Joint
Venture Agreement





The
“Agreement” was made on the 28th day of
September 2010 by and among Jinhua Bada Group, Zhejiang Kandi Vehicles Co.,
Ltd., and Tianneng Power International Co., Ltd.








Party
A: Jinhua Bada Group


(Address: 480 Liberation West Road,
Jinhua City, Zhejiang Province, China)





Party
B: Zhejiang Kandi Vehicles Co., Ltd


(Address: Jinhua
Industrial Zone, Jinhua City, Zhejiang Province, China)





Party
C: Tianneng Power International Co., Ltd.


(Address:
Meishan Industrial Zone, Changxing City, Zhejiang Province, China)





The
Chinese government has recently called for “energy conservation”and“emission reduction” to achieve
the “sustainable development”. In order to explore a new business model and to
accelerate the industrialization process of pure electric vehicle development,
the three Parties, under the principles of “mutual complementarities”, “mutual
benefits” and “joint development”, agreed to set up an electric vehicle battery
replacement servicing company. The new service company will be based in Jinhua,
Zhejiang Province, China.





1.
            Profiles
      of Each Party.





Jinhua
Bada Group (“Bada Group”).





Bada Group is a large
integrated group company of Jinhua Electric Power Bureau in China, and isengagedprimarily ininvestinginelectrical project developmentand the related planning and management, as well as in electrical product
production and sales. Bada Group is part of the group enterprise of
Jinhua, China. It has a
complete structured system of product development and research, production and
servicingnetwork.





Zhejiang
Kandi Vehicles Co., Ltd. (“Zhejiang Kandi”)





Zhejiang Kandi,with its own vehicle
development and research center, is one of the major purely electric-powered car
manufacturers in Jinhua. Its parent company, Kandi Technologies Corp., is listed
on the NASDAQ stock market. Zhejiang Kandi has successfully developed a special
type of electric vehicle, the batteries of which can be easily removed or
replaced, and Zhejiang Kandi has over ten technical patents so far related to
this battery replacement technology.




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Tianneng
Power International Co., Ltd. (“Tianneng”)





Tiannengis the wholly-owned subsidiary of
Tianneng Batteries Group. Tianneng Batteries Group, listed on“Hong Kong Stock
Exchange”,is the
leading battery producer in China. It focuses on the development, research,
production and distribution of power batteries (including lead-acid, Ni-MH and
Li-ion batteries) and wind or solar energy storage batteries, as well as those
electronic appliances for electric vehicles. Tianneng Batteries Group is ranked
among the “Top 100 Enterprises” of Zhejiang Province, China in
2010.





2.
Objectives of the Joint Venture.





The three
Parties regard unanimously the
pure electric vehicles as green vehicle products of“Zero Emission and Zero
Pollution”. They believe that these types of
vehicles have very good prospectsprovided the obstacles toelectric vehicle purchasingbyconsumers, such ashigh purchase costs forpure
electric vehicle, limited vehicle
driving mileage,
time-consuming battery charging methods, as well as the inadequate charging
facilities, can be
adequately addressed.
Consequently, to realize the industrialization ofpure electric
vehicles, theParties will focus on anew business model of efficient
battery replacement service
networks toaddress the
issues.





To take
advantage of the development of Jinhua’s electric vehicle industry and
each Party’s development strengths in electric car and power battery industries
and to have a good use of their charging facilities, Zhejiang Kandi, Tianneng
and Bada Group agreed to establish a battery rental and replacement service
company (the name of the newly built company is to be confirmed by “State Administration for Industry &
Commerce of China”) to develop a comprehensive operating service network
system. This will help to satisfy various needs from clients and customers in
both product purchases and servicing.





A total
of 6 battery charging and replacement stations (5*5 grid intersection layout)
are to be established in a regions of approximately 300 km2,
offering standard batteries’ leasing, charging, and replacement, as well as
recycling services, within Jinhua urban areas through the battery delivery and
replacement servicing network. Also, the professional maintenance servicing work
and after-sale services will be provided within Jinhua for pure electric car and
power battery consumers. All this will promote the industrialization of pure electric vehicle and help
to realize its standardization.





3.
Registered Capital and Ownership of the New Company





The initial registered capital of the
newly built service company is 6 million RMB, of whichBada Group will
own 40%, Zhejiang Kandi will own
30% andTinnengwill
own 30%. This registered capital and the ownership of the new company can
be adjusted accordingly in the future. This Agreement sets forth that the
service company’s stocks shall not be transferred to other companies or
individuals without the unanimous consent or approvals from all the
shareholders, and that its general operating businesses of the new company and
its management should be conducted in accordance with the “Corporate Articles of
Incorporation” of the company.




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4.
Two Phases for the Scheme





(a).
Pilot Use Phase





The new
company is scheduled to build a demonstration base of pure electric vehicles, which is
expected to help accelerate the pace of industrialization pace of
electric vehicles. The new company will apply for government approval of the
demonstration base.





The new
business model will be adopted for the operating businesses in this
demonstration base, providing a set of integrated services of standard power
batteries’ leasing, quick replacement, recycling and other maintenance service
work, including lead-acid batteries.





(b).
Promotion Phase





Once the
new business model is successful, the new company will focus on the
“promotion phase” of the new business model.  Under the promotion
phase, the new business model will be replicated and constructed in other
cities. In this phase, the three Parties might consider integrating the
manufacture of both of the electric cars and power batteries into this business
model.





5.Project SchedulingManagement





The three Parties promise to make a good
use of each party’s social, market and technological resources in the
construction of battery charging infrastructure and the production ofpure electric vehicles and power batteries and to cooperate with each
other and work together to create a core competitive advantage to ensure this
project can realize commercial use in a short time and that it is profitable.
They are set to create a good business operation platform for the
industrialization development of Jinhua pure electric car industry





After the three Parties signed the
Agreement, threepartieswill organize a“Co-work Team”and conduct pre-period market research
and the early-stage construction work in connection with the establishment of
the new service company.They are all resolved to work in good
efforts and collaborate well to make the battery rental and replacementservicescompany enter the trial operation phase
by the end of November of 2010. The general operating business of the new
company should be conducted in accordance with the“Company Law of PRC”and the“Articles of Incorporation”of the company.





6. Rules and Regulations on
Others





(a)
            Default
      Responsibility





As for the failure in performing part of
the obligations set forth in the Agreement or delay in accomplishing the schemes
or projects indicated in this legal document, caused by natural irresistible
forces, the unforeseen circumstances or other conditions beyond the control of
Man, none of the three Parties shall be held responsible for thesedamages or losses; and the three
Parties may terminate the Agreement as they all agree to.




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When any Party wishes to terminate the
Agreement, that Party shall notify the other two parties 30 days in advance. If
one Party ends the validity of the Agreement without
authorizationor consent
from the other two parties,
then the two Parties
reserve the rights to seek legal actions against himfor his breach of
the Agreement.





(b)
            Effectiveness





The“Joint Venture Agreement”is made out six originals which have
the same legal force and effect, and each Party is to hold two copies
of this legal
documents.





And it becomes effective as from the date
of this agreement.Any undecided issues or events should be
settled by the means of formal negotiations and talks.








Jinhua
Bada Group (Seal)





Signatory:Su
Jianmin.







Zhejiang
Kandi Vehicles Co., Ltd (Seal)





Signatory:Hu
Xiaoming.







Tianneng
Power International Co., Ltd. (Seal)





Signatory: Zhou
Jianzhong.




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