverse Change” refers to:

	 	(1)	 	investigations (which may cause the Company to be punished) and penalties upon
the Company by relevant governmental authorities;
	 
	 	(2)	 	involvement with any litigation, arbitration or any other judicial proceedings by
the Company which may have impact on the legal existence of the Company and/or the
Hydroelectric Project; or
	 
	 	(3)	 	any change which may have impact on the legal existence of the Company and/or the
Hydroelectric Project.

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

“Payment Date” refers to the date when the Transferee has fully paid the Transfer Price to the
Transferors in accordance with Article 5.2 hereof.

“Transferors’ Bank Accounts” refer to, for the purpose of this Contract, the bank accounts opened
separately by Party B and Party C under their respective names for receiving the Transfer Price
(as defined in Article 3.1 below).

7/46

 

“Delivery Completion Date” refers to the date provided by Article 13.5 hereunder.

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

“Working Day” refers to the statutory working day provided by the State Council of the PRC.

Chapter II Sale Equity Stake

Article 2 Sale Equity Stake

Pursuant to the terms and conditions 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 for transfer 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 agreed at RMB 65,000,000 (hereinafter referred to
as the “Transfer Price”). Specifically, the amount respectively payable to the Transferors
shall be as follows:
	 
	 	 	 	Party B: RMB62,400,000;
	 
	 	 	 	Party C: RMB2,600,000.

Article 4 Conditions Precedent for the Payment of the Transfer Price

8/46

 

	 	4.1	 	Under this Contract, the conditions precedent for the payment of the Transfer Price by
the Transferee are set out as follows:

	 	(1)	 	The Transferors have completed all conditions precedent set out in Appendix
I to this Contract;
	 
	 	(2)	 	This Contract, the New Articles of Association and the transfer of the Sale
Equity Stake in this Contract have been approved in writing by the Examination and
Approval Authority, and the certificate of approval for establishment of foreign
invested enterprises has been issued;
	 
	 	(3)	 	The alteration registration with the competent administration for industry
and commerce for the Sale Equity Stake has been completed and the Sale Equity Stake
has been registered under the name of the Transferee;
	 
	 	(4)	 	The business license for foreign invested enterprises of the Company has
been issued;
	 
	 	(5)	 	The competent foreign exchange administration authority has approved the
transfer of the Transfer Price from the capital account of the Transferee to the
Transferors’ Bank Accounts; and
	 
	 	(6)	 	From the Signing Date to the Payment Date (as defined in Article 5.1),
there has been no Material Adverse Change to the Company.

	 	4.2	 	In the event that any of the conditions set out in the aforesaid Article 4.1 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 which shall not be deemed as breach of contract.
	 
	 	4.3	 	The Transferors and the Transferee shall use their best efforts to procure the timely
approvals of this Contract, the New Articles of Association and the transfer of the Sale
Equity Stake contemplated herein by the Examination and

9/46

 

	 	 	 	Approval Authority and to procure the certificate of approval for establishment of foreign
invested enterprises and the business license of foreign invested enterprise.

Article 5 Payment

	 	5.1	 	Prior to the signing of this Contract, the Transferee has paid a deposit in the amount
of RMB25,000,000 to the Transferors, of which, RMB12,500,000 shall be served as the deposit
for the Sale Equity Stake contemplated hereunder; the Transferee agrees to pay additional
deposit in the amount of RMB50,000,000 to the Transferors as the deposit for the Sale
Equity Stake within five (5) Working Days from the Signing Date. Thus, to acquire the Sale
Equity Stake, the Transferee has paid the deposit in the total amount of RMB62,500,000 to
the Transferors.
	 
	 	5.2	 	The Payment Date shall be within five (5) Working Days after all conditions precedent
set out in Article 4.1 hereof have been completed. The Transferors shall refund the deposit
in the amount of RMB62,500,000 to the bank account designated by the Transferee within
three (3) working days from the Payment Date.
	 
	 	5.3	 	The Transferors shall, within five (5) Working Days after the Signing Date of this
Contract, provide the Transferee in written form with the detailed information in relation
to the Transferors’ Bank Accounts, otherwise, in the event that the Transferee cannot pay
or cannot pay as scheduled the Transfer Price due to the Transferors’ failure to provide
the detailed information of the Transferors’ Bank Accounts in a timely fashion, or due to
the reason of the opening banks of the Transferors’ Bank Accounts, the Transferee shall not
assume any liability arising therefrom.
	 
	 	5.4	 	The Transferors shall issue to the Transferee the legal documents evidencing the
receipt of the Transfer Price within three (3) Working Days after receiving the Transfer
Price paid by the Transferee. In the event that the Transferors fail to issue the said
documents within the prescribed time limit to the Transferee,

10/46

 

	 	 	 	the Transferee shall be entitled to correspondingly delay its payment of the following
payable instalment of the Transfer Price, which shall not be deemed as breach of contract.
In the event that the said legal documents 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	 	All Parties hereby confirm that all the profit of the Company shall be enjoyed by the
Transferee from the Payment Date (inclusive).
	 
	 	5.6	 	The Transferors shall remit RMB7,733,500 to the bank account designated by the
Transferee within three (3) Working Days from the arrival date of the Transfer Price paid
by the Transferee at the Transferors’ Bank Accounts, which shall be served as the guarantee
fund (hereinafter referred to as “Guarantee Fund”) for the performance of all the
obligations of the Transferors under this Contract. The guarantee duration shall commence
from the arrival date of such Guarantee Fund at the bank account designated by the
Transferee and terminate when all obligations provided in Article 5.7 hereof have been
fulfilled by the Transferors. Upon the expiration of the Guarantee Duration, the
Transferee shall remit the balance of the Guarantee Fund (if any) to the bank account
designated by Transferors without paying any interests.
	 
	 	5.7	 	Under this Contract, when all the following obligations have been fulfilled by the
Transferors, the Transferee shall refund the balance of the Guarantee Fund (if any) to the
bank account designated by Transferors within five (5) Working Days after all such
obligations have been fully fulfilled:

	 	(1)	 	During the guarantee period, the Hydroelectric Project does not have any
quality problem and the Transferors do not have any behaviours or situations violating
any provisions of this Contract;
	 
	 	(2)	 	The Transferors shall, on their own expenses, procure the Water Drawing
Permits for Aluhe Hydropower Station and Zilenghe Hydropower Station

11/46

 

	 	 	 	registered under the name of the Company, and deliver the originals of the Water
Drawing Permits to the Transferee;

	 	(3)	 	The Transferors shall, on their own expenses, enter into the Grid Connection
and Dispatching Agreement for Aluhe Hydropower Station and Zilenghe Hydropower Station
in the name of the Company with competent power grid corporation, and deliver the
original of such executed Grid Connection and Dispatching Agreement to the Transferee;
	 
	 	(4)	 	The Transferors shall, on their own expenses, procure the Social Insurance
Registration Certificate under the name of the Company, and deliver the original of
the Social Insurance Registration Certificate to the Transferee;
	 
	 	(5)	 	The Transferors shall, on their own expenses, extend the valid duration of
Yunnan Province Special Equipments Safe Use Permit (number: Q20070001) and deliver the
original of the same to the Transferee; and
	 
	 	(6)	 	The Transferors shall, on their own expenses, complete the tax clearance of
the Company in accordance with law before June 30, 2010 and deliver relevant
supporting documents for such full payment of relevant taxes in accordance with
relevant law.

	 	 	 	The Transferors hereby jointly and severally confirm and warrant that, in the event that
the Transferee and/or the Company incurs any fees or expenses or suffers from any loss or
damage due to any of the above-mentioned issues, the Transferee shall be entitled to
directly deduct the corresponding amount from the Guarantee Fund, which shall not be
required to be refunded to the Transferors; in addition, such compensation 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 the laws and
regulations of the PRC.
	 
	 	5.8	 	The obligations of the Transferee shall be deemed as having been fully accomplished
upon the remittance of the Transfer Price to the Transferors’

12/46

 

	 	 	 	Bank Accounts and the Transferee shall not take any responsibilities or obligations
thereafter.

Article 6 Taxes Payable under the Transfer of the 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 Transferee shall be payable by the respective Party
liable for the taxes or fees under the provisions of relevant laws and regulations of PRC.

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, the signing Party shall provide a power of
attorney which authorizes its representative to sign this Contract to the other Party.
	 
	 	7.2	 	At the time of signing this Contract, the Transferors and the Transferee hereby state
that the documents and information provided to the Party (ies) or their agencies
(including, without limitation, the lawyers, valuers, financial advisers, etc.) prior to
the Signing Date are still valid and authentic and confirm that, should discrepancies
appear between the latter and the terms of this Contract, this Contract shall prevail.
	 
	 	7.3	 	The Transferors and the Transferee hereby agree that the contracts or documents
pertaining to the transfer of Sale Equity Stake entered into among all Parties prior to
this Contract shall lapse automatically upon this Contract coming into effect.
	 
	 	7.4	 	All Parties to this Contract agree to strive jointly in coordinating all the work
pertaining to the transfer of the Sale Equity Stake, including but not limited to

13/46

 

	 	 	 	application for approvals, registration and filing for record, etc., and the expenses
arising therefrom shall be borne by the Company.

	 	7.5	 	All Parties hereby confirm that: in the event that the Sale Equity Stake is not
successfully transferred to the Transferee due to the Transferee’s reasons, then the
Transferors shall be entitled not to refund the deposit in the amount of RMB62,500,000 to
the Transferee; in the event that the Sale Equity Stake is not successfully transferred to
the Transferee due to the Transferors’ reasons, the Transferors shall refund twice of the
deposit in the amount of RMB62,500,000 to the bank account designated by the Transferee
within five (5) Working Days from the occurrence of such reason; in the event that the Sale
Equity Stake is not successfully transferred to the Transferee due to the reasons of the
Examination and Approval Authority, the Transferors shall refund the deposit in the amount
of RMB62,500,000 to the bank account designated by the Transferee within five (5) Working
Days from the occurrence of such reason.

Chapter IV Disclosures, Representations and Warranties by the Transferors

Article 8 Disclosures, Representations and Warranties by the Transferors

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 effect on
the Transferors’ abilities 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

14/46

 

	 	 	 	materially affect their abilities to sign this Contract or fulfil their obligations under
this Contract.

	 	8.3	 	Up to the Signing Date, the Transferors have informed the whole matter of the transfer
of the Sale Equity Stake to all Third Parties relating to the Sale Equity Stake, the
Company and the Hydroelectric Project; in case of requiring the consent of such Third
Party, the Transferors have procured the written consent from the Third Party.
	 
	 	8.4	 	The Transferors hereby undertake that none of them will take any action after the
Signing Date that will cause any adverse impact on the Company/Hydroelectric Project.
	 
	 	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 advisers, 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;
	 
	 	8.5.2	 	all documents supplied to the Transferee and/or the Transferee’s agencies
as originals 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.

15/46

 

	 	8.6	 	The Transferors shall, at any moment upon the request by Transferee, on their own
expenses, carry out and/or conduct in a way which is satisfactory to the Transferee, or to
impel the Third Party to carry out and/or conduct in a way which is satisfactory to the
Transferee, any action and/or document which the Transferee reasonably deems requisite, in
order to realize the full effectiveness and implementation of this Contract, provided that
the aforesaid requests shall be fair and reasonable and in compliance with relevant laws,
administrative regulations and rules.

Article 9 General Representations and Warranties by the Transferors

	 	9.1	 	Party B and Party C are legal entities that have been duly established according to the
laws and regulations of China and they are 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 their obligations stipulated herein by Party B and 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 B or Party C is a party to or is bound by.

Article 10 Ownership

	 	10.1	 	The Transferors jointly and separately 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 case that the Transferee and/or Company suffer from
any loss or damage due to the involvement of any state-owned assets and interests in the
Sale Equity Stake, the Transferors shall assume the joint liability and fully compensate
the Transferee and/or the Company.

16/46

 

	 	10.2	 	The Transferors jointly and severally undertake and warrant that: up to the Delivery
Completion 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 form 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 form of third party
rights and interest).
	 
	 	10.3	 	The Transferors jointly and severally undertake and warrant that: all obligations as
the shareholders of the Company which shall be assumed by the Transferors for the benefit
of the Company and the 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 fulfil their due obligations as the shareholders of the Company,
claim for rights against the Company or the Transferee or adopt administrative acts which
are unfavourable to the Company or the Transferee, including but not limited to imposing
fine, revoking the business license, requiring to make supplemental payment for the taxes
or compelling to stop production, etc.
	 
	 	10.4	 	The Transferors 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’ abilities to sign this Contract or fulfil the Transferors’ obligations under
this Contract.
	 
	 	10.5	 	The Transferors jointly and severally undertake and warrant to provide all relevant
materials which should be provided by the Transferors and are requisite for procuring the
written approvals to this Contract, New Articles of Association, the transfer of the Sale
Equity Stake stipulated in this Contract from the Examination and Approval Authority,
certificate of approval for establishment of foreign invested enterprises, and business
license for foreign invested enterprises of the Company, and conducting the alteration
registration

17/46

 

	 	 	 	of the Sale Equity Stake under the name of the Transferee with the competent administration
of industry and commerce.

	 	10.6	 	In the event that the Transferee fails to procure the approvals issued by the
Examination and Approval Authority within the time limit prescribed in Article 12.4 hereof
due to the reasons of the Examination and Approval Authority, the Transferors agree to give
thirty-day grace period so as to enable the completion of the approval with the Examination
and Approval Authority by the Transferee.

Article 11 The Company and the Hydroelectric Project

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

	 	11.1	 	The Company is a legal entity that has been duly established according to the laws of
PRC and it is validly and legally in existence and also operating normally in accordance
with the laws and regulations of PRC.
	 
	 	11.2	 	The registered capital of this Company has been fully paid up on schedule. The
Transferors have completed their full obligations to contribute, and have procured valid
verifications for their contributions according to PRC laws. There is no withdrawal of the
registered capital by the Transferors.
	 
	 	11.3	 	The Company is the legal owner of the Hydroelectric Project, and has the full and
complete ownership, operation right and right to profit over the Hydroelectric Project.
	 
	 	11.4	 	The development, construction and operation of the Hydroelectric Project have been duly
granted by relevant governmental authorities all requisite approvals and are fully complied
with the PRC laws and regulations and the approvals and permits of relevant governmental
authorities, in no violation of PRC laws and regulations and approvals and permits of
relevant governmental authorities, without any condition that leads to or may leads to the
revocation or withdrawing of such approvals and permits. In the event that Transferee

18/46

 

	 	 	 	and/or the Company suffer from any damage or loss arising out of any violation and /or
revocation and/or withdrawing, the Transferors shall be jointly liable for the full
compensation on the Transferee and/or the Company.

	 	11.5	 	Up to the Delivery Completion Date, every aspect of the Hydroelectric Project,
including but not limited to the hydrology, geology, water flow, water diversion canal,
water retaining dam, hydroelectric generator units and the affiliated facilitates, pressure
pipes, pressure forebay, power generation workshop, step-up substation, etc., is complied
with the requirements of power generation under normal situations and is free from any
defect or any other problem provided of the loss due to normal operation and usage. In the
event that Transferee and/or the Company suffer from any damage or loss arising out of any
defect or any other problem which already existed before the Delivery Completion Date, the
Transferors shall be jointly liable for the full compensation on the Transferee and/or the
Company.
	 
	 	11.6	 	Up to the Delivery Completion Date, the Company has never suffered and is not currently
suffering from any administrative investigations, prosecutions, arbitrations, disputes,
claims or other proceedings (ongoing, pending or threatened), nor the Company has been
punished or the Transferors can foresee any punishment to be made by any administrative
authorities of the PRC for the issues already existed before the share transfer. Up to the
Delivery Completion Date, the Transferors have fully disclosed to the Transferee all
information in respect of environmental protection, water and soil preservation, flood
prevention plan, utilization of land (woodland), wood cutting, power generation,
fire-prevention and work safety, etc. In addition, the Transferors hereby separately and
jointly warrant that all fees (including, without limitation, water resources fees, land
requisition and compensation fees, water and soil preservation facility compensation fees,
etc.), charges, penalties and expenses payable to or being required to pay to any PRC
governmental authority have been paid in full, and, as of the Delivery Completion Date,
there is no arrears of such fees, charges, penalties and expenses, nor is there any arrears
of costs and/or expenses being required by any PRC governmental authority to be paid for
any purpose of correcting defects and/or inappropriate

19/46

 

	 	 	 	actions of the Company. In the event that the Transferee and/or the Company suffer from any
penalty, damage, loss, etc. due to any such administrative investigations, prosecutions,
arbitrations, disputes, claims, penalties and/or other proceedings which existed before the
Delivery Completion Date, the Transferors shall assume joint liabilities and fully
compensate the Transferee and/or the Company.

	 	11.7	 	The Company legally owns all requisite real estate (including but not limited to land,
buildings, water retaining dam, water diversion canal, pressure pipes, pressure forebay,
booster station, power transmission lines, structures and affiliated facilities) and
moveable assets (including but not limited to machineries, equipments, vehicles, furniture
and office supplies), and such real estate and movable assets shall be not less than those
real estate and movable assets listed out in Appendix IV to this Contract. The Company does
not provide any other security (including but not limited to mortgage, pledge and lien) or
other restrictions on the real estate and movable assets, except for those listed out in
Appendix III to this Contract. Up to the Delivery Completion Date, all material aspects of
the buildings, structures, machineries and equipments, vehicles and other assets owned by
the Company are in good, secure and operational conditions (excluding the reasonable usage
damage), which are anticipated not to need to be repaired (excluding the daily requisite
repairs), replaced or supplemented within twelve (12) months after the Signing Date due to
the issues before the Delivery Completion Date. The Transferors warrant and undertake that
commencing from the Signing Date, the above real estate and movable assets will not suffer
from any loss or damage resulting from the actions of the Transferors or any Third Party.
In case of any loss or damage suffered by the real estate and movable assets due to the
above mentioned causes, the Transferors shall assume the joint liability and fully
compensate Transferee and/or the Company.
	 
	 	11.8	 	The production, operation, construction and business of the Company are fully complied
with all the relevant PRC laws and regulations, including but not limited to those laws and
regulations in relation to hydropower generation, environmental protection, water and soil
preservation, flood prevention plan,

20/46

 

	 	 	 	design and construction of water resource project, invitation and submission of bids,
utilization of woodland, wood cutting, fire-prevention, work safety and relocation. The
Transferors warrant that the environmental protection authorities, water resource
authorities, power regulatory authorities, construction authorities, forestry authorities,
fire-prevention authorities, planning authorities, safe production authorities, development
and reform authorities and other governmental authorities will not punish the Company for
the problems of environmental protection, water and soil preservation, water fetching,
flood prevention planning, design and construction of water resources projects, invitation
and submission of bids, power generation, utilization of woodland, wood cutting,
fire-prevention, work safety and relocation, etc. which already existed before the Delivery
Completion 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, forest authority, construction authority,
fire-prevention authority, planning authority, work safety authority, development and
reform authorities 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 complied
with all relevant PRC laws and regulations and national fire-prevention standards.
	 
	 	11.10	 	Prior to the signing of this Contract, the Transferors have already disclosed all
information of the bank loans of the Company. As of the Payment Date, such information is
still complete, liable, accurate and true. As of the Signing Date, all bank loans of the
Company have been indicated in Appendix II to this Contract and as of the Delivery
Completion date, all due principal and interests of the debts set out in Appendix II hereto
have been fully paid off. The Transferors shall assume joint liabilities for any
undisclosed debts of the Company and any unpaid due principal and interests so as to hold
the Transferee and/or the Company harmless.

21/46

 

	 	11.11	 	The Company can legally own the land use right and building ownership for all the land
and buildings currently occupied and used by the Company, and could not be involved in any
legal action, arbitration, penalty or suffer from any other damage or loss due to the land
and/or building issues. In the event that the Transferee and/the Company suffer from any
penalty, damage or loss, etc. due to the use of land or building, the Transferors shall
assume the joint liability to fully compensate Transferee and/or the Company.
	 
	 	11.12	 	The land use right (granted) currently occupied and procured by the Company with the
State-owned Land Use Right Certificates (the serial numbers of which are: Fu Guo Yong
[2010] No. 000007, Fu Guo Yong [2010] No. 000024) has covered all the land needed by the
Company and the Hydroelectric Project, and the procurement of such land use right has been
fully in compliance with the regulations of PRC laws and regulations, and relevant fees and
taxes (including but not limited to requisition compensation fees and land grant premium)
have been fully paid off in accordance with law. In the event that the Transferee and/or
the Company suffer from any penalty, damage or loss, etc. due to such land, the Transferor
shall assume joint liability and fully compensate the Transferee and/or the Company.
	 
	 	11.13	 	When relevant governmental authorities begin to carry out the business of Building
Ownership Certificate, the Transferors shall, on their own expenses, procure the Building
Ownership Certificates for all buildings of the Hydroelectric Project registered under the
name of the Company and deliver the originals of the same to the Transferee.
	 
	 	11.14	 	As of the Delivery Completion Date, the Company does not, neither as lessee nor as
lessor, lease any moveable assets and real estate such as land, buildings equipments and
facilities, etc.
	 
	 	11.15	 	The selection of the entities for the project survey and design, construction,
substantial equipments and materials purchases and project supervisor have been in
compliance with the regulations of all RPC laws and regulations without any violation, and
the competent water resource authority will not impose any administrative penalty on the
Transferee and/or the Company due

22/46

 

	 	 	 	to such selection. In the event the Transferee and/or the Company suffer from any penalty,
damage or loss, etc. due to such selection of the entities for the project survey and
design, construction, substantial equipments and materials purchases and project
supervisor, the Transferors shall assume the joint liability to fully compensate the
Transferee and/or the Company.

	 	11.16	 	During the period between the Signing Date and the Delivery Completion Date
(inclusive), the Transferors shall normally operate and manage the Company and warrant that
there will not be any Material Adverse Change of the operation, business and conditions of
the Company.
	 
	 	11.17	 	As of the Delivery Completion Date, the Company does not have any equity investment or
other investment in any other companies, enterprises, and other economic organizations,
etc. In the event that the Company suffers from any damage or loss due to such undisclosed
equity investment or other investments, the Transferors shall assume joint liabilities and
fully compensate the Transferee and/or the Company.
	 
	 	11.18	 	As of the Delivery Completion Date, other than those securities set out in Appendix
III 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 restrictions, neither
has the Company provided any security (including but not limited to mortgage, pledge and
guarantee, etc.) for any other companies, enterprises, economic entities or any
individuals. In the event that the Company suffers from any damage or loss due to such
undisclosed securities, the Transferors shall assume joint liabilities and fully compensate
the Transferee and/or the Company
	 
	 	11.19	 	As of the Delivery Completion Date, the electricity fees collection right of the
Company is free from any pledge or other restrictions. In the event that the Transferee
and/or the Company suffer from any damage or loss sue to such pledge or restriction, the
Transferors shall assume joint liability and fully compensate the Transferee and/or the
Company

23/46

 

	 	11.20	 	The Company has completed relevant taxation registration effectively and obtained
valid taxation registration certificates, and conducted relevant taxation declaration in
accordance with PRC laws, with all contents declared being real and complete. As of June
30, 2010, the Company has fully paid up all taxes required by the PRC laws and regulations,
including but not limited to enterprise income tax, value-added tax, urban construction tax
and educational surcharges. The Transferors shall assume joint liabilities for any unpaid
tax and fine to the Transferee and/or the Company so as to hold the Transferee and/or the
Company harmless.
	 
	 	11.21	 	All construction projects (whether finished or under construction) of the Company have
obtained all requisite governmental approvals and permits and are strictly complied with
and without any violation of the approvals and permits issued by relevant governmental
authorities. In the event that the Company is punished or suffers from any damage or loss
after the completion of the share transfer by any governmental authority because of any
above issue, the Transferors shall assume joint liabilities and fully compensate the
Company and/or the Transferee.
	 
	 	11.22	 	The effectiveness of this Contract will not cause any Third Party to terminate the
contracts or agreements which are concluded with the Company prior to the effective date
(inclusive) of this Contract which are still effective on the effective date of this
Contract, and will not create any security or restriction in any other form favourable to
the Third Party on the assets and/or rights of the Company.
	 
	 	11.23	 	The effectiveness of this Contract will not cause any adverse effect on the
development, operation and assets of the Hydroelectric Project owned by the Company,
neither can or will cause the loss of the development right, operation right, ownership
right and right to profit of the Hydroelectric Project, which has been obtained by the
Company before the effective date of this Contract (inclusive).

24/46

 

	 	11.24	 	The originals of all the material contacts (including, without limitation, the
contracts and relevant supplemental agreements concerning project development, investment
cooperation, land requisition, land compensation, woodland compensation, land lease, loan,
security, counter security, insurance, design, construction, procurement, project
supervisor, purchase, sales of certified emission reductions, grid connection and
dispatching agreement, power purchase and sale contracts and relevant supplemental
agreements, etc. ) concluded by the Company prior to the Signing 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 to the Transferee in written form.
	 
	 	11.25	 	The Company’s production technology and procedures are in full compliance with
relevant PRC laws, 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 issue, the
Transferors shall assume joint liabilities and fully compensate the Company and/or
Transferee.
	 
	 	11.26	 	Labour Contracts between the Company and the employees who are still employed by the
Company upon the Signing Date of this Contract have been legally and validly concluded. The
various social insurance premiums, which shall be paid for the employees according to
relevant PRC laws and regulations, have been fully and timely paid up, and the Company has
not delayed any payment of the employees’ social insurance premiums, salaries, and other
welfares provided in PRC laws and the Company’s internal regulations. As of the Delivery
Completion Date, the Company is free from any problem which may lead the employees to
initiate labour arbitrations or lawsuits against the Company. In the event that the Company
and/or Transferee suffer from any punishment, loss or damage due to the aforesaid reasons,
the Transferors shall be jointly liable for the full compensation on the Transferee and/or
the Company.

25/46

 

	 	11.27	 	As of the Signing Date, relevant coordination fees, compensation fees and other
liabilities and obligations, which are payable and assumed by the Company to any Third
Party in accordance with relevant agreements for the purpose of the construction, land
occupation and other issues of the Hydroelectric Project, have been fully paid off or
implemented, and relevant originals of the payment evidences and implementation supporting
documents have been delivered to the Transferee. After the Signing Date, in the event that
the Company and/or the Transferee suffer from any loss or damage due to the aforesaid
reasons, the Transferors shall be jointly liable for the full compensation on Transferee
and/or the Company.
	 
	 	11.28	 	The Company and/or the Transferee will not suffer from any damage or loss as a result
of being involved of any legal action, arbitration, claim, etc. initiated by Carbon Asset
Management Sweden AB due to the Company’s termination and/or non-performance and/or failure
to perform the Certified Emission Reduction Purchase and Sale Agreement for the Aluhe
Hydropower Station with the installed capacity of 12.6 MW entered into between the Company
and Carbon Asset Management Sweden AB on March 25, 2007 and/or the Certified Emission
Reduction Purchase and Sale Agreement for the Zilenghe Hydropower Station with the
installed capacity of 24 MW entered into between the Company and Carbon Asset Management
Sweden AB. In the event that the Company and/or Transferee suffer from any loss or damage
due to the aforesaid reason, the Transferors shall be jointly liable for the full
compensation on the Transferee and/or the Company. All Parties hereby confirm that all
revenues generated from the Certified Emission Reduction Purchase and Sale Agreement shall
be owned by the Transferors.
	 
	 	11.29	 	Due to the reasonable needs of its production and operation, the Company has taken out
requisite insurances which are usually purchased by other companies in the same industry,
with all the insurance policies are valid, all the mature insurance premiums have been paid
up, and all the other key conditions have been fully fulfilled and complied with. As of the
Delivery Completion Date, there are no conditions which have lead or may lead the aforesaid
insurance

26/46

 

	 	 	 	policies to be invalid. The aforesaid insurance policies are free from restrictions from
any special or unusual articles. As of the Delivery Completion Date, there are no
situations in which the Company may claim for compensations from the insurer according to
the aforesaid insurance policies.

	 	11.30	 	All the accounts, books, ledgers and financial records of the Company have been
formulated in accordance with the accounting procedures and rules provided by PRC
accounting system, and have been fully, properly and accurately recorded and completed,
which do not involve any material mistake and deviation, and truly and precisely reflect
all transactions relating to the Company and show the financial, contractual and other
business conditions of the Company during every financial term.
	 
	 	11.31	 	Any representation and warranty made by the Transferors remain valid within
twenty-four months after the Delivery Completion Date.
	 
	 	11.32	 	In the event that the Transferors violate any representation or warranty hereof and
the Transferee incurs any damage or loss therefrom, the Transferee shall be entitled to
directly deduct relevant amount from the Guarantee Fund, the Transferors shall not request
the Transferee to refund such deducted amount and the such compensation shall not prejudice
any right enjoyed by the Company and/or the Transferee against the Transferors under the
PRC laws and regulations and other provisions of this Contract.
	 
	 	11.33	 	The Transferors undertake that they will use their best efforts to procure the
confirmation letter issued by Agricultural Bank of China, Kunming City Panjiawan
Sub-branch, confirming a) the bank has received the notice regarding the transfer of the
Sale Equity Stake and agreed on such transfer; b) the bank will not request the Company to
repay the loan in advance; c) the credit rating of the Company shall not be degraded due to
the deferred payment of the loan in the amount of RMB4,000 which was already due on January
18, 2010.
	 
	 	11.34	 	The Transferors undertake that their will use their best efforts to procure the
confirmation letter issued by the Agricultural Bank of China, Fugong County

27/46

 

	 	 	 	Sub-branch, confirming a) the bank has received the notice regarding the transfer of the
Sale Equity Stake and agreed on such transfer; b) the bank will not request the Company to
repay the loan in advance.

Chapter V Disclosures, Representations and Warranties by Transferee

Article 12 Disclosures, Representations and Warranties by Transferee

The Transferee hereby represents and warrants to the Transferors that:

	 	12.1	 	The Transferee is a limited liability company that has been duly established, validly
and legally in existence and also operated normally in accordance with the laws and
regulations of PRC.
	 
	 	12.2	 	The Transferee in 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 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 Transferee is a party to or is bound by.
	 
	 	12.3	 	No lawsuits, arbitrations, or other legal or administrative proceedings or governmental
investigations are on-going against Transferee that will materially affect its ability to
sign this Contract or fulfil its obligations under this Contract.
	 
	 	12.4	 	The Transferee undertakes that it will do its best to procure the approvals issued by
the Examination and Approval Authority requisite for the transfer of the Sale Equity Stake
contemplated under this Contract prior to May 25, 2010.

28/46

 

Chapter VI Delivery

Article 13 Delivery

	 	13.1	 	After the Signing Date, the Transferors and the Transferee shall immediately organize a
Delivery Team to make preparations for the delivery of the Company and the Hydroelectric
Project.
	 
	 	13.2	 	During the term from the Signing Date to the Delivery Completion Date:

	 	(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 RMB 50,000, it shall be subject to the prior written
consent of the Transferee); the Transferors shall not terminate any 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;

29/46

 

	 	(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 (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.

	13.3	 	The Transferors shall warrant making a full and complete delivery and the Company’s
movable assets and real estate delivered to the Transferee shall not be decreased or
damaged comparing with those listed in Appendix IV to this Contract. Otherwise, the
Transferors shall compensate the Transferee and/or the Company in full.

	13.4	 	The delivery includes but not limited to:

	 	(1)	 	The production, operation and management of the Company and the
Hydroelectric Project;

30/46

 

	 	(2)	 	Delivery of financial affairs;
	 
	 	(3)	 	The Company’s seals, such as the official seal, financial seal and
contract seal, etc. shall be delivered to the Transferee;
	 
	 	(4)	 	The originals of the accounts opening documents and seals for all the
bank accounts of the Company shall be delivered to the Transferee;
	 
	 	(5)	 	The Transferors and the Transferee shall check and verify all the
assets (including but not limited to the real estate and movable assets) of the
Company in accordance with the real estate and movable assets list of Appendix IV,
make a list of the Company’s assets, and complete the delivery with the
representatives of both the Transferor and the Transferee signed and confirmed on
site; during the checking and verifying of the assets, the Transferor shall
compensate for the damaged assets by reference to the assessed value;
	 
	 	(6)	 	Originals of all approvals, certificates, licences, customer
information and other materials shall be delivered to the Transferee, which shall
be no less than those materials set out in the materials list delivered to and
confirmed by the Transferee as provided in Appendix I;
	 
	 	(7)	 	Originals of all the project drawings, contracts and agreements
(including but not limited to grid connection and dispatching agreement, power
purchase and sale contract, project contract, equipment contract, installation
contract, project supervisor contract, materials contract, loan contract and
mortgage contract) and other files shall be delivered to the Transferee;
	 
	 	(8)	 	Originals of all the financial accounting books, financial vouchers
and the fiscal files shall be delivered to the Transferee;

31/46

 

	 	(9)	 	The Transferors shall deliver the specific technologies of the
parties to the Hydroelectric Project contracts, such as the parties of
construction, equipment manufacture, design, supervision, quality examination,
etc. to the Transferee; and
	 
	 	(10)	 	The delivery of other materials and files of the Company.

	 	13.5	 	The delivery shall be completed within five (5) Working Days after the Payment Date,
the completion of which shall be confirmed in writing by the Transferee. The Delivery
Completion Date shall be the issuance date of the written confirmation by the Transferee.
	 
	 	13.6	 	After the completion of the delivery, as for the reasonable request of further delivery
by the Transferee in writing, the Transferors shall cooperate actively.
	 
	 	13.7	 	The Transferors shall make sure the continuity, stability and safety of the production
and operation of the Company during the process of the delivery.
	 
	 	13.8	 	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 Debt Arrangement and Employees Relocation

Article 14 Debts Arrangement

	 	14.1	 	All Parties confirm that as of the Delivery Completion Date, the banking debts of the
Company shall be in the total amount of RMB 118,000,000, and the Company will continue to
undertake such loans after the completion of the transfer of the Sale Equity Stake. All
creditor’s right and other debts incurred prior to the Delivery Completion Date shall be
enjoyed and assumed by the

32/46

 

	 	 	 	Transferors and the Transferee and/or the Company shall not be liable unless otherwise
agreed by the Parties.
	 
	 	14.2	 	After the completion of the transfer of the Sale Equity Stake, except for the banking
debts in the amount of RMB 118,000,000 listed out in Article 14.1 above, the Transferee
shall not assume any other liabilities to the other banking debts of the Company incurred
before the Delivery Completion Date. In the event that the Company and/or the Transferee
suffer from any damage or loss due to such debts, the Transferors shall assume the joint
liability to fully compensate the Company and/or Transferee.

Article 15 Relocation of Employees

	 	15.1	 	Upon the completion of the transfer of the Sale Equity Stake, the Transferee shall be
entitled to choose to 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 its implementation regulations and other relevant PRC laws and
regulations. The Company shall 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 any 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

33/46

 

	 	 	 	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	 	Unless otherwise provided for in another relevant confidentiality agreement, with
regard to the confidential and exclusive information that have been disclosed to or may be
disclosed to the other Parties by any Party to this 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 made by the
receiving Party and was approved to be known by the receiving Party by the written
records before the disclosing Party disclosed the information to the receiving Party;

34/46

 

	 	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 to 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 require 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.
	 
	 	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.

35/46

 

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) for the losses and damages or any other
liabilities arising out of that defaulting Party’s breach of contract in accordance with
the provisions of this Contract and the laws and regulations of PRC. In the event all
Parties commit the breach of contract, one Party shall assume the liability to compensate
the loss or damage or other obligations for the other Parties respectively.
	 
	 	18.2	 	In the event that the undisclosed issues by Transferors prior to the signing of this
Contract which may influence the legal existence of the Company and the Hydroelectric
Project, actually influence the legal existence of the Company or the Hydroelectric Project
after the share transfer hereunder, the Transferee is entitled to the termination of this
Contract and to require the Transferors to fully pay back the Transfer Price which has
already paid by the Transferee and three percent (3%) of the Transfer Price as liquidated
damages; in addition, the Transferee is entitled to resort to other claims in accordance
with the PRC laws.
	 
	 	18.3	 	Any violation of the obligations, representations and warranties under this Contract by
any Party of the Transferors and 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

36/46

 

	 	 	 	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, 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 Transferors.

Chapter X Force Majeure

Article 19 Force Majeure

	 	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 the relevant laws and regulations of PRC.
	 
	 	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 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.

37/46

 

	 	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) days thereafter, it shall provide
sufficient evidence issued by the notary organization 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
thirty (30) days after the commencement of the friendly consultations, the dispute cannot
be resolved through such means, either Party may submit the dispute to China International
Economic and Trade Arbitration Commission South China Sub-Commission for arbitration in
accordance with its prevailing valid arbitration rules. The place for arbitration shall be
in Shenzhen.
	 
	 	20.2	 	The arbitration tribunal shall consist of three (3) arbitrators and the arbitrators
shall be proficient in both English and Chinese Languages.

Article 21 Validity of the Arbitration Award

The arbitration award shall be final and shall be 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

38/46

 

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 practice.

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 the prior written consents
from the other Parties or the written approvals from the Examination and Approval Authority as
required by laws, none of the Parties to this Contract shall transfer or assign that Party’s
entitlement or obligations as stipulated in this Contract.

39/46

 

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 both of the written document signed by
all Parties indicating their consent to such amendment and the written approval of the
Examination and Approval Authority, shall any amendment to this Contract become effective.

Article 27 Severability

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

Article 28 Language

This Contract is written in both the Chinese Language and the English Language. In case of any
inconsistency between the Chinese Language and the English Language, the Chinese Language shall
prevail.

Article 29 Validity of the Text and Appendices

	 	29.1	 	This Contract, being executed by all Parties, shall become effective on the approval
date by the Examination and Approval Authority. The Chinese text of this Contract shall be
signed in six (6) sets of original. Each Party shall each hold one (1) set of original, and
one (1) set of original each shall be sent to the Examination and Approval Authority and
other governmental authorities as required. The remaining originals shall be filed and kept
by the Company.
	 
	 	29.2	 	The English text of this Contract shall be signed in six (6) sets of original and one
(1) set of original each shall be sent to the Examination and Approval

40/46

 

	 	 	 	Authority and other governmental authorities as required. The remaining originals shall be
filed and kept by the Company.

	 	29.3	 	The Appendices to this Contract shall form an integral part of this Contract, and shall
have the same 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 and English Language and shall send them as a letter
by a courier service company or by facsimile. Letters sent by a courier service company
will require a confirmation to be given seven (7) Working 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 effective on the date of receipt. If they are sent by facsimile, the date of receipt
shall be deemed to be three (3) Working 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:
	 
	 	 	 	Transferee’s Address: 25B, New Poly Plaza, No.1 Chaoyangmen North St., Dongcheng District, Beijing

	 	 	 

	Telephone Number:

	 	010-6492 8483
	Facsimile Number:

	 	010-6496 1540
	Addressee:

	 	Jin Lei

	 	 	 	The Address appointed by Transferors together: 8th Floor, Minnan
Plaza, Hubin South Road, Xiamen City

	 	 	 

	Telephone Number:

	 	0592-5831088
	Facsimile Number:

	 	0592-5831299

41/46

 

	 	 	 

	Addressee:

	 	Mao Chengwen

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)

42/46

 

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

			
	Party A:	 	Fujian Huabang Hydroelectric Investment Co., Ltd. 
(Stamp)

Authorized Representative (Signature): /s/ James Li 

               
           
                    
               /s/ Gan Wu 

			
	Party B:	 	Yunnan Minfa Hydroelectric Development Group Co., Ltd.
(Stamp)

Authorized Representative (Signature): /s/ Zhang Zimin 

			
	Party C:	 	Xiamen Minrui Investment Co., Ltd.
(Stamp)

Authorized Representative (Signature): /s/ Zhang Zimin 

43/46

 

Appendix I Conditions Precedent

Conditions Precedent

The Transferors hereby jointly and severally confirm and warrant that they shall, on their own
expenses, complete all of the following conditions precedent:

	 	(1)	 	To procure the confirmation letter issued by Agricultural Bank of China, Kunming City
Panjiawan Sub-branch, confirming that it has consented to the deferred payment of the loan
in the principal amount of RMB4,000,000 which was due on January 18, 2010 to the end of
2010, or to pay off such loan to Agricultural Bank of China, Kunming City Panjiawan
Sub-branch;
	 
	 	(2)	 	To enter into the extension agreement on the Power Purchase and Sale Contract on
Outbound Transmission to Provincial Grid Output (purchaser’s contract number: Yun Dian Nu
Ying Gou Shou Dian He Tong [2009] No.17/Power Wheeling Party Contract number: YH2009003)
with Yunnan Grid Corporation Nujiang Power Supply Bureau and Yunnan Nujiang Power Grid
Co., Ltd. and to enter into the extension agreement on the Power Purchase and Sale
Contract (contract number 2009003); or procure the confirmation letter respectively issued
by Yunnan Grid Corporation Nujiang Power Supply Bureau and Yunnan Nujiang Power Grid Co.,
Ltd., confirming the Power Purchase and Sale Contract on Outbound Transmission to
Provincial Grid Output (purchaser’s contract number: Yun Dian Nu Ying Gou Shou Dian He
Tong [2009] No.17/Power Wheeling Party Contract number: YH2009003) is still valid and they
will continue to perform such contract and to obtain the confirmation letter issued by
Yunnan Nujiang Power Grid Co., Ltd., confirming that the Power Purchase and Sale Contract
(contract number 2009003) is still valid and it will continue to perform such contract;
	 
	 	(3)	 	The Transferors shall deliver the list of all documents, vouchers and other materials
of the Company to the Transferee, including, without limitation, the financial vouchers,
accounting books, approvals, certificates, permits,

44/46

 

	 	 	 	customers information, all contracts and agreements signed by the Company, employees
materials, etc.;

	 	(4)	 	To provide the preliminary design report of the Hydroelectric Project and relevant
approvals; and
	 
	 	(5)	 	To provide the overall completion acceptance report and relevant approvals.

45/46

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}]]