Exhibit 10.1

 

SHARE EXCHANGE AGREEMENT

 

By and Among

 

Kandi Technologies, Corp.

 

and

 

KO NGA Investment Limited

 

and

 

GAO SHUPING

 

and

 

ZHENG XIUJIN

 

and

 

HU QIKUN

 

and

 

XU WENGE

 

and

 

LUO XIANSONG

 

and

 

LI QIAOHONG

 

and

 

WANG YINGXIONG

 

Dated as of February 13, 2012

 

 

 

 

SHARE EXCHANGE AGREEMENT

 

This Share Exchange Agreement is made effective as of the 13th day of February,
2012 by and among Kandi Technologies, Corp., a Delaware corporation, with its
primary office at Jinhua City Industrial Zone, Jinhua, Zhejiang Province,
People’s Republic of China (“Kandi”); KO NGA Investment Limited, a British
Virgin Islands corporation, with its registration address at Portcullis TrustNet
Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands (“KO NGA”),
and each of the individuals listed on Schedule 1 attached hereto (individually,
a “Seller” and collectively, the “Sellers”).

 

WHEREAS:

 

A.          The Sellers are the owners of all of the issued and outstanding
common shares in the capital of KO NGA; KO NGA is the sole owner of all share
capital of K S Asia Limited Group Limited, a Hong Kong corporation, (“K S
Asia”), K S Asia is the sole owner and shareholder of Yongkang K S Electric
Limited, a Chinese company (“Yongkang”) and Yongkang is the sole owner and
shareholder of Yongkang Scrou Electric. Co., Ltd., a Chinese company (“Scrou”).

 

B.          Kandi has agreed to issue common stock shares of Kandi to the
Sellers as consideration for the purchase of all of the issued and outstanding
common shares of KO NGA held by the Sellers; and

 

C.          Upon the terms and subject to the conditions set forth in this
Agreement, the Sellers have agreed to sell all of the issued and outstanding
common shares of KO NGA to Kandi in exchange for common shares of Kandi.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties, intending to be legally bound,
covenant and agree as follows:

 

1.           DEFINITIONS

 

1.1         Definitions. The following terms have the following meanings in this
Agreement, unless the context indicates otherwise:

 

(a)“Agreement” shall mean this Agreement, and all the exhibits, schedules and
other documents attached or referred hereto, and all amendments and supplements,
if any, hereto;

 

(b)“Closing” shall mean the completion of the Transaction, in accordance with
Section 7 hereof, at which the Closing Documents shall be exchanged by the
parties, except for those documents or other items specifically required to be
exchanged at a later time;

 

(c)“Closing Date” shall mean a date mutually agreed upon by the parties hereto
in writing and in accordance with Section 10.6 hereof following the satisfaction
or waiver by Kandi and Sellers of the conditions precedent set out in Section 5
hereof, respectively, provided that such date shall be no later than June 30,
2012 unless mutually agreed to in writing by the Parties;

 

 

 

(d)“Closing Documents” shall mean the papers, instruments and documents required
to be executed and delivered at the Closing pursuant to this Agreement;

 

(e)“Exchange Act” shall mean the United States Securities Exchange Act of 1934,
as amended;

 

(f)“FINRA” means the Financial Industry Regulatory Authority;

 

(g)“Former Entity” means any entity other than K S Asia, Yongkang and Scrou that
has ever been owned by KO NGA or one of KO NGA’s subsidiaries.

 

(h)“GAAP” shall mean United States generally accepted accounting principles
applied in a manner consistent with prior periods;

 

(i)“Liabilities” shall include any direct or indirect indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate,
liquidated or unliquidated, secured or unsecured;

 

(j)“Kandi Shares” shall mean common stock shares of Kandi to be issued to the
Sellers by Kandi pursuant to this Agreement;

 

(k)“SEC” shall mean the United States Securities and Exchange Commission;

 

(l)“Securities Act” shall mean the United States Securities Act of 1933, as
amended;

 

(m)“Taxes” shall mean all international, federal, state, provincial and local
income taxes, capital gains taxes, value-added taxes, franchise, personal
property and real property taxes, levies, assessments, tariffs, duties
(including any customs duties), business license or other fees, sales, use and
any other taxes relating to the assets of the designated party or the business
of the designated party for all periods up to and including the Closing Date,
together with any related charge or amount, including interest, fines, penalties
and additions to tax, if any, arising out of tax assessments; and

 

(n)“Transaction” shall mean the purchase of all of the issued and outstanding
shares of KO NGA by Kandi from the Sellers in consideration for the issuance of
the Kandi Shares.

 

1.2         Schedules. The following schedules are attached to and form part of
this Agreement:

 

Schedule 1   List of Sellers Schedule 2   Regulation S. Certificate

  

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1.3         Currency. All references to currency in this Agreement are to United
States Dollars, unless expressly stated otherwise.

 

2.           OFFER, PURCHASE AND SALE OF SHARES

 

2.1         Offer, Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement, the Sellers hereby covenant and agree to sell,
assign and transfer to Kandi, and Kandi hereby covenants and agrees to purchase
from the Sellers, all of the issued and outstanding shares of KO NGA.

 

2.2          Consideration.

 

(a)Parties agree that the aggregate value of all of the issued and outstanding
shares of KO NGA is RMB 50,052,387.66, which value is primarily derived from KO
NGA’s indirect, wholly-owned operating entity Scrou, does not ascribe any amount
of value to any Former Entity, and is based upon the year end December 31, 2011
financial report of Scrou and a valuation report by Jinhua Jincheng Assets
Evaluation Co., Ltd on January 19, 2012;

 

(b)As consideration for the sale of all of the issued and outstanding shares of
KO NGA by the Sellers to Kandi, Kandi shall issue the Kandi Shares pro rata to
the Sellers, or a Seller’s designee, based on each Seller’s “percentage
interest” as set forth on Schedule 1 hereto at an aggregate price for the Kandi
Shares equal to RMB 50,052,387.66; and

 

(c)The price per share for the Kandi Shares in connection with the issuance
shall be the average closing price per share for the Kandi stock traded on
NASDAQ for the 10 consecutive trading days prior to the effective date of this
Agreement (the “Stock Price”). The exchange rate between U.S. Dollar and Chinese
RMB in connection with this stock issuance shall be the middle rate published by
the People’s Bank of China on the effective day of this Agreement (the “Exchange
Rate”).

 

(d)The number of Kandi Shares to which each Seller shall be entitled shall be
equal to a number derived by multiplying such Seller’s “percentage interest” (as
set forth on Schedule 1) by RMB 50,052,387.66, then dividing by the Exchange
Rate, and then dividing by the Stock Price.

 

(e)A sample Kandi Share distribution which assumes this Agreement was signed on
February 1, 2012 is set forth on Schedule 1; if the Agreement had been effective
February 1, 2012, the Exchange Rate would have been 6.31 and the Stock Price
would have been $3.412.

 

2.3          Share Exchange Procedure. The Sellers may exchange their
certificates representing their shares of KO NGA by delivering such certificates
to Kandi duly executed and endorsed in blank (or accompanied by a duly executed
stock power endorsed in blank), in proper form for transfer, signature
guaranteed, and, if applicable, with all stock transfer and any other required
documentary stamps affixed thereto and with appropriate instructions to allow
the transfer agent to issue certificates for Kandi Shares, together with a
Certificate of Non-U.S. Shareholder (the “Regulation S. Certificate”), a copy of
which is attached as Schedule 2 hereto.

 

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2.4         Fractional Shares. Notwithstanding any other provision of this
Agreement, no certificate for fractional Kandi Shares will be issued in the
Transaction. In lieu of any such fractional shares, if a Seller would otherwise
be entitled to receive a fraction of a Kandi Share upon surrender of the
certificate(s) representing all of such Seller’s ownership of shares of KO NGA
for exchange pursuant to this Agreement, such Seller will be entitled to have
such fraction rounded up to the nearest whole number of Kandi Shares and will
receive from Kandi a stock certificate representing same.

 

2.5         Closing Date. The Closing will take place, subject to the terms and
conditions of this Agreement, on the Closing Date.

 

2.6         Registered Shares.

 

(a)In order to register the Kandi Shares issued pursuant to the terms and
conditions set forth in this Agreement, Kandi will a file a S-3 registration
statement, if it is available to Kandi, or a post-effective amendment pursuant
to an effective shelf registration statement within 90 days of the Closing Date.
If Kandi is not qualified for an S-3 registration statement, then Kandi shall
prepare and file an S-1 registration statement for the Kandi Shares issued
pursuant to the terms and conditions set forth in this Agreement within 120 days
of the Closing Date.

 

(b)Each Seller acknowledges and agrees that the Kandi Shares are being issued
pursuant to an exemption from the prospectus and registration requirements of
the Securities Act. As required by applicable securities laws, each of the
Sellers agrees to abide by all applicable resale restrictions and hold periods
imposed by all applicable securities laws. Until the Kandi Shares are registered
pursuant to Section 2.6(a), all certificates representing the Kandi Shares
issued will be endorsed with the following legend pursuant to the Securities Act
in order to reflect the fact that the Kandi Shares will be issued to the Sellers
pursuant to an exemption from the registration requirements of the Securities
Act:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (A) IN THE ABSENCE OF (I) A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT OR (II) AN
OPINION OF COUNSEL TO THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (B)
UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF THE SECURITIES ACT. THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.”

 

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3.           REPRESENTATIONS AND WARRANTIES OF SELLERS

 

As of the Closing, KO NGA and the Sellers, jointly and severally, represent and
warrant to Kandi, and acknowledge that Kandi is relying upon such
representations and warranties, in connection with the execution, delivery and
performance of this Agreement, notwithstanding any investigation made by or on
behalf of Kandi, as follows:

 

3.1         Organization of KO NGA and its subsidiaries.

 

(a)KO NGA and its subsidiaries are corporations duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
incorporation and each has the requisite corporate power and authority to own,
lease and carry on its business as now being conducted. KO NGA and its
subsidiaries are duly qualified to do business and are in good standing as
foreign corporations in each of the jurisdictions in which they own property,
lease property, do business, or are otherwise required to do so, where the
failure to be so qualified would have a material adverse effect on the business
of KO NGA and its subsidiaries taken as a whole.

 

(b)All of the issued and outstanding shares of KO NGA common stock have been
duly authorized, are validly issued, were not issued in violation of any
pre-emptive rights and are fully paid and non-assessable, are not subject to
preemptive rights and were issued in full compliance with the laws of the
British Virgin Islands. There are no outstanding options, warrants,
subscriptions, conversion rights, or other rights, agreements, or commitments
obligating KO NGA to issue any additional shares of KO NGA Common Stock, or any
other securities convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire from KO NGA any shares of KO NGA Common Stock. There
are no agreements purporting to restrict the transfer of the KO NGA Common
Stock, no voting agreements, shareholders’ agreements, voting trusts, or other
arrangements restricting or affecting the voting of the KO NGA Common Stock.

 

(c)The issued and outstanding shares of each of KO NGA’s subsidiaries have been
duly authorized, are validly issued, were not issued in violation of any
pre-emptive rights and are fully paid and non-assessable, are not subject to
preemptive rights and were issued in full compliance with all applicable laws.
There are no outstanding options, warrants, subscriptions, conversion rights, or
other rights, agreements, or commitments obligating KO NGA or any of its
subsidiaries to issue any additional common stock of any of KO NGA’s
subsidiaries, or any other securities convertible into, exchangeable for, or
evidencing the right to subscribe for or acquire any shares of the common stock
of any of KO NGA’s subsidiaries. There are no agreements purporting to restrict
the transfer of the common stock of any of KO NGA’s subsidiaries, no voting
agreements, shareholders’ agreements, voting trusts, or other arrangements
restricting or affecting the voting of the common stock of any of KO NGA’s
subsidiaries.

 

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3.2         Standing. Each Seller is a natural person having legal capacity to
enter into this Agreement and to perform the Sellers’ obligations hereunder and
to consummate the Transaction. Each of this Agreement and any collateral
document to which any Seller is a party has been duly executed and delivered by
such Seller and constitutes a legal, valid and binding obligation of such
Seller, enforceable against such Seller in accordance with its terms.

 

3.3         Ownership of Equity. Each Seller (i) has good and valid title to and
beneficial ownership of the number of shares of capital stock of the KO NGA (the
“Shares”) set forth opposite such Seller’s name on Schedule 1 free and clear of
all liens, pledges, security interests and encumbrances, (ii) has not granted
any option, warrant or other right in or to any of the Shares, and (iii) is not
a party to any voting trust, voting agreement or shareholder agreement with
respect to the Shares.

 

3.4          Authority. KO NGA has all requisite corporate power and authority
to execute and deliver this Agreement and any other document contemplated by
this Agreement (collectively, the “KO NGA Documents”) to be signed by KO NGA and
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of each of the KO NGA Documents
by KO NGA and the consummation by KO NGA of the transactions contemplated hereby
have been duly authorized by its board of directors and no other corporate or
shareholder proceeding on the part of KO NGA is necessary to authorize such
documents or to consummate the transactions contemplated hereby. This Agreement
has been, and the other KO NGA Documents when executed and delivered by KO NGA
as contemplated by this Agreement will be, duly executed and delivered by KO NGA
and this Agreement is, and the other KO NGA Documents when executed and
delivered by KO NGA, as contemplated hereby will be, valid and binding
obligations of KO NGA enforceable in accordance with their respective terms,
except:

 

(a)as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors’ rights
generally;

 

(b)as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies; and

 

(c)as limited by public policy.

 

3.5         Legal Proceedings. There are no suits, actions, claims, proceedings
or investigations pending or, to the knowledge of Sellers, threatened against,
relating to or involving any Seller or KO NGA that would or would reasonably be
expected to impair the ability of any Seller or KO NGA to perform its respective
obligations hereunder or prevent or delay the consummation of the Transaction.

 

3.6          Corporate Records of KO NGA and its subsidiaries. The corporate
records of KO NGA and its subsidiaries, as required to be maintained by them
pursuant to all applicable laws, are accurate, complete and current in all
material respects, and the minute books of KO NGA and its subsidiaries are, in
all material respects, correct and contain all records required by all
applicable laws in regards to all proceedings, consents, actions and meetings of
their respective boards of directors.

 

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3.7          Non-Contravention. Neither the execution, delivery and performance
of this Agreement, nor the consummation of the Transaction, will:

 

(a)conflict with, result in a violation of, cause a default under (with or
without notice, lapse of time or both) or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation contained in or the
loss of any material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the material properties or
assets of KO NGA and its subsidiaries under any term, condition or provision of
any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease
or other agreement, instrument, permit, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to KO NGA or any of its
subsidiaries, or any of their respective material property or assets;

 

(b)violate any provision of the Articles of Incorporation, Bylaws or any other
documents of KO NGA or any of its subsidiaries or any applicable laws; or

 

(c)violate any order, writ, injunction, decree, statute, rule, or regulation of
any court or governmental or regulatory authority applicable to KO NGA or its
subsidiaries or any of their respective material property or assets.

 

3.8         Actions and Proceedings. There is no basis for and there is no
action, suit, judgment, claim, demand or proceeding outstanding or pending, or
threatened against or affecting KO NGA and its subsidiaries or which involves
any of the business, or the properties or assets of KO NGA and its subsidiaries
that, if adversely resolved or determined, would have a material adverse effect
on the business, operations, assets, properties, prospects, or conditions of KO
NGA and its subsidiaries taken as a whole (a “Material Adverse Effect”). There
is no reasonable basis for any claim or action that, based upon the likelihood
of its being asserted and its success if asserted, would have such a Material
Adverse Effect.

 

3.9          Compliance.

 

(a)Each of KO NGA and its subsidiaries is in compliance with, is not in default
or violation in any material respect under, and has not been charged with or
received any notice at any time of any material violation of any statute, law,
ordinance, regulation, rule, decree or other applicable regulation to its
business or operations;

 

(b)None of KO NGA and its subsidiaries is subject to any judgment, order or
decree entered in any lawsuit or proceeding applicable to its business and
operations that would constitute a Material Adverse Effect;

 

(c)KO NGA and its subsidiaries have duly filed all reports and returns required
to be filed with governmental authorities and have obtained all governmental
permits and other governmental consents, except as may be required after the
execution of this Agreement. All such permits and consents are in full force and
effect, and no proceeding for the suspension or cancellation of any of them, and
no investigation relating to any of them, is pending or threatened, and none of
them will be adversely affected by the consummation of the Transaction; and

 

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(d)Each of KO NGA and its subsidiaries has operated in material compliance with
all laws, rules, statutes, ordinances, orders and regulations applicable to its
business. None of KO NGA or its subsidiaries has received any notice of any
violation thereof, nor is aware of a valid basis therefore.

 

3.10       Filings, Consents and Approvals. No filing or registration with, no
notice to and no permit, authorization, consent, or approval of any public or
governmental body or authority or other person or entity is necessary for the
consummation by KO NGA and its subsidiaries of the Transaction contemplated by
this Agreement or to enable Kandi to continue to conduct the business of KO NGA
and its subsidiaries after the Closing Date in a manner which is consistent with
that in which the business is presently conducted.

 

3.11       Financial Representations. Each of (a) the consolidated unaudited
balance sheets for Scrou for the period ended December 31, 2011 (the “Accounting
Date”), together with related statements of income, cash flows, and changes in
shareholder’s equity for such interim period then ended (collectively, the
“Scrou Financial Statements”) and (b) the consolidated audited balance sheets
for KO NGA for its last two fiscal years plus any consolidated unaudited balance
sheets for KO NGA for the period ended on the Accounting Date, together with
related statements of income, cash flows, and changes in shareholder’s equity
for such fiscal years and interim period then ended (collectively, the “KO NGA
Financial Statements”) to be supplied on or before the Closing Date:

 

(a)are in accordance with the books and records of their respective entity; and

 

(b)present fairly the financial condition of their respective entity as of the
respective dates indicated and the results of operations for such periods.

 

Neither KO NGA nor Scrou has received any advice or notification from its
independent certified public accountants that KO NGA or Scrou has used any
improper accounting practice that would have the effect of not reflecting or
incorrectly reflecting in the KO NGA Financial Statements, the books and records
of KO NGA, the Scrou Financial Statements or the books and records of Scrou, any
properties, assets, liabilities, revenues, or expenses. The books, records, and
accounts of Scrou accurately and fairly reflect, in reasonable detail, the
assets, and liabilities of Scrou. Scrou has not engaged in any transaction,
maintained any bank account, or used any funds of Scrou, except for
transactions, bank accounts, and funds which have been and are reflected in the
normally maintained books and records of Scrou. The books, records, and accounts
of KO NGA accurately and fairly reflect, in reasonable detail, the assets, and
liabilities of KO NGA. KO NGA has not engaged in any transaction, maintained any
bank account, or used any funds of KO NGA except for transactions, bank
accounts, and funds which have been and are reflected in the normally maintained
books and records of KO NGA.

 

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3.12       Absence of Undisclosed Liabilities. Neither Scrou nor KO NGA has any
material liabilities or obligations either direct or indirect, matured or
unmatured, absolute, contingent or otherwise that exceed $10,000, which:

 

(a)are not set forth in the Scrou Financial Statements or the KO NGA Financial
Statements, respectively, and have not heretofore been paid or discharged;

 

(b)did not arise in the regular and ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed in writing
to Kandi; or

 

(c)have not been incurred in amounts and pursuant to practices consistent with
past business practice, in or as a result of the regular and ordinary course of
its business since the Accounting Date.

 

3.13       Tax Matters.

 

(a)None of KO NGA and its subsidiaries are presently under (nor have any of them
received notice of any contemplated) investigation or audit by any regulatory or
governmental agency or body or any foreign or state taxing authority concerning
any fiscal year or period ended prior to the date hereof;

 

(b)All taxes required to be withheld by KO NGA and its subsidiaries on or prior
to the date hereof from employees for income taxes, social security taxes,
unemployment taxes and other similar withholding taxes have been properly
withheld and, if required on or prior to the date hereof, have been deposited
with the appropriate governmental agency; and

 

(c)Each of the Scrou Financial Statements and the KO NGA Financial Statements
contain full provision for all taxes including any deferred taxes that may be
assessed to Scrou or KO NGA (as the case may be) for the accounting period ended
on the Accounting Date or for any prior period in respect of any transaction,
event or omission occurring, or any profit earned, on or prior to the Accounting
Date or for any profit earned by Scrou or KO NGA (as the case may be) on or
prior to the Accounting Date or for which Scrou or KO NGA is accountable up to
such date and all contingent liabilities for taxes have been provided for or
disclosed in the Scrou Financial Statements and the KO NGA Financial Statements.

 

3.14        Absence of Changes.

 

Since the Accounting Date, none of Scrou, KO NGA or any of KO NGA’s other
subsidiaries has:

 

(a)incurred any liabilities, other than liabilities incurred in the ordinary
course of business consistent with past practice, or discharged or satisfied any
lien or encumbrance, or paid any liabilities, other than in the ordinary course
of business consistent with past practice, or failed to pay or discharge when
due any liabilities of which the failure to pay or discharge has caused or will
cause any material damage or risk of material loss to it or to any of its assets
or properties;

 

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(b)sold, encumbered, assigned or transferred any material fixed assets or
properties except for ordinary course business transactions consistent with past
practice;

 

(c)created, incurred, assumed or guaranteed any indebtedness for money borrowed,
or mortgaged, pledged or subjected any of the material assets or properties of
Scrou, KO NGA or any of KO NGA’s other subsidiaries to any mortgage, lien,
pledge, security interest, conditional sales contract or other encumbrance of
any nature whatsoever;

 

(d)made or suffered any amendment or termination of any material agreement,
contract, commitment, lease or plan to which it is a party or by which it is
bound, or cancelled, modified or waived any substantial debts or claims held by
it or waived any rights of substantial value, other than in the ordinary course
of business;

 

(e)declared, set aside or paid any dividend or made or agreed to make any other
distribution or payment in respect of its capital shares or redeemed, purchased
or otherwise acquired or agreed to redeem, purchase or acquire any of its
capital shares or equity securities;

 

(f)suffered any damage, destruction or loss, whether or not covered by
insurance, that materially and adversely effects its business, operations,
assets, properties or prospects;

 

(g)suffered any material adverse change in its business, operations, assets,
properties, prospects or condition (financial or otherwise);

 

(h)received notice or had knowledge of any actual or threatened labor trouble,
termination, resignation, strike or other occurrence, event or condition of any
similar character which has had or might have an adverse effect on its business,
operations, assets, properties or prospects;

 

(i)made commitments or agreements for capital expenditures or capital additions
or betterments exceeding in the aggregate $5,000;

 

(j)other than in the ordinary course of business, increased the salaries or
other compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees or directors or
made any increase in, or any addition to, other benefits to which any of its
employees or directors may be entitled;

 

(k)entered into any transaction other than in the ordinary course of business
consistent with past practice; or

 

(l)agreed, whether in writing or orally, to do any of the foregoing.

 

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3.15       Absence of Certain Changes or Events.

 

Since the Accounting Date, there has not been:

 

(a)a Material Adverse Effect; or

 

(b)any material change by Scrou or KO NGA in its accounting methods, principles
or practices.

 

3.16       Personal Property. Scrou possesses, and has good and marketable title
to all property necessary for the continued operation of the business of Scrou
as presently conducted and as represented to Kandi. All such property is used in
the business of Scrou. All such property is in reasonably good operating
condition (normal wear and tear excepted), and is reasonably fit for the
purposes for which such property is presently used. All material equipment,
furniture, fixtures and other tangible personal property and assets owned or
leased by Scrou is owned by Scrou free and clear of all liens, security
interests, charges, encumbrances, and other adverse claims.

 

3.17       Intellectual Property.

 

(a)Intellectual Property Assets. KO NGA and its subsidiaries own or hold an
interest in all intellectual property assets necessary for the operation of the
business of KO NGA and its subsidiaries as they are currently conducted
(collectively, the “Intellectual Property Assets”), including:

 

(i)all functional business names, trading names, registered and unregistered
trademarks, service marks and applications (collectively, the “Marks”);

 

(ii)all patents, patent applications, and inventions, methods, processes and
discoveries that may be patentable (collectively, the “Patents”);

 

(iii)all copyrights in both published works and unpublished works (collectively,
the “Copyrights”); and

 

(iv)all know-how, trade secrets, confidential information, customer lists,
technical information, data, process technology, plans, drawings, and blue
prints owned, used, or licensed by KO NGA and its subsidiaries as licensees or
licensors (collectively, the “Trade Secrets”).

 

(b)Agreements. To the best knowledge of the Sellers, there are no outstanding or
threatened disputes or disagreements with respect to any agreements to which KO
NGA or any its subsidiaries is a party.

 

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(c)Intellectual Property and Know-How Necessary for the Business. KO NGA and its
subsidiaries are the owners of all rights, titles and interests in and to each
of the Intellectual Property Assets, free and clear of all liens, security
interests, charges, encumbrances and other adverse claims, and has the right to
use without payment to a third party of all the Intellectual Property Assets.
Each of KO NGA and is subsidiaries and all former and current employees and
contractors of KO NGA and its subsidiaries have executed written contracts,
agreements or other undertakings with KO NGA and its subsidiaries that assign
all rights to any Intellectual Property Assets or other inventions,
improvements, discoveries, or information relating to the business of Scrou to
Scrou. No employee, director, officer or shareholder of KO NGA or any of its
subsidiaries owns directly or indirectly in whole or in part, any Intellectual
Property Asset which Scrou is presently using or which is necessary for the
conduct of its business. No employee or contractor of KO NGA and its
subsidiaries has entered into any contract or agreement that restricts or limits
in any way the scope or type of work in which the employee may be engaged or
requires the employee to transfer, assign, or disclose information concerning
his work to anyone other than Scrou.

 

(d)Trade Secrets. KO NGA and its subsidiaries have taken all reasonable
precautions to protect the secrecy, confidentiality and value of its Trade
Secrets. KO NGA and its subsidiaries have good title and an absolute right to
use the Trade Secrets. The Trade Secrets are not part of the public knowledge or
literature. KO NGA and its subsidiaries have not been used, divulged, or
appropriated either for the benefit of any person or entity or to the detriment
of KO NGA and its subsidiaries. No Trade Secret is subject to any adverse claim
or has been challenged or threatened in any way.

 

3.18       Insurance. The products sold by and the assets owned by Scrou are
insured under various policies of general product liability and other forms of
insurance consistent with prudent business practices. All such policies are in
full force and effect in accordance with their terms, no notice of cancellation
has been received, and there is no existing default by Scrou, or any event
which, with the giving of notice, the lapse of time or both, would constitute a
default thereunder. All premiums to date have been paid in full.

 

3.19       Employees and Consultants. All employees and consultants of KO NGA
and its subsidiaries have been paid all salaries, wages, income and any other
sum due and owing to them by KO NGA or one of its subsidiaries, as at the end of
the most recent completed pay period. KO NGA and its subsidiaries are not aware
of any labor conflict with any employees. No employee of KO NGA or its
subsidiaries is in violation of any term of any employment contract,
non-disclosure agreement, non-competition agreement or any other contract or
agreement relating to the relationship of such employee with KO NGA and its
subsidiaries or to any other nature of the business conducted or to be conducted
by KO NGA and its subsidiaries.

 

3.20       Real Property. Each of the leases, subleases, claims or other real
property interests (collectively, the “Leases”) to which KO NGA or its
subsidiaries is a party or is bound is legal, valid, binding, enforceable and in
full force and effect in all material respects. All rental and other payments
required to be paid by KO NGA or its subsidiaries pursuant to any such Leases
have been duly paid and no event has occurred which, upon the passing of time,
the giving of notice, or both, would constitute a breach or default by any party
under any of the Leases. The Leases will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
Closing Date. KO NGA and its subsidiaries have not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the Leases
or the leasehold property pursuant thereto.

 

13

 

3.21       Material Contracts and Transactions. Each contract to which KO NGA or
one of its subsidiaries is a party is in full force and effect, and there exists
no material breach or violation of or default under any contract, or any event
that with notice or the lapse of time, or both, will create a material breach or
violation thereof or default under any contract by KO NGA and its subsidiaries.
The continuation, validity, and effectiveness of each contract will in no way be
affected by the consummation of the Transaction contemplated by this Agreement.
There exists no actual or threatened termination, cancellation, or limitation
of, or any amendment, modification or change to any contract.

 

3.22       No Brokers. None of KO NGA, KO NGA’s subsidiaries or Sellers has
incurred any obligation or liability to any party for any brokerage fees,
agent’s commissions or finder’s fees in connection with the Transaction
contemplated by this Agreement

 

3.23       Completeness of Disclosure. No representation or warranty by Sellers
or KO NGA in this Agreement nor any certificate, schedule, statement, document
or instrument furnished or to be furnished to Kandi pursuant hereto contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated herein or therein or necessary to
make any statement herein or therein not materially misleading.

 

4.          REPRESENTATIONS AND WARRANTIES OF KANDI

 

As of the Closing, Kandi represents and warrants to KO NGA and the Sellers and
acknowledges that KO NGA and the Sellers are relying upon such representations
and warranties in connection with the execution, delivery and performance of
this Agreement, notwithstanding any investigation made by or on behalf of KO NGA
or the Sellers, as follows:

 

4.1        Organization and Good Standing. Kandi is duly incorporated,
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
carry on its business as now being conducted.

 

4.2        Authority. Kandi has all requisite corporate power and authority to
execute and deliver this Agreement and any other document contemplated by this
Agreement (collectively, the “Kandi Documents”) to be signed by Kandi and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of each of the Kandi Documents
by Kandi and the consummation by Kandi of the transactions contemplated hereby
have been duly authorized by its board of directors and no other corporate or
shareholder proceeding on the part of Kandi is necessary to authorize such
documents or to consummate the transactions contemplated hereby. This Agreement
has been, and the other Kandi Documents when executed and delivered by Kandi as
contemplated by this Agreement will be, duly executed and delivered by Kandi and
this Agreement is, and the other Kandi Documents when executed and delivered by
Kandi, as contemplated hereby will be, valid and binding obligations of Kandi
enforceable in accordance with their respective terms, except:

 

14

 

(a)as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors’ rights
generally;

 

(b)as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies; and

 

(c)as limited by public policy.

 

4.3        Capitalization of Kandi. The authorized capital stock of Kandi
consists of 100,000,000 shares of Common Stock (the “Kandi Common Stock”) with
27,445,600 shares of common stock issued and outstanding. Kandi has 10,000,000
shares of preferred stock authorized, none of which are issued and outstanding.
All of such outstanding shares are duly authorized and have been, or upon
issuance will be, validly issued and are fully paid and non-assessable.

 

4.4        Corporate Records of Kandi. The corporate records of Kandi, as
required to be maintained by it pursuant to the laws of the State of Delaware,
are accurate, complete and current in all material respects, and the minute book
of Kandi is, in all material respects, correct and contains all material records
required by the law of the State of Delaware in regards to all proceedings,
consents, actions and meetings of the shareholders and the board of directors of
Kandi.

 

4.5        Validity of Kandi Common Stock Issuable upon the Transaction. The
Kandi Shares to be issued to the Sellers, or their designees, upon consummation
of the Transaction in accordance with this Agreement will, upon issuance, have
been duly and validly authorized and, when so issued in accordance with the
terms of this Agreement, will be duly and validly issued, fully paid and
non-assessable.

 

4.6        No Brokers. Kandi has not incurred any obligation or liability to any
party for any brokerage fees, agent’s commissions or finder’s fees in connection
with the Transaction contemplated by this Agreement.

 

5.         CLOSING CONDITIONS

 

5.1        Conditions Precedent to Closing by Kandi. The obligation of Kandi to
consummate the Transaction is subject to the satisfaction or written waiver of
the conditions set forth below by a date mutually agreed upon by the parties
hereto in writing and in accordance with Section 10.6. The Closing of the
Transaction contemplated by this Agreement will be deemed to mean a waiver of
all conditions to Closing. These conditions precedent are for the benefit of
Kandi and may be waived by Kandi in its sole discretion.

 

(a)Representations and Warranties. The representations and warranties of KO NGA
and the Sellers set forth in this Agreement will be true, correct and complete
in all respects as of the Closing Date, as though made on and as of the Closing
Date and Sellers will have delivered to Kandi a certificate dated as of the
Closing Date, to the effect that the representations and warranties made by KO
NGA and the Sellers in this Agreement are true and correct.

 

15

 

(b)Performance. All of the covenants and obligations that KO NGA and the Sellers
are required to perform or to comply with pursuant to this Agreement at or prior
to the Closing must have been performed and complied with in all material
respects.

 

(c)Transaction Documents. This Agreement, the Scrou Financial Statements and all
other documents necessary or reasonably required to consummate the Transaction,
all in form and substance reasonably satisfactory to Kandi, will have been
executed and delivered to Kandi.

 

(d)Third Party Consents. Kandi will have received duly executed copies of all
third party consents and approvals contemplated by this Agreement, in form and
substance reasonably satisfactory to Kandi.

 

(e)No Material Adverse Change. No Material Adverse Effect will have occurred
since the date of this Agreement.

 

(f)No Action. No suit, action, or proceeding will be pending or threatened
against Sellers or KO NGA and its subsidiaries before any governmental or
regulatory authority wherein an unfavorable judgment, order, decree,
stipulation, injunction or charge would:

 

(i)prevent the consummation of any of the transactions contemplated by this
Agreement; or

 

(ii)cause the Transaction to be rescinded following consummation.

 

(g)Delivery of Financial Statements. Scrou will have delivered to Kandi the
Scrou Financial Statements, which financial statements will include audited
financial statements for Scrou’s two most recent fiscal years, prepared in
accordance with GAAP. KO NGA will have delivered to Kandi the KO NGA Financial
Statements, which financial statements will include audited financial statements
for KO NGA’s two most recent fiscal years, prepared in accordance with GAAP.

 

(h)Due Diligence Review of Financial Statements. Kandi will be reasonably
satisfied with its due diligence investigation and review of the Scrou Financial
Statements.

 

(i)Due Diligence Generally. Kandi will be reasonably satisfied with its due
diligence investigation of KO NGA and its subsidiaries that is reasonable and
customary in a transaction of a similar nature to that contemplated by the
Transaction, including:

 

(i)materials, documents and information in the possession and control of KO NGA
or its subsidiaries which are reasonably germane to the Transaction;

 

(ii)a physical inspection of the assets of Scrou by Kandi or its
representatives;

 

16

 

(iii)a review by Kandi of all Material Agreements entered into by KO NGA or its
subsidiaries; and

 

(iv)title to the material assets of Scrou.

 

(j)Surrender of Shares. Sellers shall surrender all of the issued and
outstanding shares of KO NGA to Kandi endorsed in blank for transfer from
Sellers to Kandi.

 

(k)Former Entities. Yongkang shall have completed the transfer of its ownership
and/or shares in any entities other than Scrou to Sellers or a third party so
that the only entities directly or indirectly owned by KO NGA are K S Asia,
Yongkang and Scrou. Yongkang shall deliver to Kandi a new business license
issued by the China Administration for Industry and Commerce providing that
Yongkang has only one wholly owned subsidiary (Scrou).

 

5.2        Conditions Precedent to Closing by Sellers. The obligation of the
Sellers to consummate the Transaction is subject to the satisfaction or written
waiver of the conditions set forth below by a date mutually agreed upon by the
parties hereto in writing and in accordance with Section 10.6. The Closing of
the Transaction will be deemed to mean a waiver of all conditions to Closing.
These conditions precedent are for the benefit of the Sellers and may be waived
by Sellers in their discretion.

 

(a)Representations and Warranties. The representations and warranties of Kandi
set forth in this Agreement will be true, correct and complete in all respects
as of the Closing Date, as though made on and as of the Closing Date and Kandi
will have delivered to Sellers a certificate dated the Closing Date, to the
effect that the representations and warranties made by Kandi in this Agreement
are true and correct.

 

(b)Public Market. On the Closing Date, Kandi’s Common Stock will be traded on
the NASDAQ Global Market.

 

6.         ADDITIONAL COVENANTS OF THE PARTIES

 

6.1        Confidentiality. All information regarding the business of Kandi
including, without limitation, financial information that Kandi provides to
Sellers during its due diligence investigation of Kandi will be kept in strict
confidence by Sellers and will not be used (except in connection with due
diligence), dealt with, exploited or commercialized by Sellers or disclosed to
any third party (other than Sellers’s professional accounting and legal
advisors) without Kandi’s prior written consent. All information regarding the
business of KO NGA and its subsidiaries including, without limitation, financial
information that Sellers provides to Kandi during its due diligence
investigation of KO NGA and its subsidiaries will be kept in strict confidence
by Kandi and will not be used (except in connection with due diligence), dealt
with, exploited or commercialized by Kandi or disclosed to any third party
(other than Sellers’s professional accounting and legal advisors) without
Sellers’ prior written consent unless it is required by the law or regulations.
The Non-Disclosure Agreement, dated September 16, 2011, between the parties
shall remain in full force and effect for the period described therein or until
September 16, 2014, whichever is later.

 

17

 

 

6.2         Conduct of KO NGA and its subsidiaries. From the date of this
Agreement to the Closing Date, and except to the extent that Kandi otherwise
consents in writing, KO NGA and its subsidiaries will operate its business
substantially as presently operated and only in the ordinary course and in
compliance with all applicable laws, and use its best efforts to preserve intact
its good reputation and present business organization and to preserve its
relationships with persons having business dealings with it.

 

6.3         Certain Acts Prohibited. Except as expressly contemplated by this
Agreement or for purposes in furtherance of this Agreement, between the date of
this Agreement and the Closing Date, none of KO NGA nor any of its subsidiaries
will, without the prior written consent of Kandi:

 

(a)amend its Articles of Incorporation, Bylaws or other constating documents;

 

(b)incur any liability or obligation other than in the ordinary course of
business or encumber or permit the encumbrance of any of its properties or
assets except in the ordinary course of business;

 

(c)dispose of or contract to dispose of any of its property or assets, including
the Intellectual Property Assets, except in the ordinary course of business
consistent with past practice;

 

(d)issue, deliver, sell, pledge or otherwise encumber or subject to any lien any
shares of KO NGA Common Stock, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible securities;

 

(i)declare, set aside or pay any dividends on, or make any other distributions
in respect of the KO NGA Common Stock, or

 

(ii)split, combine or reclassify any KO NGA Common Stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of KO NGA Common Stock; or

 

(e)not materially increase the benefits or compensation expenses of KO NGA and
its subsidiaries, other than as contemplated by the terms of any employment
agreement in existence on the date of this Agreement, increase the cash
compensation of any director, executive officer or other key employee or pay any
benefit or amount not required by a plan or arrangement as in effect on the date
of this Agreement to any such person.

 

6.4        Notification. Between the date of this Agreement and the Closing
Date, each of the parties to this Agreement will promptly notify the other
parties in writing if it becomes aware of any fact or condition that causes or
constitutes a material breach of any of its representations and warranties as of
the date of this Agreement, if it becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would cause or constitute a
material breach of any such representation or warranty had such representation
or warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the Schedules
relating to such party, such party will promptly deliver to the other parties a
supplement to the Schedules specifying such change. During the same period, each
party will promptly notify the other parties of the occurrence of any material
breach of any of its covenants in this Agreement or of the occurrence of any
event that may make the satisfaction of such conditions impossible or unlikely.

 

18

 

 

6.5         Access and Investigation. Between the date of this Agreement and the
Closing Date, KO NGA, will and will cause its representatives to:

 

(a)afford Kandi and its representatives full and free access to its personnel,
properties, assets, contracts, books and records, and other documents and data;

 

(b)furnish Kandi and its representatives with copies of all such contracts,
books and records, and other existing documents and data as required by this
Agreement and as Kandi may otherwise reasonably request; and

 

(c)furnish Kandi and its representatives with such additional financial,
operating, and other data and information as Kandi may reasonably request.

 

All of such access, investigation and communication by Kandi and its
representatives will be conducted during normal business hours and in a manner
designed not to interfere unduly with the normal business operations of KO NGA
and its subsidiaries. KO NGA will instruct its auditors to co-operate with Kandi
and its representatives in connection with such investigations.

 

6.6        Public Announcements. Kandi and KO NGA each agree that they will not
release or issue any reports or statements or make any public announcements
relating to this Agreement or the Transaction contemplated herein without the
prior written consent of the other party, except as may be required upon written
advice of counsel to comply with applicable laws or regulatory requirements
after consulting with the other party hereto and seeking their reasonable
consent to such announcement.

 

7.         CLOSING

 

7.1        Closing. The Closing shall take place on the Closing Date at the
office of Kandi or at such other location as agreed to by the parties.

 

7.2        Closing Deliveries of Scrou and the Selling Shareholder. At Closing,
Sellers will deliver or cause to be delivered the following, fully executed and
in form and substance reasonably satisfactory to Kandi:

 

(a)A fully executed and completed copy of this Agreement;

 

(b)share certificates representing the KO NGA Shares as required by Section 2.3
of this Agreement;

 

(c)all certificates and other documents required by Section 2.3 of this
Agreement; and

 

19

 

(d)the Scrou Financial Statements, the KO NGA Financial Statements and any other
necessary documents, each duly executed by Sellers, as required to give effect
to the Transaction.

 

7.3        Closing Deliveries of Kandi. At Closing, Kandi will deliver or cause
to be delivered the following, fully executed and in form and substance
reasonably satisfactory to Sellers:

 

(a)copies of the resolutions or consent action adopted by or on behalf of the
Board of Directors of Kandi evidencing approval of this Agreement and the
Transaction;

 

(b)any other necessary documents, each duly executed by Kandi, as required to
give effect to the Transaction; and

 

(c)certificates representing the Kandi Shares.

 

8.          INDEMNIFICATION

 

8.1        Certain Definitions. For the purposes of this Article 8 the terms
“Loss” and “Losses” mean any and all demands, claims, actions or causes of
action, assessments, losses, damages, Liabilities, costs, and expenses,
including without limitation, interest, penalties, fines and reasonable
attorneys, accountants and other professional fees and expenses, but excluding
any indirect, consequential or punitive damages suffered by Kandi or KO NGA
including damages for lost profits or lost business opportunities.

 

8.2        Agreement of the Sellers to Indemnify. The Sellers will indemnify,
defend, and hold harmless, to the full extent of the law, Kandi and its
shareholders from, against, and in respect of any and all Losses asserted
against, relating to, imposed upon, or incurred by Kandi and its shareholders by
reason of, resulting from, based upon or arising out of:

 

(a)the breach by the Sellers or KO NGA of any representation or warranty of the
Sellers or KO NGA contained in or made pursuant to this Agreement or any
certificate or other instrument delivered pursuant to this Agreement;

 

(b)the breach or partial breach by the Sellers or KO NGA of any covenant or
agreement of the Sellers or KO NGA made in or pursuant to this Agreement or any
certificate or other instrument delivered pursuant to this Agreement;

 

(c)any misstatement, misrepresentation or breach of the representations and
warranties made by the Sellers contained in or made pursuant to the Certificate
of Non-U.S. Shareholder executed by the Selling Shareholder as part of the share
exchange procedure detailed in Section 2.3 of this Agreement; or

 

(d)a claim against Kandi or any of its subsidiaries arising out of KO NGA’s
prior direct or indirect ownership of a Former Entity.

 

20

 

 

8.3        Agreement of Kandi to Indemnify. Kandi will indemnify, defend, and
hold harmless, to the full extent of the law, the Sellers from, against, for,
and in respect of any and all Losses asserted against, relating to, imposed
upon, or incurred by the Sellers by reason of, resulting from, based upon or
arising out of:

 

(a)the breach by Kandi of any representation or warranty of Kandi contained in
or made pursuant to this Agreement or any certificate or other instrument
delivered pursuant to this Agreement; or

 

(b)the breach or partial breach by Kandi of any covenant or agreement of Kandi
made in or pursuant to this Agreement or any certificate or other instrument
delivered pursuant to this Agreement.

 

9.          TERMINATION

 

9.1         Termination. This Agreement may be terminated at any time prior to
the Closing Date contemplated hereby by:

 

(a)mutual agreement of Kandi, KO NGA and Sellers representing 51% of the
outstanding shares of KO NGA;

 

(b)Kandi, if (i) there has been a material breach by KO NGA or the Sellers of
any material representation, warranty, covenant or agreement set forth in this
Agreement on the part of KO NGA or the Sellers that is not cured, to the
reasonable satisfaction of Kandi, within ten business days after notice of such
breach is given by Kandi (except that no cure period will be provided for a
breach by KO NGA or the Sellers that by its nature cannot be cured); or (ii) the
due diligence inquiry into the Scrou Financial Statements reveals material
discrepancies from what has previously been represented to Kandi;

 

(c)KO NGA, if there has been a material breach by Kandi of any material
representation, warranty, covenant or agreement set forth in this Agreement on
the part of Kandi that is not cured by the breaching party, to the reasonable
satisfaction of KO NGA, within ten business days after notice of such breach is
given by Kandi (except that no cure period will be provided for a breach by
Kandi that by its nature cannot be cured);

 

(d)KO NGA or Kandi, upon payment of RMB 10 million to the other party; or

 

(e)KO NGA or Kandi if any permanent injunction or other order of a governmental
entity of competent authority preventing the consummation of the Transaction
contemplated by this Agreement has become final and non-appealable.

 

9.2        Effect of Termination. In the event of the termination of this
Agreement as provided in Section 9.1, this Agreement will be of no further force
or effect, provided, however, that no termination of this Agreement will relieve
any party of liability for any breaches of this Agreement that are based on a
wrongful refusal or failure to perform any obligations.

 

21

 

 

10.         MISCELLANEOUS PROVISIONS

 

10.1       Effectiveness of Representations; Survival. Each party is entitled to
rely on the representations, warranties and agreements of each of the other
parties and all such representations, warranties and agreements will be
effective regardless of any investigation that any party has undertaken or
failed to undertake. Unless otherwise stated in this Agreement, and except for
instances of fraud, the representations, warranties and agreements will survive
the Closing Date and continue in full force and effect until three (3) years
after the Closing Date.

 

10.2       Further Assurances. Each of the parties hereto will co-operate with
the others and execute and deliver to the other parties hereto such other
instruments and documents and take such other actions as may be reasonably
requested from time to time by any other party hereto as necessary to carry out,
evidence, and confirm the intended purposes of this Agreement.

 

10.3       Amendment. This Agreement may not be amended except by an instrument
in writing signed by each of the parties.

 

10.4       Expenses. Each party will bear its own costs incurred in connection
with the preparation, execution and performance of this Agreement and the
Transaction contemplated hereby, including all fees and expenses of its own
agents, representatives and accountants.

 

10.5       Entire Agreement. This Agreement, the schedules attached hereto and
the other documents in connection with this transaction contain the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior arrangements and understandings, both written and oral,
expressed or implied, with respect thereto. Any preceding correspondence or
offers are expressly superseded and terminated by this Agreement.

 

10.6       Notices. All notices and other communications required or permitted
under this Agreement must be in writing and will be deemed given if sent by
email, personal delivery, faxed with electronic confirmation of delivery,
internationally-recognized express courier or registered or certified mail
(return receipt requested), postage prepaid, to the parties at the addresses
provided in this Agreement.

 

All such notices and other communications will be deemed to have been received:

 

(a)In the case of email, on the day after the email has been sent;

 

(b)in the case of personal delivery, on the date of such delivery;

 

(c)in the case of a fax, when the party sending such fax has received electronic
confirmation of its delivery;

 

(d)in the case of delivery by internationally-recognized express courier, on the
third business day following dispatch; and

 

(e)in the case of mailing, on the seventh business day following mailing.

 

22

 

10.7        Headings. The headings contained in this Agreement are for
convenience purposes only and will not affect in any way the meaning or
interpretation of this Agreement.

 

10.8        Benefits. This Agreement is and will only be construed as for the
benefit of or enforceable by those persons party to this Agreement.

 

10.9        Assignment. This Agreement may not be assigned (except by operation
of law) by any party without the consent of the other parties.

 

10.10      Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the state of Delaware applicable to contracts made
and to be performed therein.

 

10.11      Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.

 

10.12      Gender. All references to any party will be read with such changes in
number and gender as the context or reference requires.

 

10.13      Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

 

10.14      Schedules. The schedules are attached to this Agreement and are
incorporated herein.

 

10.15      Effective. This Agreement becomes effective upon the parties’
execution.

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.

 

Kandi Technologies, Corp.       Per:       Name:  Hu Xiaoming     Title:  Chief
Executive Officer       KO NGA Investment Limited       Per:       Name:    
Title:  

 

23

 

 

Sellers:           GAO SHUPING           ZHENG XIUJIN           HU QIKUN        
  XU WENGE           LUO XIANSONG           LI QIAOHONG           WANG YINGXIONG
 

 

24

 

 

SCHEDULE 1

 

TO THE SHARE EXCHANGE AGREEMENT
Shareholders of KO NGA

 

Name   Address   Number of
KO NGA
Shares held
prior to
Closing  

Percentage

Interest

 

Sample

Distribution

of Kandi

Shares

(Sec 2.2(e))

Gao SHUPING

高淑萍

(ID330722196606095922)

 

NO 33 SHANGFANGJIAN XITIAN VILLAGE LONGSHAN TOWN, YONGKANG CITY, ZHEJIANG

浙江永康市龙山镇溪田村上房尖33号

  42   16.6008 % 385,936

ZHENG XIUJIN

郑秀金

(ID330722195909285921)

 

NO 33 XIADIANKOU VILLAGE LONGSHAN TOWN, YONGKANG, ZHEJIANG

浙江永康市龙山镇下奠口村33号

  30   11.8577 % 275,669

HU QIKUN

胡启昆

(ID330722195811010014)

 

NO 3218 JIULING EAST RAOD, DONGCHENG STREET, YONGKANG, ZHEJIANG

浙江永康市东城街道九铃东路3218号

  24   9.4862. % 220,535

XU WENGE

徐文革

(ID330722196612120426)

 

ROOM 503 NO 1166 JIULING WEST RAOD, XICHENG STREET, YONGKANG, ZHEJIANG

浙江永康市西城街道九铃西路1166号503室

  41   16..2005 % 376,747

LUO XIANSONG

罗献松

(ID330702197312252012)

 

NO 24 YANGHUAN ROAD, WUCHENG AREA, JINHUA, ZHEJIANG

浙江金华市婺城区杨环路24号

  30   11.8577 % 275,669

Li QIAOHONG

李巧红

(ID330722196001310028)

 

NO 3 BUILD 5 XIJIN ROAD, JIANGNAN STREET, YONGKANG, ZHEJIANG

浙江永康市江南街道西津路5幢3号

  43   16.9960 % 395,125

WANG YINGXIONG

王英雄

(ID330722197811044010)

 

NO 8 LANE 40 NANSHAN ROAD, NANSHAN VILLAGE GUSHAN TOWN, YONGKANG, ZHEJIANG

浙江永康市古山镇南山村南山路40弄 8号

  43   16.9960 % 395,125

 

Schedule 1-1

 

 

 

  

SCHEDULE 2

 

FORM REGULATION S. CERTIFICATE

 

Schedule 2-1