Document:

Exhibit
10.5

     

    SHAREHOLDER
PLEDGE AGREEMENT

     

    SHAREHOLDER PLEDGE AGREEMENT
(this "Agreement"), dated as of
January 21, 2010, made Excelvantage Group Limited, a company organized under the
laws of the British Virgin Islands (the "Pledgor"), Kandi Technologies
Corp., a Delaware corporation (the "Company") and the secured
parties listed on the signature pages hereof (collectively, the “Secured Parties” and each,
individually, a “Secured
Party”).

     

    WITNESSETH:

     

    WHEREAS,
the Company and each of the Secured Parties are parties to party to the
Securities Purchase Agreement, dated as of January 20, 2010 (as amended,
restated or otherwise modified from time to time, the "Securities Purchase
Agreement"), pursuant to which the Company has agreed to sell, and the
Secured Parties has agreed to purchase, the Notes (as defined in the Securities
Purchase Agreement) and the Warrants (as defined Securities Purchase Agreement);
and

     

    WHEREAS,
in order to induce the Secured Parties to purchase, severally and not jointly,
the Notes and Warrants as provided for in the Securities Purchase Agreement, the
Pledgor has agreed to agreed to grant each Secured Party a separate, continuing
security interest in and to the Pledged Collateral (as defined below) in order
to secure the prompt and complete payment, observance and performance of the
Secured Obligations (as defined below).

     

    NOW,
THEREFORE, for and in consideration of the recitals made above and other good
and valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

     

    SECTION
1.   Definitions and Rules of
Interpretation.

     

    (a)           Definitions.  Reference
is made to the Securities Purchase Agreement and the Notes for a statement of
terms thereof.  All terms used in this Agreement which are defined in
the Securities Purchase Agreement or the Notes or in Article 8 or Article 9 of
the Uniform Commercial Code as in effect from time to time in the State of New
York (the "Code") and
which are not otherwise defined herein shall have the same meanings herein as
set forth therein; provided, that terms
used herein which are defined in the Code as in effect in the State of New York
on the date hereof shall continue to have the same meaning notwithstanding any
replacement or amendment of such statute except as the Secured Parties holding a
majority of the Secured Obligations then outstanding (the “Required Holders”) may
otherwise determine.  In the event that any such term is defined in
both the Securities Purchase Agreement, the Notes and the Code, the definition
of such term in the Securities Purchase Agreement or the Notes shall
control.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (b)           Rules of
Interpretation.  Except as otherwise expressly provided in this
Agreement, the following rules of interpretation apply to this Agreement: (i)
the singular includes the plural and the plural includes the singular; (ii) “or”
and “any” are not exclusive and “include” and “including” are not limiting;
(iii) a reference to any agreement or other contract includes permitted
supplements and amendments; (iv) a reference to a law includes any amendment or
modification to such law and any rules or regulations issued thereunder; (v) a
reference to a person includes its permitted successors and assigns; and (vi) a
reference in this Agreement to an Article, Section, Annex, Exhibit or Schedule
is to the Article, Section, Annex, Exhibit or Schedule of this
Agreement.

     

    SECTION
2.   Pledge
and Grant of Security Interest.  As collateral security for all
of the Secured Obligations (as defined in Section 3 hereof), the Pledgor hereby
pledges and assigns and grants to each Secured Party a separate, continuing
security interest in, and Lien on, all of his right, title and interest in and
to the following (collectively, the "Pledged
Collateral"):

     

    (a)           The
Pledgor’s shares of common stock of the Company as set forth in Schedule I (as such
Schedule is amended from time to time in accordance with the terms hereof), and
all future, issued and outstanding shares of capital stock, or other equity or
investment securities of, or partnership, membership, or joint venture interests
in, the Company  that are required to be pledged from time to time in
accordance with the terms hereof including without limitation, any Additional
Pledged Shares required to be pledged in accordance with Section 4(a) of this
Agreement, whether now owned or hereafter acquired by the Pledgor and whether or
not evidenced or represented by any stock certificate, certificated security or
other instrument, together with the certificates representing such equity
interests, all options and other rights, contractual or otherwise, in respect
thereof and all dividends, distributions, cash, instruments, investment property
and any other property (including, but not limited to, any stock dividend and
any distribution in connection with a stock split) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the foregoing and all cash and noncash proceeds thereof (collectively, the
"Pledged
Shares");

     

    (b)           all
present and future increases, profits, combinations, reclassifications, and
substitutes and replacements for all or part of the foregoing collateral
heretofore described;

     

    (c)           all
investment property, financial assets, securities, capital stock, other equity
interests, stock options and commodity contracts of the Pledgor, all notes,
debentures, bonds, promissory notes or other evidences of indebtedness payable
or owing to the Pledgor, and all other assets now or hereafter received or
receivable with respect to the foregoing;

     

    (d)           all
securities entitlements of the Pledgor in any and all of the foregoing;
and

     

    (e)           all
proceeds (including proceeds of proceeds) of any and all of the
foregoing;

     

    in each
case, whether now owned or hereafter acquired by the Pledgor and howsoever his
interest therein may arise or appear (whether by ownership, security interest,
Lien, claim or otherwise).

     

    SECTION
3.   Security for Secured
Obligations.  The security interest created hereby in the
Pledged Collateral constitutes continuing collateral security for the prompt
payment and due performance and observance of all of the following Secured
Obligations (the "Secured
Obligations"):

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (a)           all
liabilities, obligations, or undertakings owing by the Company to the Secured
Parties of any kind or description arising out of or outstanding under, advanced
or issued pursuant to, or evidenced by the Securities Purchase Agreement, the
Notes, the Warrants or any of the other Transaction Documents, and

     

    (b)           all
liabilities, obligations, or undertakings owing by Pledgor to the Secured
Parties under this Agreement, in each case with respect to the foregoing
liabilities, obligations or undertakings, irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, liquidated
or unliquidated, determined or undetermined, due or to become due, voluntary or
involuntary, whether now existing or hereafter arising, and including all
interest, costs, indemnities, fees (including attorneys fees), and expenses
(including interest, costs, indemnities, fees, and expenses that, but for the
provisions of the Bankruptcy Code, would have accrued irrespective of whether a
claim therefor is allowed) and any and all other amounts which Company or
Pledgor is required to pay pursuant to any of the foregoing, by law, or
otherwise.

     

    SECTION
4.   Delivery of the Pledged
Collateral.

     

    (a)           The
Market Price (as defined in the Notes) of the Pledged Shares held by any Secured
Party, as determined by such Secured Party in its sole discretion based on the
thirty (30) day Volume Weighted Average (as defined in the Notes) of the Common
Stock for the thirty (30) Trading Days (as defined in the Notes) immediately
preceding the date of determination (the "Pledged Share Value"), shall
at all times equal or exceed the aggregate principal amount outstanding under
the Note (whether or not then due and payable) of such Secured
Party.  The Pledgor shall, within five business days following the
receipt of notice from such Secured Party that the Pledged Share Value is less
than the aggregate principal amount outstanding under the Note of such Secured
Party, deliver additional shares ("Additional Pledged Shares") to
such Secured Party in accordance with the terms of this Section 4 such that
the Pledged Share Value (taking into account the fair market value of such
Additional Pledged Shares) shall be no less than the aggregate principal amount
outstanding under the Note.

     

    (b)           In
accordance with the terms and conditions set forth in the Securities Purchase
Agreement, the Pledgor shall deliver to each of the Secured Parties as of date
hereof a certificate with respect to the Pledged Shares to be initially held by
such Security Party in such amounts as set forth on Schedule I attached
hereto.  As of any given date, with respect to all other promissory
notes, certificates and instruments constituting Pledged Collateral from time to
time or required to be pledged to the Secured Parties pursuant to the terms of
this Agreement or the Securities Purchase Agreement, including without
limitation, any Additional Pledged Shares required to be pledged in accordance
with Section 4(a) above (collectively the "Additional Collateral") such
amount equal to a fraction (i) the numerator of which is the principal amount of
such Secured Party’s Note on such given date and (ii) the denominator of which
is the aggregate principal amount of all Notes outstanding as of such given date
(the “Secured Party Pro Rata
Amount”) of such Additional Collateral shall be delivered to each Secured
Party promptly upon receipt thereof by or on behalf of the
Pledgor.  All such promissory notes, certificates and instruments
shall be held by each Secured Party pursuant hereto and shall be delivered in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment or undated stock powers executed in blank,
all in form and substance reasonably satisfactory to the Secured
Parties.  If any Pledged Collateral consists of uncertificated
securities, unless the immediately following sentence is applicable thereto, the
Pledgor shall cause the applicable Secured Party (or its designated custodian,
nominee or other designee) to become the registered holder thereof, or cause
each issuer of such securities to agree that it will comply with instructions
originated by the applicable Secured Party (or its designated custodian, nominee
or other designee), with respect to such securities without further consent by
the Pledgor.  If any Pledged Collateral consists of securities
entitlements, the Pledgor shall transfer the applicable Secured Party Pro Rata
Amount of such securities entitlements to each Secured Party (or its designated
custodian, nominee or other designee) or cause the applicable securities
intermediary to agree that it will comply with entitlement orders by such
Secured Party (or its designated custodian, nominee or other designee) without
further consent by the Pledgor.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (c)           Promptly
upon the receipt by the Pledgor of any Additional Collateral and
contemporaneously with any delivery of Additional Pledged Shares in accordance
with Section 4(a), a Pledge Amendment, duly executed by the Pledgor, in
substantially the form of Annex I hereto (a
"Pledge Amendment"),
shall be delivered to each Secured Party, in respect of the Additional
Collateral which is or are to be pledged pursuant to this Agreement and the
Securities Purchase Agreement, which Pledge Amendment shall from and after
delivery thereof constitute part of Schedule I
hereto.  The Pledgor hereby authorizes each Secured Party to attach
each Pledge Amendment to this Agreement and agrees that all promissory notes,
certificates or instruments listed on any Pledge Amendment shall for all
purposes hereunder constitute Pledged Collateral and the Pledgor shall be deemed
upon delivery thereof to have made the representations and warranties set forth
in Section 6
with respect to such Additional Collateral.

     

    (d)           If
the Pledgor shall receive, by virtue of the Pledgor’s being or having been an
owner of any Pledged Collateral, any (i) stock certificate (including, without
limitation, any certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off or
split-off), promissory note or other instrument, (ii) option or right, whether
as an addition to, substitution for, or in exchange for, any Pledged Collateral,
or otherwise, (iii) dividends payable in cash (except such dividends
permitted to be retained by the Pledgor pursuant to Section 8 hereof) or
in securities or other property or (iv) dividends, distributions, cash,
instruments, investment property and other property in connection with a partial
or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus (collectively, the “Distribution Collateral”), the
Pledgor shall hold such Distribution Collateral in trust for the benefit of the
Secured Parties, shall segregate it from the Pledgor’s other property and shall
deliver the applicable Secured Party Pro Rata Amount of such Distribution
Collateral forthwith to each Secured Party in the exact form received, with any
necessary endorsement and/or appropriate stock powers duly executed in blank, to
be held by the each Secured Party as Pledged Collateral and as further
collateral security for the Secured Obligations.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (e)           So
long as no Event of Default (as defined in the Notes) has occurred or is
continuing, on the later to occur of (i) the final Adjustment Date (as defined
in the Notes) and (ii) the last business day of each fiscal quarter of the
Company beginning with the fiscal quarter ended March 31, 2010, if both (x) the
number of shares of Common Stock issuable pursuant to the Notes and Warrants
then outstanding of a Secured Party is less than the number of Pledge Shares
then held by such Secured Party and (y) the Pledged Share Value of the Pledged
Shares held by such Secured Party exceeds 110% of the Secured Obligations of
such Secured Party then outstanding (whether or not then due and payable), then
no later than the tenth (10th) Trading Day following receipt of written notice
from the Pledgor, such Secured Party shall release such number of Pledge Shares
to the Pledgor equal to the difference of (A) the number of Pledge Shares then
held by such Secured Party and (B) the number of shares of Common Stock issuable
pursuant to the Notes and Warrants then outstanding of such Secured
Party.

     

    SECTION
5.   Taxes.

     

    (a)           All
payments made by the Pledgor hereunder or under any other Transaction Document
shall be made in accordance with the terms of the respective Transaction
Document and shall be made without set-off, counterclaim, deduction or other
defense.  All such payments shall be made free and clear of and
without deduction for any present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on the net income of any Secured Party by the jurisdiction in which such
Secured Party  is organized or where it has its principal lending
office (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities, collectively or individually, "Taxes").  If the
Pledgor shall be required to deduct or to withhold any Taxes from or in respect
of any amount payable hereunder or under any other Transaction
Document:

     

    (i)           the
amount so payable shall be increased to the extent necessary so that after
making all required deductions and withholdings (including Taxes on amounts
payable to any Secured Party pursuant to this sentence) each Secured Party
receives an amount equal to the sum it would have received had no such deduction
or withholding been made,

     

    (ii)          the
Pledgor shall make such deduction or withholding,

     

    (iii)         the
Pledgor shall pay the full amount deducted or withheld to the relevant taxation
authority in accordance with applicable law, and

     

    (iv)        as
promptly as possible thereafter, the Pledgor shall send the Secured Parties an
official receipt (or, if an official receipt is not available, such other
documentation as shall be satisfactory to the Secured Parties, as the case may
be) showing payment.  In addition, the Pledgor agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, this Agreement or any other Transaction Document (collectively, "Other
Taxes").

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (b)           The
Pledgor hereby indemnifies and agrees to hold each Secured Party (each an "Indemnified Party") harmless
from and against Taxes or Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this Section 5) paid
by any Indemnified Party  as a result of any payment made hereunder or from
the execution, delivery, registration or enforcement of, or otherwise with
respect to, this Agreement or any other Transaction Document, and any liability
(including penalties, interest and expenses for nonpayment, late payment or
otherwise) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted.  This indemnification
shall be paid within 30 days from the date on which such Secured Party makes
written demand therefor, which demand shall identify the nature and amount of
such Taxes or Other Taxes.

     

    (c)           If
the Pledgor fails to perform any of its obligations under this Section 5, the
Pledgor shall indemnify each Secured Party for any taxes, interest or penalties
that may become payable as a result of any such failure.  The
obligations of the Pledgor under this Section 5 shall
survive the termination of this Pledge Agreement and the payment of the
Obligations and all other amounts payable hereunder.

     

    SECTION
6.   Representations and
Warranties.  The Pledgor represents and warrants as
follows:

     

    (a)           The
Pledgor has all requisite power and authority to execute, deliver and perform
its obligations under this Agreement.  This Agreement has been duly
executed and delivered by the Pledgor and constitutes a legal, valid and binding
obligation of the Pledgor, enforceable against the Pledgor in accordance with
its terms, except (a) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws now or hereafter in effect relating to, or affecting generally, the
enforcement of creditors’ and other obligees’ rights and (b) where the remedy of
specific performance or other forms of equitable relief may be subject to
certain equitable defenses and principles and to the discretion of the court
before which the proceeding may be brought.

     

    (b)           The
Pledged Shares have been duly authorized and validly issued, are fully paid and
nonassessable and the holders thereof are not entitled to any preemptive first
refusal or other similar rights.  All other shares of stock
constituting Pledged Collateral will be, when issued, duly authorized and
validly issued, fully paid and nonassessable.

     

    (c)           The
Pledgor is and will be at all times the legal and beneficial owner of the
Pledged Collateral free and clear of any Lien, security interest, option or
other charge or encumbrance except for the security interest and Lien created by
this Agreement or any Permitted Liens.

     

    (d)           The
exercise by any Secured Party of any of its rights and remedies hereunder will
not contravene any law or any contractual restriction binding on or affecting
the Pledgor or any of the properties of the Pledgor and will not result in or
require the creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of the properties of the Pledgor other
than pursuant to this Agreement and the other Transaction Documents, as defined
in the Securities Purchase Agreement, the "Transaction
Documents").

     

    (e)           No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority is required to be obtained or made by the Pledgor for
(i) the due execution, delivery and performance by the Pledgor of this
Agreement, (ii) the grant by the Pledgor, or the perfection, of the security
interest and Lien purported to be created hereby in the Pledged Collateral or
(iii) the exercise by any Secured Party of any of its rights and remedies
hereunder, except as may be required in connection with any sale of any Pledged
Collateral by laws affecting the offering and sale of securities
generally.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (f)           This
Agreement creates a valid security interest and Lien in favor of the Secured
Parties in the Pledged Collateral, as security for the Secured
Obligations.  Each Secured Party having possession of the certificates
representing the Pledged Shares and all other certificates, instruments and cash
constituting Pledged Collateral from time to time results in the perfection of
such security interest and Lien.  Such security interest and Lien is,
or in the case of Pledged Collateral in which the Pledgor obtains rights after
the date hereof, will be, a perfected Lien, subject only to the Permitted
Liens.  All action necessary or desirable to perfect and protect such
security interest and Lien has been duly taken, except for such Secured Party’s
having possession of certificates, instruments and cash constituting Pledged
Collateral after the date hereof.

     

    SECTION
7.   Covenants as to the Pledged
Collateral.  So long as any Secured Obligations shall remain
outstanding, the Pledgor will, unless the Required Holders, shall otherwise
consent in writing:

     

    (a)           keep
adequate records concerning the Pledged Collateral and permit the Secured
Parties, or any designees or representatives thereof at any time or from time to
time during reasonable hours after prior written notice to examine and make
copies of and abstracts from such records;

     

    (b)          at
the Pledgor’s expense, promptly deliver to each Secured Party a copy of each
material notice or other material communication received by the Pledgor in
respect of the Pledged Collateral;

     

    (c)           at
the Pledgor’s expense, defend each Secured Party’s right, title and security
interest in and to the Pledged Collateral against the claims of any
Person;

     

    (d)          at
the Pledgor’s expense, at any time and from time to time, promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary or desirable or that any Secured Party may reasonably request
in order to (i) perfect and protect, or maintain the perfection of, the
security interest and Lien purported to be created hereby, (ii) enable such
Secured Party to exercise and enforce its rights and remedies hereunder in
respect of the Pledged Collateral or (iii) otherwise effect the purposes of this
Agreement, including, without limitation, delivering to such Secured Party
irrevocable proxies in respect of the Pledged Collateral;

     

    (e)           not
sell, assign (by operation of law or otherwise), exchange or otherwise dispose
of any Pledged Collateral or any interest therein except as expressly permitted
by the Securities Purchase Agreement or the Notes;

     

    (f)           not
create or suffer to exist any Lien, upon or with respect to any Pledged
Collateral except for the Lien created hereby or for any Permitted
Lien;

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (g)           not
make or consent to any amendment or other modification or waiver with respect to
any Pledged Collateral or enter into any agreement or permit to exist any
restriction with respect to any Pledged Collateral;

     

    (h)      
    except as expressly permitted by the Securities Purchase
Agreement, not permit the issuance of (i) any additional shares of any class of
capital stock, partnership interests, member interests or other equity of the
Company, (ii) any securities convertible voluntarily by the holder thereof
or automatically upon the occurrence or non-occurrence of any event or condition
into, or exchangeable for, any such shares of capital stock or (iii) any
warrants, options, contracts or other commitments entitling any Person to
purchase or otherwise acquire any such shares of capital stock;

     

    (i)          
 not issue any stock certificate, certificated security or other instrument
to evidence or represent any shares of capital stock, any partnership interest
or membership interest described in Schedule I hereto;
and

     

    (j)        
   not take or fail to take any action which would in any manner
impair the validity or enforceability of each Secured Party’s security interest
in and Lien on any Pledged Collateral.

     

    SECTION
8.   Voting Rights,
Dividends, Etc. in Respect of the Pledged Collateral.

     

    (a)        
  So long as no Event of Default shall have occurred and be
continuing:

     

    (i)           the
Pledgor may exercise any and all voting and other consensual rights pertaining
to any Pledged Collateral for any purpose not inconsistent with the terms of
this Agreement, the Securities Purchase Agreement or the Notes;

     

    (ii)          the
Pledgor may receive and retain any and all dividends, interest or other
distributions paid in respect of the Pledged Collateral to the extent permitted
by the Securities Purchase Agreement; provided, however, that any and
all (A) dividends and interest paid or payable other than in cash in respect of,
and instruments and other property received, receivable or otherwise distributed
in respect of or in exchange for, any Pledged Collateral, (B) dividends and
other distributions paid or payable in cash in respect of any Pledged Collateral
in connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or paid-in surplus, and
(C) cash paid, payable or otherwise distributed in redemption of, or in exchange
for, any Pledged Collateral, together with any dividend, distribution, interest
or other payment which at the time of such dividend, distribution, interest or
other payment was not permitted by the Securities Purchase Agreement, shall be,
and shall forthwith be delivered to each Secured Party in proportion to their
Secured Party Pro Rata Amount to hold as, Pledged Collateral and shall, if
received by the Pledgor, be received in trust for the benefit of such Secured
Party, shall be segregated from the other property or funds of the Pledgor, and
shall be forthwith delivered to such Secured Party in the exact form received
with any necessary indorsement and/or appropriate stock powers duly executed in
blank, to be held by such Secured Party as Pledged Collateral and as further
collateral security for the Secured Obligations; and

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (iii)         each
Secured Party will execute and deliver (or cause to be executed and delivered)
to the Pledgor all such proxies and other instruments as the Pledgor may
reasonably request for the purpose of enabling the Pledgor to exercise the
voting and other rights which it is entitled to exercise pursuant to paragraph
(i) of this Section
8(a) and to receive the dividends, distributions, interest and other
payments which it is authorized to receive and retain pursuant to paragraph (ii)
of this Section
8(a), in each case, to the extent that such Secured Party has possession
of such Pledged Collateral.

     

    (b)          Upon
the occurrence and during the continuance of an Event of Default (as defined in
the Notes) (an "Event of
Default"), :

     

    (i)           all
rights of the Pledgor to exercise the voting and other consensual rights which
he would otherwise be entitled to exercise pursuant to paragraph (i) of
subsection (a) of this Section 8, and to
receive the dividends, distributions, interest and other payments which he would
otherwise be authorized to receive and retain pursuant to paragraph (ii) of
subsection (a) of this Section 8, shall
cease, and all such rights shall thereupon become vested in each Secured Party
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such dividends,
distributions, interest and other payments;

     

    (ii)          without
limiting the generality of the foregoing, each Secured Party may at his option
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any of the Pledged Collateral as if
it were the absolute owner thereof, including, without limitation, the right to
exchange, in its discretion, any and all of the Pledged Collateral upon the
merger, consolidation, reorganization, recapitalization or other adjustment of
any issuer of the Pledged Collateral or upon the exercise by any issuer of the
Pledged Collateral of any right, privilege or option pertaining to any Pledged
Collateral, and, in connection therewith, to deposit and deliver any and all of
the Pledged Collateral with any committee, depository, transfer agent, registrar
or other designated agent upon such terms and conditions as the Secured Parties
may determine; and

     

    (iii)         all
dividends, distributions, interest and other payments which are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section 8(b) shall be
received in trust for the benefit of the Secured Parties, shall be segregated
from other funds of the Pledgor, and shall be forthwith paid over to the Secured
Parties in proportion to the applicable Secured Party Pro Rata Amount as Pledged
Collateral in the exact form received with any necessary indorsement and/or
appropriate stock powers duly executed in blank, to be held by such Secured
Party as Pledged Collateral and as further collateral security for the Secured
Obligations.

     

    SECTION
9.   Additional Provisions
Concerning the Pledged Collateral.

     

    (a)           The
Pledgor hereby (i) authorizes the Secured Parties to file one or more financing
or continuation statements, and amendments thereto, relating to the Pledged
Collateral, without the signature of the Pledgor where permitted by law, (ii)
ratifies such authorization to the extent that the Secured Parties has filed any
such financing or continuation statements, or amendments thereto, without the
signature of the Pledgor prior to the date hereof and (iii) authorizes each
Secured Party to execute any agreements, instruments or other documents in the
Pledgor’s name and to file such agreements, instruments or other documents that
are related to the security interest and Lien of each Secured Party in the
Pledged Collateral or as provided under Article 8 or Article 9 of the Code or
any other applicable uniform commercial code or other law in any appropriate
filing office. Not withstanding anything to the contrary contained herein, no
Secured Party shall have any responsibility for the preparing, recording,
filing, re-recording, or re-filing of any financing statement, continuation
statement or other instrument in any public office.

     

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      
 

    (b)           The
Pledgor hereby irrevocably appoints each Secured Party as his attorney-in-fact
and proxy, with full authority in the place and stead and in his name or
otherwise, from time to time in the Secured Parties’ discretion to take any
action and to execute any instrument which the Secured Parties may deem
necessary or advisable to accomplish the purposes of this Agreement (subject to
the rights of the Pledgor under Section 8(a) hereof),
including, without limitation, to receive, indorse and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
distribution in respect of any Pledged Collateral and to give full discharge for
the same.  This power is coupled with an interest and is irrevocable
until the termination of this Agreement.

     

    (c)           If
the Pledgor fails to perform any agreement or obligation contained herein, each
Secured Party may perform, or cause performance of, such agreement or
obligation, and the expenses of such Secured Party incurred in connection
therewith shall be payable by the Pledgor pursuant to Section 11 hereof and
shall be secured by the Pledged Collateral.

     

    (d)           Other
than the exercise of reasonable care to assure the safe custody of the Pledged
Collateral while held hereunder, no Secured Party shall have any duty or
liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it or tendering
surrender of it to any of the Pledgor.  Each Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of the
Pledged Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which such Secured Party accords its own
property, it being understood that no Secured Party shall have responsibility
for (i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Pledged
Collateral, whether or not such Secured Party has or is deemed to have knowledge
of such matters, or (ii) taking any necessary steps to preserve rights against
any parties with respect to any Pledged Collateral.  Each Secured
Party agrees that, with respect to any Pledged Collateral at any time or times
in its possession and in which any other Secured Party has a Lien, the Secured
Party in possession of any such Pledged Collateral shall be the bailee of each
other Secured Party solely for purposes of perfecting (to the extent not
otherwise perfected) each other Secured Party’s Lien in such Pledged Collateral,
provided that no Secured Party shall be obligated to obtain or retain possession
of any such Pledged Collateral.  Without limiting the generality of
the foregoing, Secured Parties and Pledgor hereby agree that any Secured Party
that is in possession of any Pledged Collateral at such time as the Secured
Obligations owing to such Secured Party have been paid in full may deliver such
Pledged Collateral to the Company or, if requested by any Secured Party prior to
such delivery, may deliver such Pledged Collateral (unless otherwise restricted
by applicable law or court order and subject in all events to the receipt of an
indemnification of all liabilities arising from such delivery) to the requesting
Secured Party, without recourse to or representation or warranty by the Secured
Party in such possession.  No later than the third business day after
the Company’s receipt of such Pledged Collateral, the Company shall deliver to
each Secured Party with Secured Obligations then outstanding the applicable
Secured Party Pro Rata Amount of such Pledged Collateral.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (e)           The
powers conferred on each Secured Party hereunder are solely to protect its
interest in the Pledged Collateral and shall not impose any duty upon it to
exercise any such powers.  Except for the safe custody of any Pledged
Collateral in its possession and the accounting for monies actually received by
it hereunder, no Secured Party shall have any duty as to any Pledged Collateral
or as to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Pledged Collateral.

     

    (f)           Upon
the occurrence and during the continuation of any Default or Event of Default,
each Secured Party may at any time in its discretion (i) without notice to the
Pledgor, transfer or register in the name of such Secured Party or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights of the Pledgor under Section 8(a) hereof,
and (ii) exchange certificates or instruments constituting Pledged Collateral
for certificates or instruments of smaller or larger denominations.

     

    SECTION
10.   Remedies Upon
Default.  If any Event of Default shall have occurred and be
continuing:

     

    (a)           Each
Secured Party may exercise in respect of the Pledged Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
of the rights and remedies of a secured party on default under the Code then in
effect in the State of New York; and without limiting the generality of the
foregoing and without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange or broker’s board or elsewhere, at such price or prices and on
such other terms as such Secured Party may deem commercially
reasonable.  The Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten (10) days’ notice to any of the Pledgor
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification.  No
Secured Party shall be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given.  Each Secured Party
may adjourn any public or private sale by such Secured Party from time to time
by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned.

     

    (b)           The
Pledgor recognizes that it may be impracticable to effect a public sale of all
or any part of the Pledged Shares or any other securities constituting Pledged
Collateral and that each Secured Party may, therefore, determine to make one or
more private sales of any such securities to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire such securities
for its own account, for investment and not with a view to the distribution or
resale thereof.  The Pledgor acknowledges that any such private sale
may be at prices and on terms less favorable to the seller than the prices and
other terms which might have been obtained at a public sale and, notwithstanding
the foregoing, agrees that such private sales shall be deemed to have been made
in a commercially reasonable manner and that no Secured Party shall have any
obligation to delay sale of any such securities for the period of time necessary
to permit the issuer of such securities to register such securities for public
sale under the Securities Act of 1933, as amended (the "Securities
Act").  The Pledgor further acknowledges and agrees that any
offer to sell such securities which has been (i) publicly advertised on a bona
fide basis in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such an offer may
be so advertised without prior registration under the Securities Act) or (ii)
made privately in the manner described above to not less than fifteen (15) bona fide offerees shall
be deemed to involve a “public disposition” for the purposes of Section 9-610 of
the Code (or any successor or similar, applicable statutory provision) as then
in effect in the State of New York, notwithstanding that such sale may not
constitute a “public offering” under the Securities Act, and that any Secured
Party may, in such event, bid for the purchase of such
securities.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (c)           Any
cash held by any Secured Party as Pledged Collateral and all cash proceeds
received by such Secured Party in respect of any sale of, collection from, or
other realization upon, all or any part of the Pledged Collateral shall be
applied (after payment of any amounts payable to such Secured Party pursuant to
Section 11
hereof) by such Secured Party against, all or any part of the Secured
Obligations in such order as such Secured Party shall elect consistent with the
provisions of the Securities Purchase Agreement.

     

    (d)           In
the event that the proceeds of any such sale, collection or realization are
insufficient to pay all amounts to which any Secured Party is legally entitled,
the Pledgor shall be jointly and severally liable for the deficiency, together
with interest thereon at the highest rate specified in the Notes for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees, costs and
expenses of any attorneys employed by such Secured Party to collect such
deficiency.

     

    SECTION
11.   Indemnity and
Expenses.

     

    (a)           The
Pledgor hereby agrees to indemnify and hold each Secured Party (and all of its
officers, directors, employees, attorneys, consultants) harmless from and
against any and all claims, damages, losses, liabilities, obligations,
penalties, fees, costs and expenses (including, without limitation, reasonable
legal fees and disbursements of counsel) to the extent that they arise out of or
otherwise result from this Agreement (including, without limitation, enforcement
of this Agreement), except claims, losses or liabilities arising or resulting
directly from such Person’s gross negligence or willful misconduct as determined
by a court of competent jurisdiction.

     

    (b)           The
Pledgor shall be obligated for, and will upon demand pay to each Secured Party
the reasonable amount of any and all out-of-pocket costs and expenses, including
the reasonable fees and disbursements of such Secured Party’s counsel and of any
experts which such Secured Party may incur in connection with (i) the
preparation, negotiation, execution, delivery, recordation, administration,
amendment, waiver or other modification or termination of this Agreement, (ii)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of such Secured Party hereunder, or (iv) the
failure by the Pledgor to perform or observe any of the provisions
hereof.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    SECTION
12.   Notices,
Etc.  All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), sent by Federal Express or other
recognized courier service (return receipt requested), telecopied or delivered,
if to the Pledgor, to him at the address specified in the Securities Purchase
Agreement or if to the Secured Parties, to it at the address specified in the
Securities Purchase Agreement; or as to either such Person at such other address
as shall be designated by such Person in a written notice to such other Person
complying as to delivery with the terms of this Section 12.  All such
notices and other communications shall be effective (i) if sent by certified
mail, postage prepaid, return receipt requested, when received or three (3)
Business Days after mailing, whichever first occurs, (ii) if telecopied, when
transmitted and confirmation is received, provided same is on a Business Day
and, if not, on the next Business Day or (iii) if delivered or sent by Federal
Express or other recognized courier service (return receipt requested), upon
delivery, provided same is on a Business Day and, if not, on the next Business
Day.

     

    SECTION
13.   Security Interest
Absolute.  All rights of the Secured Parties, all Liens and all
obligations of the Pledgor hereunder shall be absolute and unconditional
irrespective of:  (i) any lack of validity or enforceability of the
Securities Purchase Agreement, the Notes or any other Transaction Document, (ii)
any change in the time, manner or place of payment of, or in any other term in
respect of, all or any of the Secured Obligations, or any other amendment or
waiver of or consent to any departure from the Securities Purchase Agreement,
the Notes or any other Transaction Document, (iii) any exchange or release of,
or non-perfection of any Lien on any Collateral, or any release or amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Secured Obligations, or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Pledgor in respect of
the Secured Obligations (other than the payment in full of the Secured
Obligations or complete conversion to equity securities of the Company of all
indebtedness obligations owed by the Company to the Secured Parties under the
Notes (including, without limitation, all principal, interest and fees related
to the Notes)).  All authorizations and agencies contained herein with
respect to any of the Pledged Collateral are irrevocable and powers coupled with
an interest.

     

    SECTION
14.   Beneficial
Ownership.  Each Secured Party shall not have the right to
exercise its rights under this Agreement, to the extent that after giving effect
to such exercise, any Secured Party (together with such Secured Party's
affiliates) would beneficially own in excess of 4.99% (the "Maximum Percentage") of the
shares of Common Stock outstanding immediately after giving effect to such
exercise.  To the extent the above limitation applies, the
determination of whether a Secured Party has any rights to acquired Common Stock
pursuant to this Agreement shall, subject to such Maximum Percentage limitation,
be determined on the basis of the first exercise of rights by such Secured
Party.  No prior inability to exercise rights pursuant to this
Agreement due to this paragraph shall have any effect on the applicability of
the provisions of this paragraph with respect to any subsequent
determination of exercisability. For purposes of this paragraph, beneficial
ownership and all determinations and calculations (including, without
limitation, with respect to calculations of percentage ownership) shall be
determined in accordance with Section 13(d) of the 1934 Act (as defined in the
Securities Purchase Agreement) and the rules and regulations promulgated
thereunder. The provisions of this paragraph shall be implemented in a manner
otherwise than in strict conformity with the terms of this paragraph to correct
this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Maximum Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly
give effect to such Maximum Percentage limitation.  The limitations
contained in this paragraph shall apply to a successor of the Secured
Party.  The holders of Common Stock shall be third party beneficiaries
of this paragraph and the Company may not waive this paragraph without the
consent of holders of a majority of its Common Stock.  For any reason
at any time, upon the written or oral request of such Secured Party, the Company
shall within one (1) Business Day confirm orally and in writing to such Secured
Party the number of shares of Common Stock then outstanding, including by virtue
of any exercise of rights of such Secured party hereunder, including, without
limitation, pursuant to any securities issued pursuant to the Securities
Purchase Agreement.  By written notice to the Company, any Secured
Party may increase or decrease the Maximum Percentage of such Secured Party, to
any other percentage not in excess of 9.99% specified in such notice; provided
that (i) any such increase will not be effective until the 61st day after such
notice is delivered to the Company, and (ii) any such increase or decrease will
apply only to such Secured Party sending such notice and not to any other
Secured Party. .

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    SECTION
15.   Acknowledgment.

     

    (a)           Each
Secured Party hereby agrees and acknowledges that no other Secured Party has
agreed to act for it as an administrative or collateral agent, and each Secured
Party is and shall remain solely responsible for the attachment, perfection and
priority of all Liens created by this Agreement or any other Security Document
in favor of such Secured Party.  No Secured Party shall have by reason
of this Agreement or any other Transaction Document an agency or fiduciary
relationship with any other Secured Party.  No Secured Party (which
term, as used in this sentence, shall include reference to each Secured Party’s
officers, directors, employees, attorneys, agents and affiliates and to the
officers, directors, employees, attorneys and agents of such Secured Party’s
affiliates) shall: (i) have any duties or responsibilities except those
expressly set forth in this Agreement and the other Security Documents or
(ii) be required to take, initiate or conduct any enforcement action
(including any litigation, foreclosure or collection proceedings hereunder or
under any of the other Security Documents).  Without limiting the
foregoing, no Secured Party shall have any right of action whatsoever against
any other Secured Party as a result of such Secured Party acting or refraining
from acting hereunder or under any of the Security Documents except as a result
and to the extent of losses caused by such Secured Party’s actual gross
negligence or willful misconduct.  No Secured Party assumes any
responsibility for any failure or delay in performance or breach by the Pledgor
or any Secured Party of its obligations under this Agreement or any other
Transaction Document.  No Secured Party makes to any other
Secured Party any express or implied warranty, representation or guarantee with
respect to any Secured Obligations, Pledged Collateral, Transaction Document or
the Pledgor.  No Secured Party nor any of its officers, directors,
employees, attorneys or agents shall be responsible to any other Secured Party
or any of its officers, directors, employees, attorneys or agents for:
(i) any recitals, statements, information, representations or warranties
contained in any of the Transaction Documents or in any certificate or other
document furnished pursuant to the terms hereof; (ii) the execution,
validity, genuineness, effectiveness or enforceability of any of the Transaction
Documents; (iii) the validity, genuineness, enforceability, collectability,
value, sufficiency or existence of any Pledged Collateral, or the attachment,
perfection or priority of any Lien therein; or (iv) the assets,
liabilities, financial condition, results of operations, business,
creditworthiness or legal status of the Pledgor.  No Secured Party nor
any of its officers, directors, employees, attorneys or agents shall have any
obligation to any other Secured Party to ascertain or inquire into the existence
of any default or Event of Default, the observance or performance by the Pledgor
of any of the duties or agreements of the Pledgor under any of the Transaction
Documents or the satisfaction of any conditions precedent contained in any of
the Transaction Documents.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (b)           Each
Secured Party hereby acknowledges and represents that it has, independently and
without reliance upon any other Secured Party, and based upon such documents,
information and analyses as it has deemed appropriate, made its own credit
analysis of the Pledgor and the Company and its own decision to enter into the
Transaction Documents and to purchase the Notes and Warrants, and
each Secured Party has made such inquiries concerning the Transaction
Documents, the Pledged Collateral, the Company and the Pledgor as such Secured
Party feels necessary and appropriate, and has taken such care on its own behalf
as would have been the case had it entered into the Transaction Documents
without any other Secured Party.  Each Secured Party hereby further
acknowledges and represents that the other Secured Parties have not made any
representations or warranties to it concerning the Pledgor, any of the Pledged
Collateral or the legality, validity, sufficiency or enforceability of any of
the Transaction Documents.  Each Secured Party also hereby
acknowledges that it will, independently and without reliance upon the other
Secured Parties, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in taking or refraining to take any other action
under this Agreement or the Transaction Documents.  No Secured Party
shall have any duty or responsibility to provide any other Secured Party with
any notices, reports or certificates furnished to such Secured Party by the
Pledgor or any credit or other information concerning the affairs, financial
condition, business or assets of the Company (or any of its affiliates) or any
Pledgor which may come into possession of such Secured Party

     

    SECTION
16.   Miscellaneous.

     

    (a)           No
amendment of any provision of this Agreement shall be effective unless it is in
writing and signed by the Pledgor and the Required Holders, and no waiver of any
provision of this Agreement, and no consent to any departure by the Pledgor
therefrom, shall be effective unless it is in writing and signed by the Required
Holders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

     

    (b)           No
failure on the part of any Secured Party to exercise, and no delay in
exercising, any right hereunder or under any other Transaction Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.  The rights and remedies of the Secured Parties provided
herein and in the other Transaction Documents are cumulative and are in addition
to, and not exclusive of, any rights or remedies provided by law.  The
rights of the each Secured Party under any Transaction Document against any
party thereto are not conditional or contingent on any attempt by such Secured
Party to exercise any of its rights under any other Transaction Document against
such party or against any other Person.

     

    (c)           Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (d)           This
Agreement shall create a continuing security interest in and Lien on the Pledged
Collateral and shall (i) remain in full force and effect until the termination
of this Agreement in accordance with the terms hereof and (ii) be binding
on the Pledgor and his heirs and assigns and shall inure, together with all
rights and remedies of each Secured Party and its successors, transferees and
assigns.  Without limiting the generality of clause (ii) of the
immediately preceding sentence, each Secured party may assign or otherwise
transfer its rights and obligations under this Agreement and any other
Transaction Document to any other Person pursuant to the terms of the Securities
Purchase Agreement, and such other Person shall thereupon become vested with all
of the benefits in respect thereof granted to such Secured Party herein or
otherwise.  Upon any such assignment or transfer, all references in
this Agreement to such Secured Party shall mean the assignee of such Secured
Party.  None of the rights or obligations of the Pledgor hereunder may
be assigned or otherwise transferred without the prior written consent of the
Required Holders, and any such assignment or transfer without such consent shall
be null and void.

     

    (e)           Notwithstanding
anything to the contrary in this Agreement, (i) this Agreement (along with all
powers of attorney granted hereunder) and the security interests and Lien
created hereby shall terminate and all rights to the Pledged Collateral shall
revert to the Pledgor upon the repayment in full and/or complete conversion to
equity securities of the Company of all indebtedness obligations owed by the
Company to the Secured Parties under the Notes (including, without limitation,
all principal, interest and fees related to the Notes), and (ii) the Secured
Parties will, upon the Pledgor’s request and at the Pledgor’s expense, (A)
return to the Pledgor such of the Pledged Collateral (to the extent delivered to
such Secured Party) as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (B) execute and deliver to the
Pledgor, without recourse, representation or warranty, such documents as the
Pledgor shall reasonably request to evidence such termination.

     

    (f)           The
internal laws, and not the laws of conflicts, of the State of New York shall
govern the enforceability and validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties, except
as required by mandatory provisions of law and except to the extent that the
validity and perfection or the perfection and the effect of perfection or
non-perfection of the security interest and Lien created hereby, or remedies
hereunder, in respect of any particular Pledged Collateral are governed by the
law of a jurisdiction other than the State of New York.

     

    (g)           Each
party to this Agreement hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the United States
District Court for the Southern District of New York sitting in Manhattan or the
Commercial Division, Civil Branch of the Supreme Court of the State of New York
sitting in New York County in connection with any suit, action or proceeding
directly or indirectly arising out of, under or in connection with this
Agreement or the other Transaction Documents or the transactions contemplated
hereby or thereby.  No party to this Agreement may move to (i)
transfer any such suit, action or proceeding brought in such New York court or
federal court to another jurisdiction, (ii) consolidate any such suit, action or
proceeding brought in such New York court or federal court with a suit, action
or proceeding in another jurisdiction or (iii) dismiss any such suit, action or
proceeding brought in such New York court or federal court for the purpose of
bringing the same in another jurisdiction.  Each party to this
Agreement agrees that a final judgment in any such suit, action or proceeding
shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law.  Each party to this
Agreement hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement, or the other Transaction Documents in any
New York court sitting in New York County or any federal court sitting in the
Southern District of New York.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (h)           The
Company hereby appoints CT Corporation System, with offices at 111 Eighth
Avenue, New York, New York 10011, as its agent for service of process in New
York.  Nothing contained herein shall affect the right of each Secured
Party to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against the Pledgor or any property of the
Pledgor in any other jurisdiction.

     

    (i)           The
Pledgor irrevocably and unconditionally waives any right he may have to claim or
recover in any legal action, suit or proceeding referred to in this Section any
special, exemplary, punitive or consequential damages.

     

    (j)           EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR OTHER TRANSACTION DOCUMENTS.

     

    (k)           The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.

     

    (l)           This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.

     

    [Signature
Page Follows]

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    In
Witness Whereof, the Pledgor, the Company and the Secured Parties have executed
and delivered this Agreement as of the date first above written.

     

    
      
        
          	
                  PLEDGOR:

                
	 
      
	
                  EXCELVANTAGE
      GROUP LIMITED

                
	 
      	 
      
	
                  By:

                	
                   

                
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    In
Witness Whereof, the Pledgor, the Company and the Secured Parties have executed
and delivered this Agreement as of the date first above written.

     

    
      
        
          	
                  SECURED
      PARTY:

                
	 
      
	
                  HUDSON
      BAY FUND, LP

                
	 
      	 
      
	
                  By:

                	
                   

                
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    In
Witness Whereof, the Pledgor, the Company and the Secured Parties have executed
and delivered this Agreement as of the date first above written.

     

    
      
        
          	
                  SECURED
      PARTY:

                
	 
      
	
                  HUDSON
      BAY OVERSEAS FUND, LTD.

                
	 
      	 
      
	
                  By:

                	
                   

                
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    In
Witness Whereof, the Pledgor, the Company and the Secured Parties have executed
and delivered this Agreement as of the date first above written.

     

    
      
        
          
            
              	

                      SECURED
      PARTY:

                    
	 
	
                      CAPITAL
      VENTURES INTERNATIONAL

                    
	 
      	 
      
	
                      By:

                    	
                       

                    
	 
      	
                      Name:

                    
	 
      	
                      Title:

                    

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    In
Witness Whereof, the Pledgor, the Company and the Secured Parties have executed
and delivered this Agreement as of the date first above written.

     

    
      
        
          	
                  KANDI
      TECHNOLOGIES, CORP.

                
	 
      	 
      
	
                  By:

                	
                   

                
	 
      	
                  Name:

                
	 
      	
                  Title:

                

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    SCHEDULE I TO PLEDGE
AGREEMENT

     

    Pledged
Shares

     

    
      
        
          
            
              
                
                  
                    	
                            Pledgor

                          	 	
                            Name of Issuer

                          	 	
                            Number

                            of Shares

                          	 	 	
                            
                            

                            % of

                            Shares

                          	 	
                             

                            Class

                          	 	
                            Secured Party

                             to Initially 

                            Hold Certificate

                            with respect to such

                             Pledged Shares

                          
	
                            Excelvantage
      Group Limited

                          	 	
                            Kandi

                            Technologies,

                            Corp

                          	 	 	574,000	 	 	 	2.876	%	
                            Common
      Stock

                          	 	
                            Hudson
      Bay Fund, LP

                          
	
                            Excelvantage
      Group Limited

                          	 	
                            Kandi

                            Technologies,

                            Corp

                          	 	 	826,000	 	 	 	4.138	%	
                            Common
      Stock

                          	 	
                            Hudson
      Bay Overseas Fund, Ltd.

                          
	
                            Excelvantage
      Group Limited

                          	 	
                            Kandi

                            Technologies,

                            Corp

                          	 	 	1,400,000	 	 	 	7.014	%	
                            Common
      Stock

                          	 	
                            Capital
      Ventures
International

                          

                  

                

              

            

          

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    ANNEX
I

     

    TO

     

    PLEDGE
AGREEMENT

     

    PLEDGE
AMENDMENT

     

    This
Pledge Amendment, dated ●, 20●, is delivered pursuant to Section 4 of the
Pledge Agreement referred to below.  The undersigned hereby agrees
that this Pledge Amendment may be attached to the Amended and Restated Pledge
Agreement, dated as of July __, 2010, made by ___________ in favor of the
secured parties signatory thereto (the "Secured Parties") as it may
heretofore have been or hereafter may be amended or otherwise modified or
supplemented from time to time and that the promissory notes [and/or] shares or
other equity interests listed on this Pledge Amendment shall be hereby pledged
and assigned to the Secured Parties and become part of the Pledged Collateral
referred to in such Pledge Agreement and shall secure all of the obligations
referred to in such Pledge Agreement.

     

    Pledged
Shares

     

    
      
        
          
            
              
                
                  
                    	
                            Pledgor

                          	 	
                            Name of Issuer

                          	 	
                            Number of Shares or

                            Other Equity Interests

                          	 	 	
                            Class

                          	 	 	
                            Certificate No(s)

                          	 
	 
      	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

                  

                

              

            

          

        

      

    

     

    
      
        
          	
                  [PLEDGOR]

                
	 
      	 
      
	
                  By:

                	 
      
	 
      	
                  [SHAREHOLDER]Exhibit
10.6

     

    VOTING
AGREEMENT

     

    VOTING
AGREEMENT, dated as of January 21, 2010 (this "Agreement"), by and among
Kandi Technologies, Corp., a Delaware corporation (the "Company") and Excelvantage
Group Limited, a company organized under the laws of the British Virgin Islands
(the "Stockholder").

     

    WHEREAS, the Company and certain investors (each, an "Investor", and collectively,
the "Investors") have
entered into a Securities Purchase Agreement, dated as of the date hereof (the
"Securities Purchase
Agreement"), pursuant to which, among other things, the Company has
agreed to issue and sell to the Investors and the Investors have, severally but
not jointly, agreed to purchase (i) senior secured convertible notes of the
Company (the "Notes"),
which will be convertible into shares of the Company's common stock, $0.001 par
value per share (the "Common Stock", as converted,
the "Conversion Shares")
in accordance with the terms of the Notes, and (ii) warrants (the "Warrants"), which will be
exercisable to purchase shares of Common Stock (as exercised collectively, the
"Warrant
Shares").

     

    WHEREAS,
as of the date hereof, the Stockholder owns shares of Common Stock, which
represents (i) approximately 60.12% of the total issued and outstanding Common
Stock of the Company, and (ii) approximately 60.12% of the total voting power of
the Company;

     

    WHEREAS,
as a condition to the willingness of the Investors to enter into the Securities
Purchase Agreement and to consummate the transactions contemplated thereby
(collectively, the "Transaction"), the Investors
have required that the Stockholder agree, and in order to induce the Investors
to enter into the Securities Purchase Agreement, the Stockholder has agreed, to
enter into this Agreement with respect to all the Common Stock now owned and
which may hereafter be acquired by the Stockholder and any other securities, if
any, which Stockholder is currently entitled to vote, or after the date hereof
becomes entitled to vote, at any meeting of the stockholders of the Company (the
"Other
Securities").

     

    NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:

     

    ARTICLE
I

    

    VOTING AGREEMENT OF THE
STOCKHOLDER

     

    SECTION
1.01.     Voting
Agreement.  Subject to the last sentence of this
Section 1.01, the Stockholder hereby agrees that at any meeting of the
stockholders of the Company, however called, and in any action by written
consent of the Company’s stockholders, the Stockholder shall vote the Common
Stock and the Other Securities:  (a) in favor of the Stockholder
Approval (as defined in the Securities Purchase Agreement), the Resolutions (as
defined in the Securities Purchase Agreement) and the Stockholder Consent (as
defined in the Securities Purchase Agreement), as applicable, as described in
Section 4(v) of the Securities Purchase Agreement; and (b) against any
proposal or any other corporate action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Transaction Documents (as defined in the
Securities Purchase Agreement) or which could result in any of the conditions to
the Company's obligations under the Transaction Documents not being
fulfilled.  The Stockholder acknowledges receipt and review of a copy
of the Securities Purchase Agreement and the other Transaction
Documents.  The obligations of the Stockholder under this Section 1.01
shall terminate immediately following the occurrence of the Stockholder
Approval.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    ARTICLE
II

    

    REPRESENTATIONS AND
WARRANTIES OF THE STOCKHOLDER

     

    The
Stockholder hereby represents and warrants to the Company and each of the
Investors as follows:

     

    SECTION
2.01.  Authority Relative to this
Agreement.  The Stockholder has all requisite power and
authority to execute, deliver and perform its obligations under this
Agreement.  This Agreement has been duly executed and delivered by the
Stockholder and constitutes a legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except (a) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws
now or hereafter in effect relating to, or affecting generally, the enforcement
of creditors’ and other obligees’ rights and (b) where the remedy of specific
performance or other forms of equitable relief may be subject to certain
equitable defenses and principles and to the discretion of the court before
which the proceeding may be brought.

     

    SECTION
2.02.  No
Conflict.  (a)  The execution and delivery of this
Agreement by the Stockholder does not, and the performance of this Agreement by
the Stockholder shall not, (i) conflict with or violate any federal, state or
local law, statute, ordinance, rule, regulation, order, judgment or decree
applicable to the Stockholder or by which the Common Stock or the Other
Securities owned by the Stockholder are bound or affected or (ii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the Common Stock or the Other
Securities owned by the Stockholder pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Stockholder is a party or by which the
Stockholder or the Common Stock or Other Securities owned by the Stockholder is
bound.

     

    (b)           The
execution and delivery of this Agreement by the Stockholder does not, and the
performance of this Agreement by the Stockholder shall not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental entity by the Stockholder.

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

     

    SECTION
2.03.  Title
to the Stock.  As of the date hereof, the Stockholder is the
owner of 12,000,000 shares of Common Stock, entitled to vote, without
restriction, on all matters brought before holders of capital stock of the
Company, which Common Stock represents on the date hereof approximately 60.12%
of the outstanding stock and approximately 60.12% of the voting power of the
Company.  Such Common Stock is all the securities of the Company
owned, either of record or beneficially, by the Stockholder.  Except
as provided in the Pledge Agreement (as defined in the Securities Purchase
Agreement), such Common Stock is owned free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Stockholder's voting rights, charges and other encumbrances
of any nature whatsoever.  The Stockholder has not appointed or
granted any proxy, which appointment or grant is still effective, with respect
to the Common Stock or Other Securities owned by the Stockholder.

    

    ARTICLE
III

    

    COVENANTS

     

    SECTION
3.01.  No
Disposition or Encumbrance of Stock.  Except with respect to a
transfer of any Common Stock or Other Securities to any of the Buyers in
accordance with the Pledge Agreement or any Encumbrance (as defined below) on
any Common Stock or Other Securities created in favor of any Buyer pursuant to
the Pledge Agreement (the “Pledge Encumbrance”), the
Stockholder hereby covenants and agrees that the Stockholder shall not offer or
agree to sell, transfer, tender, assign, hypothecate or otherwise dispose of,
grant a proxy or power of attorney with respect to, or create or permit to exist
any security interest, lien, claim, pledge, option, right of first refusal,
agreement, limitation on Stockholders' voting rights, charge or other
encumbrance of any nature whatsoever ("Encumbrance") with respect to
the Common Stock or Other Securities, directly or indirectly, or initiate,
solicit or encourage any person to take actions which could reasonably be
expected to lead to the occurrence of any of the foregoing.

     

    SECTION
3.02.  Company
Cooperation.  The Company hereby covenants and agrees that it
will not, and the Stockholder irrevocably and unconditionally acknowledges and
agrees that the Company will not (and waives any rights against the Company in
relation thereto), recognize any Encumbrance (other than the Pledge Encumbrance)
or agreement (other than the Pledge Agreement) on any of the Common Stock or
Other Securities subject to this Agreement.

     

    ARTICLE
IV

    

    MISCELLANEOUS

     

    SECTION
4.01.  Further
Assurances.  The Stockholder shall execute and deliver such
further documents and instruments and take all further action as may be
reasonably necessary in order to consummate the transactions contemplated
hereby.

     

    SECTION
4.02.  Specific
Performance.  The parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement was not performed in
accordance with the terms hereof and that any Investor (without being joined by
any other Investor) shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or in equity.  Any
Investor shall be entitled to its reasonable attorneys' fees in any action
brought to enforce this Agreement in which it is the prevailing
party.

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

     

    SECTION
4.03.  Entire
Agreement.  This Agreement constitutes the entire agreement
among the Company and the Stockholder (other than the Securities Purchase
Agreement and the other Transaction Documents) with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, among the Company and the Stockholder with respect to the
subject matter hereof.

     

    SECTION
4.04.  Amendment.  This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.

     

    SECTION
4.05.  Severability.  If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of this Agreement is not affected in
any manner materially adverse to any party.  Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the terms of this
Agreement remain as originally contemplated to the fullest extent
possible.

     

    SECTION
4.06.  Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of Delaware, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Delaware.  The parties hereby
agree that all actions or proceedings arising directly or indirectly from or in
connection with this Agreement shall be litigated only in the Supreme Court of
the State of New York or the United States District Court for the Southern
District of New York located in New York County, New York.  The
parties consent to the jurisdiction and venue of the foregoing courts and
consent that any process or notice of motion or other application to any of said
courts or a judge thereof may be served inside or outside the State of New York
or the Southern District of New York by registered mail, return receipt
requested, directed to the party being served at its address set forth on the
signature ages to this Agreement (and service so made shall be deemed complete
three (3) days after the same has been posted as aforesaid) or by personal
service or in such other manner as may be permissible under the rules of said
courts.  Each of the Company and the Stockholder irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action, or
proceeding brought in such a court and any claim that suit, action, or
proceeding has been brought in an inconvenient forum.  EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     

    SECTION
4.07.  Termination.  This
Agreement shall terminate immediately following the occurrence of the
Stockholder Approval.

    

    [The
remainder of the page is intentionally left blank]

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the Stockholder and the Company has duly executed this
Agreement.

        

    
      
        
          
            
              
                
                  	
                          THE
      COMPANY:

                        	 
	 	 
	
                          KANDI
      TECHNOLOGIES, CORP.

                        	 
	 
      	 
      	 
	
                          By: 

                        	 
      	 
	 
      	
                          Name:

                        	 
	 
      	
                          Title:

                        	 

                

              

            

          

        

      

    

    

    
      
        
          
            
              	
                      Address:  

                    	
                      Kandi
      Technologies, Corp.

                    	 
	 
      	
                      Jinhua
      City Industrial Zone

                    	 
	 
      	
                      Jinhua,
      Zhejiang Province

                    	 
	 
      	
                      People’s
      Republic of China

                    	 
	 
      	
                      Post
      Code 321016

                    	 

            

          

        

      

    

    

    
      
        
          
            
              
                	
                        STOCKHOLDER:

                      	 
	 
      	 
	
                        EXCELVANTAGE
      GROUP LIMITED

                      	 
	 
      	 
      	 
	
                        By:  

                      	 
      	 
	 
      	
                        Name:

                      	 
	 
      	
                        Title:

                      	 

              

            

          

        

      

    

    

    
      
        
          
            	
                    Address:  

                  	
                    c/o
      Ho Man Tim

                  	 
	 
      	
                    Jinhua
      City Industrial Zone

                  	 
	 
      	
                    Jinhua,
      Zhejiang Province

                  	 
	 
      	
                    People’s
      Republic of China

                  	 
	 
      	
                    Post
      Code 321016

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