Document:

Kandi Technologies Group, Inc.: Exhibit 10.1 - Filed by newsfilecorp.com

The Joint Venture Agreement of Establishment 

of 

Zhejiang Kandi Electric Vehicles Co., Ltd. 

by 

Shanghai Maple Guorun Automobile Co., Ltd., a subsidiary of

Geely Automobile Holdings Co., Ltd. (Hong Kong Stock Exchange: 175)

and 

Zhejiang Kandi Vehicles Co., Ltd., a subsidiary of Kandi
Technologies Group, Inc.(Nasdaq: KNDI) 

March 22, 2013 

1 

Table of Contents 

	1. Parties of the Joint Venture 	7 
	1.1 Parties of the Joint Venture 	7 
	1.2 Change of Legal Representatives or
      Authorized Representatives 	7 
	2. Definition 	7 
	3. The Joint Venture 	10 
	3.1 Establishment 	10 
	3.2 Prerequisite 	0 
	3.3 Registration 	11 
	3.4 Name and Registered Address 	11 
	3.5 Legal Person 	11 
	3.6 Limited Liability 	11 
	4. Purpose and Business Scope 	11 
	4.1 Purpose of the JV 	11 
	4.2 Main Business and Business Scope 	11
	4.3 Basic Business Plan 	 12
	4.4 Working Plan 	12
	5 Registered Capital 	12 
	5.1 Registered Capital 	12 
	5.2 Contribution by Each Party 	12 
	5.3 Form of Contribution and Time of Contribution 	12 
	5.4 Use of Registered Capital 	13 
	5.5 Certificates of Contribution 	13 
	5.6 Register of Shareholders 	13

2 

	5.7 Increase and Decrease of Registered
      Capital 	14 
	5.8 Transfer of Shares 	14 
	5.9 Control of the JV 	15 
	6. Responsibilities and Obligations of the Parties 	15 
	7. Non-Competition 	17 
	8. The Establishment and Purchase of the New Companies 	17 
	8.1 Party A’s responsibility for the
      Establishment of the New Company 	17 
	8.2 Party B’s responsibility for the Establishment of the
      New Company 	17 
	8.3 The Share Acquisition of the New
      Companies 	18 
	8.4 Time of Share Acquisition of New Companies 	18 
	9. Intellectual Property License 	19 
	9.1 License and Transfer of Trademark. 	19 
	9.2 License of Patent and Technology 	19 
	10. Shareholders Meeting and Shareholders Rights and
      Obligations 	20 
	10.1 Shareholders Meeting 	20 
	10.2 Shareholders Rights and Obligations 	21 
	11. Board of Directors 	22 
	11.1 Establishment 	22 
	11.2 Composition 	22 
	11.3 Chairman 	23 
	11.4 Authority of the Board of Directors
	23 
	11.5 Fees for Directors 	25 
	11.6 Management Positions 	25 
	11.7 Terms and Remuneration 	25 
	11.8 Board Meeting 	26

3 

	11.9 Quorum 	26 
	11.10 Notice of Board Meeting 	26 
	11.11 Meeting Procedures 	26 
	11.12 Proxy 	26 
	11.13 Voting Right 	27 
	11.14 Meeting Minutes 	27 
	11.15 Written Consent 	27 
	11.16 Record Book of Board Meetings 	27 
	12. Management 	28 
	12.1 Management Team 	28 
	12.2 General Manager, Deputy General
      Manager,Financial Controller and Other Senior Management 	28 
	12.3 Business Department 	28 
	12.4 Dismissal and Replacement 	28 
	12.5 Responsibilities and Authority of General Manager 	28 
	13. Supervisors 	29 
	14. Key Items of the Joint Venture 	30 
	14.1 Material Procurement 	30 
	14.2 Quality, Cost and Sales 	31 
	15. Dividend Distribution 	31 
	15.1 Dividend Distribution Plan 	31 
	16. Financials and Accounting 	32 
	16.1 System 	32 
	16.2 Fiscal Year 	32 
	16.3 Accounting Currency 	32 
	16.4 Financial Statements 	32

4 

	16.5 Audit 	32 
	16.6 Financial Reports 	32 
	16.7 Budgets 	32
	16.8 Financial Supervision 	33 
	16.9 Financial Personnel 	33 
	16.10 Audit by the Party 	33 
	17. Tax 	33 
	17.1 Preferential Tax 	33 
	17.2 Employee Tax 	33 
	18. Labor 	33 
	18.1 Recruitment 	33 
	18.2 Fees of Labor Union 	34 
	18.3 Resignation and Dismissal 	34 
	18.4 Senior Management Personnel 	34 
	19. Insurance 	34 
	20. Corporate Governance of Subsidiaries of JV company 	34 
	21. Confidentiality 	34 
	22. Liability of Breach 	35 
	22.1 Breach 	36 
	22.2 Waiver 	36 
	23. Force Majeure 	36 
	23.1 The Scope of Force Majure 	36 
	23.2 Notice. 	36 
	23.3 Performance. 	36 
	24. Terms, Early termination, Takeover and
      Liquidation 	37

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	24.1 Terms and Extension 	37 
	24.2 Early Termination and Take Over 	37 
	24.3 Procedures of Liquidation 	39 
	24.4 Rights and Obligations Before the Termination 	39 
	25. Governing Law 	39 
	26. Disputes Resolution 	39 
	26.1 Arbitration 	39 
	26.2 Final Award 	40 
	26.3 Arbitration Fee 	40 
	26.4 Complete Performance 	40 
	27. Miscellaneous 	40 
	27.1 Notice 	40 
	27.2 Effective Date 	40 
	27.3 Employee Guidelines 	41 
	27.4 Exhibits 	41 
	27.5 Representation and Warranties 	41 
	27.6 Subtitles 	42 
	27.7 Conflict 	42 
	27.8 Amendment 	42 
	27.9 Copies 	42 
	27.10 Exhibits 	42

6 

Joint Venture Agreement 

Preface 

According to the Corporate Law of the People’s Republic of
China and other relevant Laws and Regulations, on March 22, 2013, Shanghai Maple
Guorun Automobile Co., Ltd. a subsidiary of Geely Automobile Holdings Co., Ltd.
(Hong Kong Stock Exchange:175). (hereinafter referred as “Party A”) and Zhejiang
Kandi Vehicles Co., Ltd., a subsidiary of Kandi Technologies Group,
Inc.(NASDAQ:KNDI) (hereinafter referred as “Party B”), in consideration of the
mutual covenant and through friendly negotiation, agreed to enter this agreement
to establish a Joint Venture Company (hereinafter referred as “JV company”) in
the People’s Republic of China (hereinafter referred as “China”). 

1. Parties of the Joint Venture 

1.1 Parties of the Joint Venture 

Party A: Shanghai Maple Guorun Automobile Co., Ltd. 

Registered Address: Fengjing Industrial Zone, Jinshan District
,Shanghai 

Representative: Yu Wei 

Position: General Manager 

Party B: Zhejiang Kandi Vehicles Co., Ltd. 

Registered Address: Jinhua Industrial Zone, Jinhua City,
Zhejiang 

Representative: Hu Xiaoming 

Position: Chairman 

1.2 Change of legal representative or authorized representative

Each Party of the JV company is entitled to change its legal
representative or its authorized representative at any time. However, the Party
shall notify the other Party the name, position and nationality of its new legal
representative or its new authorized representative in writing. 

2. Definition 

2.1 “The Joint Venture Company”: the Zhejiang Kandi
Electric Vehicles Co., Ltd. established by the Parties based on this Agreement
and the JV company’s Articles of Association. 

7 

2.2 “Articles of Association”: the Articles of
Association of the JV company, which is agreed and signed by the Parties on the
date of this Agreement and may be amend by the Parties from time to time. 

2.3 “Shareholders Meeting”: the shareholders meeting
according to this Agreement and Articles of Association. 

2.4 “Board of Directors” or “Board”: the board of
directors of the JV company established according to this Agreement and Articles
of Association. 

2.5 “Business License”: the JV’s business license issued
by registration authority. 

2.6 “Registration Authority”: State Administration for
Industry and Commerce (“SAIC”) or its local offices or other government agencies
that are authorized to issue Business License to the JV company. 

2.7 “Incorporation Date”: the date that Registration
Authority issues Business License of the JV company. 

2.8 “Basic Business Plan” : the basic development plan
and commercial plan of the JV company during the five year period from its
incorporation agreed by Parties, the form and content see Exhibit 1. 

2.9 “Annual Working Plan”: the plan that is prepared
each year and stipulates overall work of the JV company. The Annual Working Plan
shall include: combined marketing and sales plan, production plan, investment
plan, financing plan, annual budget and expenditure plan of each department.

2.10 “New Companies Share Transfer Agreements”: the
share agreements that JV company purchases the shares of new companies that are
established by the Parties. The form and content of the agreements see Exhibit
2. The New Companies Share Transfer Agreements shall be executed and implemented
at a proper time between the JV company and new company’s shareholders after the
JV is incorporated. 

2.11“ Trademark License Agreement”: includes all the
trademark and logo license agreements between the JV company and related parties
which will allow the JV company to use them free of charge (including but not
limited to both Parties of this Agreement and/or other entities that own the
specific trademarks and logo suggested by both Parties). The form and content of
such agreement see Exhibit 3. After the establishment of the JV, the
JV company and the relevant parties shall negotiate and sign the trademark
license agreement based upon the form under Exhibit 3. 

8 

2.12 “Patent and Technology License Agreement” includes
all the patent and technology license agreements between the JV company and
related parties which will allow the JV company to use them free of charge
(including but not limited to both Parties of this Agreement and/or other
entities that own the specific patents and technology suggested by both
Parties). The form and content of such agreement see Exhibit 4. After the
establishment of JV, the JV company and the relevant party shall negotiate and
sign the patent and technology license agreement based upon the form under
Exhibit 4. 

2.13 “Related Documents” shall mean the Framework
Agreement, the JV company’s Articles of Association, New Companies Share
Transfer Agreement, Patent and Technology License Agreement and Trademark
License Agreement. 

2.14 “Framework Agreement” shall mean the Cooperation
Framework Agreement of Establishing Zhejiang Kandi Electric Vehicles Investment
Co., Ltd entered by Shanghai Maple Guorun Automobile Co., Ltd. and Zhejiang
Kandi Vehicles Co., Ltd. on Feb 1st 2013. 

2.15 “Confidential Information” : any written or
non-written information and data with respect to technology, finance, business,
trade ,operation and strategies as well as proprietary technology, business
secrets or any survey, analysis, consolidation of these information which is
directly or indirectly related to the JV company or any Party’s business
delivered or supplied by one Party or its affiliate or JV company (including its
employee, representative, agent and consultant) to the other party or its
affiliate (including its employee, representative, agent and consultant), no
matter it happens before or after the execution of this Agreement, but excluding
the following information (a) the information has been known to the public when
it is disclosed (or known to the public after the disclosure ), and such
disclosure wasn’t caused by any breach of confidentiality obligation by any
Party or breach the applicable laws; or (b) the receiving party obtains the
information legally from an independent source which has no confidentiality
obligation. 

2.16 “Senior Management”: the General Manager, Deputy
General Manager, Financial Controller and other personnel appointed by the
Board. 

9 

2.17 “Mid-Level EV”: all the vehicle
models that meet Kandi’s current technology model with highest speed no more
than 90 kilometers per hour and approved for production by the Board of the JV
company. 

2.18 “Parties”: Party A and Party B, “Party” shall mean
the Party A or the Party B. 

2.19 “RMB” shall mean the legal currency of China. 

2.20 “Entity” shall mean any person, company, legal
person enterprise, non-legal person enterprise, joint venture, partnership,
wholly owned enterprise, unit, trust or other entities or organizations,
including but not limited to any government or political organizations, or
government agent or political organizations or their branches and other legal
person or non-legal person organization. It also includes legal representatives,
assignee, successor or heir. 

2.21 “Affiliate” shall mean an entity that controls, or
is controlled by, or is under common control by any specified entity. Control
means: directly or indirectly possession of 50 % or more of the voting rights at
its decision making level. 

2.22 “Related Party Transaction” shall mean the
transaction happen between JV company and (a) any Party of this Agreement or (b)
the related party of any Party of this Agreement. 

2.23 “Transferring Party” shall mean the Party that
transfers the shares of the JV company. 

2.24 “Assignee” shall mean the Party that purchases the
shares of the JV company. 

2.25 “China” shall mean the People’s Republic of China.

3. The Joint Venture 

3.1 Establishment 

According to the Corporate Law of China, other relevant Laws
and Regulations of China and this Agreement, the Parties establish the Joint
Venture. 

3.2 Prerequisite 

The establishment of JV company shall meet the following
prerequisites: 

3.2.1 Both Parties has made preparations in article 8 

3.2.2 Both Parties has signed the JV company Articles of
Association and agree the forms of new company share transfer agreement, patent
and technology license contract and trademark license agreement, etc. 

10 

3.2.3 Each Party shall obtain the internal approvals to sign
and perform this Agreement and relevant documents. (In the case of involving the
listed company, it shall meet the requirements of the binding listing rules and
other regulation rules). 

3.2.4 The establishment of JV company shall obtain all the
necessary government approvals (including but not limited to the governments,
stock exchanges or other securities regulators at home or aboard that have
jurisdiction) 

Until a Party has completely fulfilled its obligations under
3.2.1 to 3.2.4 or such obligations are waived by the other Party that has the
right , the other Party has no obligation to make its contribution to JV
company. If the JV company is incorporated and the above prerequisites still
cannot be completely realized or exempted by the other Party that has the right,
Parties may dissolve and liquidate JV company according to the laws. 

3.3 Registration 

The Parties shall apply to the Registration Authority for the
registration of the JV company within 30 days of the execution of this Agreement
for the issuance of a Business License. 

3.4 Name and Registered Address 

Name of the Joint Venture: Zhejiang Kandi Electric Vehicles
Co., Ltd., subject to the final approval by the Registration Authority 

Registered Address: Building No. 1, No 560 Xixi Road, Xihu
District, Hangzhou City, Zhejiang Province, China 

3.5 Legal Person 

The JV company is established under the Corporate Law of China
and is a Chinese legal person. Its activities shall comply with Chinese Laws and
Regulations and its rights and interests shall be protected by the Chinese Laws
and Regulations. 

3.6 Limited Liability 

The JV company is a limited liability company and is an
independent commercial entity. The risks and liabilities of each Party to the JV
company are limited to the respective amount of its contribution to the
registered capital of the JV company. The profits, risks and losses of the JV
company shall be shared by the Parties in proportion to their respective
contributions to the registered capital of the JV company. The JV company shall be
responsible for its own liabilities with all its assets. 

11 

4. Purposes and Business Scope 

4.1 Purposes of the JV 

The purpose of the JV company is to use advanced technologies,
operating models and management methods to invest, develop, manufacture and sell
pure electric vehicles to satisfy the consumer needs and obtain satisfactory
returns to shareholders. 

4.2 Main Business and Business Scope 

The main business the JV company is EV development, manufacture
and sale business and auto parts development, purchase and sale as well as
investment in the companies that engaged in above business. The vehicle models
to be included in the JV business scope will be: Kandi EVs, the remodeled Panda
Mid-Leve EV, IG and other models which will be developed by the JV company. The
above models will be developed, manufactured, sold and repaired by the JV
company or its subsidiaries. The specific business scope shall be subject to the
approval by Registration Authority. 

4.3 Basic Business Plan 

Both Parties shall urge the Board and shareholder meeting of
the JV company to approve the basic business plan after JV company is
established which will become the development goal of the JV company and the
principle requirements to evaluate the performance of management team of the JV
in the future. 

4.4 Working Plan 

The JV company shall prepare a working plan to coordinate with
both parties’ existing resources and advantages as well as to expand the JV
company’ business. The working plan shall be carried out upon the approval by
the Board. 

5. Registered Capital 

5.1 Registered Capital 

The registered capital of the JV company is RMB 1 billion. 

5.2 Contribution by Each Party 

5.2.1 Party A shall contribute RMB 500 million which accounts
for 50% of the registered capital. 

12 

5.2.2 Party B shall contribute RMB 500 million which accounts
for 50% of the registered capital. 

5.3 Form of Contribution and Time of Contribution 

Subject to article 3.2, the Forms of Contribution and Payment
of Contribution shall be: 

5.3.1 Party A 

Party A shall contribute in cash to the registered capital of
JV company. 

5.3.2 Party B 

Party B shall contribute in cash to the registered capital of
JV company. 

5.3.3 Contribution Schedule 

(1) The First Payment 

The Parties shall contribute in cash at 20% of the registered
capital of the JV company on their first contribution. 

(2) The Second Payment 

The Parties shall make the remaining contribution to according
to the resolution by the shareholder meeting of the JV company. However, such
contribution shall be completed within 2 years from the date of establishment of
the JV company. 

5.4 Use of Registered Capital 

The Registered Capital will be mainly used to purchase the new
companies’ equities under the article 8.3 of this Agreement, the expected amount
of purchase is RMB 800 million(the value of the new companies established by
each Party is about RMB 400 million each), the actual amount will be subject to
evaluation accepted by both Parties. The remaining RMB 200 million will be the
initial working capital for the JV company. 

5.5 Certificate of Contribution 

5.5.1 After the payment of contribution by each Party,
according to the verification report issued by certified public accountant
registered in China, the JV company shall deliver each Party an investment
certificate. 

5.5.2 The investment certificate shall include following items:

(1) Name of the JV company; 

(2) Registration date of the JV company; 

13 

(3) Registered capital of the JV company; 

(4) Name of the shareholder 

(5) Payment amount of the contribution and date of the
contribution 

(6) Number of the investment certificate; and 

(7) Date of issuance. 

5.6 Register of shareholders 

5.6.1 The register of shareholders shall indicate following
items: 

(1) Name and address of shareholders; 

(2) The contributions made by shareholders; and 

(3) Number and date of investment certificates issued. 

5.7 Increase and Decrease of the Registered Capital 

5.7.1 Registered capital of the JV company shall not be
increased or decreased unless approved by the shareholders meeting of the JV
company. 

5.7.2 Upon the approval of the increase of Registered Capital
of the JV company by the shareholders meeting, each Party shall pay for the
increased contribution by its respective amount of their subscriptions at the
time and form decided by shareholders meeting . 

5.8 Transfer of Shares 

5.8.1 General Principle 

(1) If one shareholder wants to transfer, sell, gift, pledge or
in other methods to dispose its shares in the JV company or set up liens on its
shares, it shall first receive the consent from the other Party in writing. The
transferor shall send the written notice to the other Party and list the
transfer terms such as proposed transferee, transfer share number and price. The
other Party shall response within 60 days whether it agrees or disagree such
transfer. If the other Party doesn’t respond in 60 days, it shall be considered
as its consent for such transfer. 

(2) Any transfer with the consent of the other Party, under the
same conditions, the other Party has the preemptive right to purchase such
shares and such preemptive right shall be exercised within 60 days of the above
notice. If the other Party doesn’t exercise its preemptive right, it will be
considered that such Party has agreed the transfer to the third party in the
terms in the notice. 

14 

5.8.2 Adjustment of ownership percentage of the JV company 

Based upon the need of JV company development and the approval
of both Parties, any Party can purchase other Party’s partial or all shares in
the JV company . The purchase price shall base upon the net assets value the JV
company and share percentage of such holder at that time with reasonable
adjustment agreed by both Parties. The share transfer agreement shall be
negotiated and signed separately by both Parties at that time. 

5.8.3 Upon any transfer, sale or disposal of partial or all
shares in the JV company made in accordance with Article 5.8 or 24.2, the JV
company shall make timely change of shareholder with the Registration Authority.

5.8.4 Before the transfer, the transfer party shall ensure the
transferee to agree in writing that (i) it will be fully abided by the terms and
conditions of this Agreement, and (ii) it shall assume all obligations and
liabilities of the transferring party under this Agreement. 

5.9 Control of the JV 

Within 3 years upon the establishment of the JV company, unless
both Parties agree in writing or due to ownership percentage changes under
5.8.2,24.2.2 or 24.2.3, neither Party shall unilaterally seek to change the
50-50 share ownership percentage of the JV company. 

Both Parties agree, in the situation of 50-50 share
ownership,(i) neither Party has the unilateral control right to the JV company,
(ii) neither Party has the right to consolidated financials of the JV
company,(iii) if according to the accounting standards applicable to one Party
or its controlling shareholder or its actual controlling person that such Party
or its controlling shareholder or person should consolidate the financials, the
Parties shall negotiate immediately in good faith to take proper measures(
including but not limited to redistribute the rights in the JV company) to
return to the status that neither party has the right to consolidate the
financials of the JV company. 

6. Responsibilities and Obligations of the Parties 

In addition to the other responsibilities and obligations
stipulated in the Agreement, both Parties shall assume the followings: 

6.1 to make contribution according to the clauses of this
Agreement and the Articles of Association of the JV company. 

15 

6.2 to assist the JV company to obtain the business license and
necessary approvals, permits, ratifications, filings and registrations for its
daily business. 

6.3 to cooperate closely to assist the JV company working with
the government, customers and suppliers, and to assist the JV company to obtain
the preferential treatments from tax, customs, foreign exchange, industry
supervision, other government supports according to the laws and regulations.

6.4 For the establishment of the JV company and its business
development, Parties shall review their current cooperation arrangements,
letters of intent and agreements with their related parties, business partners
and government and propose their opinions for the basic business plan of the JV
company. 

6.5 Promote the JV company and its subsidiaries to obtain the
special support funds from Zhejiang province, Hangzhou city and other local
governments. 

6.6 For the establishment of the JV company and its business
development, Parties shall complete the tests and performance confirmation for
their existing vehicles models (including those equipped with lead-acid and
lithium battery). 

6.7 Promote the cooperation between the JV company or its
subsidiaries and the State Grid of China. 

6.8 Promote the projects in provinces and strive for the policy
support from the cities and provinces, except for the supports under the
contracts already signed in Shandong and Hainan provinces. 

6.9 Upon the request of the JV company, assist the JV company
to find the suitable management personnel, technicians and other necessary
employees, to provide necessary training to the JV company employees, to assist
JV to keep a stabile working force and to assist the JV company to solve the
labor disputes according to the laws. 

6.10 Execute the relevant documents that it is a party and
perform its obligation under these documents. 

6.11 Urge the JV company and its senior management to sign
confidential agreement, Non-competing agreement or include the terms of
confidentiality and non-competition in the employment agreement, so as to
prevent the senior management from owning, managing, controlling, investing the industry which has the same, similar
or competing business with the JV company or its subsidiaries, or prevent them
from providing services and convenience to such business. 

16 

6.12 Each Party (including its related party) shall not
unilaterally disclose the negotiation, process and content of this Agreement and
related documents, unless both Parties agree the content, time and method of the
disclosure (any Party shall not unreasonably refuse to give its consent); after
the establishment of the JV company, each Party (including its related party)
shall not unilaterally disclose the confidential information of the JV company
unless the content, time and methods of such disclosure have been approved by
the Board of the JV company. 

7. Non-Competition 

Parties promise that during the period that they are the direct
or indirect shareholders of the JV company plus three years after that, without
JV company’s authorization, neither Party or its related party shall take part
in the R&D, production and sales of mid level EV in China or abroad or
provide services or convenience for such (hereinafter referred to as
Non-Competition). However; the Non-Competition doesn’t apply to existing
agreements between the Party A or its related party and the third party or the
products and business subject to existing agreement or arrangements (the
“existing obligations”) entered before Parties entered into the Framework
Agreement, if such obligations is in conflict with Non-Competition requirement.
Party A shall provide a list of its existing obligations upon this Agreement
takes effect. For the existing agreements between the Party B or its related
party and the third party or the products and business subject to existing
agreement or arrangements entered before Parties signed the Framework Agreement,
and if such obligations is in conflict with Non-Competition requirement, except
for the projects being consolidated into the JV company, Parties shall discuss a
solution. 

8. The Establishment and Purchase of the New Companies

8.1 Party A’s responsibility for the Establishment of the New
Company 

Party A promises to establish a new company and to inject
certain EV related assets and business (as whole) of Party A or its related
party (subject to the companies under control of Geely Automobile Holdings Co.,
Ltd) to the new company. The value and consideration of the injected assets and business shall be determined by an appraisal firm
that is jointly appointed by the Parties. Party A shall provide the capital
verification report of the new company for Party B’s review. 

17 

The taxes occurred due to the establishment of aforesaid new
company shall be borne by the Party that establishing such new company. The new
company shall not assume any debt (including contingent liability) for the
aforesaid establishment unless otherwise required by Chinese laws. 

8.2 Party B’s responsibility for the Establishment of the New
Company 

Party B promises to establish a new company and to inject
certain EV related assets and business (as whole) of Party B or its related
party (subject to the companies under control of Kandi Technologies Group, Inc.)
to the new company. The value and consideration of the injected assets and
business shall be determined by an appraisal firm that is jointly appointed by
the Parties. Party B shall provide the capital verification report of the new
company for Party A’s review. 

The taxes occurred due to the establishment of aforesaid new
company shall be borne by the Party that establishing such new company. The new
company shall not assume any debt (including contingent liability) for the
aforesaid establishment unless otherwise required by Chinese laws. 

8.3 The Share Acquisition of the New Companies 

Each Party can request a due diligence of the new companies,
and Parties will accept the diligence result. The Party that is the shareholder
of the new company shall supply reasonable documents to the Party requesting the
due diligence and shall assist it to complete the due diligence, including but
not limited to the new company’s incorporation documents, such as its bylaws,
business license, registered capital verification report, evaluation report and
financial statements, etc, as well as the proof documents that certain assets
and business have been injected in the new company. 

Both Parties agree, after the establishment of the JV company,
based upon the status of the establishment of the new companies and new
companies share transfer agreements (its form attached in exhibit 2 of this
Agreement), the JV company will purchase 100% shares of the new companies. In
order to complete the process smoothly, both Parties can further negotiate to
establish an interim joint working team to supervise and coordinate the business
and operation of the new companies during the period between their establishment
and the completion of share transfers. 

18 

The taxes caused by the establishment of aforesaid new company
shall be borne by each Party; the new company will be not borne any debts
(including contingent liability) from the aforesaid establishment, except for
the taxes must be borne by the new company according to Chinese laws. 

The taxes occurred due to the share transfer of new companies
shall be borne by the parties in the transaction. The JV company shall not
assume any debt (including contingent liability) for the aforesaid share
transfer transaction unless otherwise required by Chinese laws. 

8.4 Time of Share Acquisition of New Companies 

According to the new companies establishment status, the
Parties shall urge the shareholders meeting and the Board of the JV company at a
proper time to make a decision on the share purchase of the new companies
established by the Parties. The JV company can acquire two new companies at the
same time or one at a time. Upon the completion of the share transfer, the new
companies will become the subsidiaries of the JV company. 

9. Intellectual Property License 

9.1 License and Transfer of Trademark. 

9.1.1 The trademark and logo owned and/or is authorized to use
by the Parties will be licensed to use by the JV company free of charge. The
form of trademark and logo license agreement please see the Exhibit 3. This
trademark license agreement shall be signed and performed by the relevant party
and the JV company after the JV company’s establishment. 

9.1.2 Parties agree (i) pursuant to the (1) above, for the
trademarks to be licensed to the JV company for free, Parties shall also jointly
decide a list of trademarks to be transferred to the JV company and the final
trademarks that will be transferred to the JV company upon the consented by both
Parties. The trademark license agreement shall indicate that the holders of the
trademarks shall license the trademark for the JV company to use free of charge
for 3 years from the establishment of the JV company, and after three years, it
shall transfer the trademarks to the JV company for free, and the holder shall
assist to the JV company to complete the trademark transfer procedure; (ii)
pursuant to the (i), the trademarks to be transferred to the JV company for free
upon 3 years of the establishment of the JV, and if the JV company liquidates
after 3 years and before 5 years of its establishment (the time shall be based
on the time when the liquidation team finishes the liquidation report), and if
the JV company still has remaining assets ( including trademarks) to be distributed to its shareholders, then the
trademarks shall be transferred back to its originally owners under (i) for
free. 

19 

9.2 License of Patent and Technology 

The patents and technologies owned by the Parties shall be
licensed to the JV company for free. The form of patent and technology license
agreement please see Exhibit 4. The patent and technology license agreement will
be signed and performed by relevant party and the JV company after the JV
company establishment. 

10. Shareholders Meeting, Shareholders Rights and
Obligations 

10.1 Shareholders Meeting 

10.1.1 The JV company shall have shareholders meeting, and the
shareholders meeting has the highest authority of the JV company. The
shareholders meeting consists of the two Parties of this Agreement. 

10.1.2 The shareholders meeting shall exercise the following
authorities: 

(1) To determine the JV company's operational guidelines and
investment plans; 

(2) To elect and replace non-employee directors and
supervisors, to decide the compensation of the directors and supervisors 

(3) To deliberate and approve the report of the Board; 

(4) To deliberate and approve the report of the Supervisors;

(5) To deliberate and approve the annual budget and financial
statements of the JV company as well as their amendments; 

(6) To deliberate and approve the JV company’s profit
distribution plan and loss recovery plan; 

(7) To make resolution on the increase or decrease of the
registered capital of the JV company; 

(8) To make resolution on the issuance of debenture note by the
JV company; 

(9) To make resolution on the merger, division, dissolution,
liquidation or change company structure of the JV company; 

(10) To amend the JV company’s Articles of Associations, 

(11) Other authorities required by the Articles of
Associations. 

10.1.3 The shareholders meeting’s voting power is based on the
actual contribution percentage of the shareholders. The resolutions on amendment
of the company’s Articles of 

20 

Association, increase or decrease of the registered capital,
and merger, division, dissolution, liquidation or the change of company
structure must be approved by the shareholders that have more than 2/3 of the
voting power, other resolutions must have approved by the shareholders that have
more than 50% of the voting power. 

10.1.4 If shareholders reach a written unanimous consent on the
items set out in article 10.1.2 above, they can sign the written consent instead
of holding a shareholders meeting. 

10.1.5 The resolutions adopted by the shareholders meeting
shall be consistent with the provisions of this Agreement. If the Parties want
to reach an amendment or supplement to this Agreement, all shareholders shall
unanimously approve such amendment or supplement. 

10.1.6 The first shareholders meeting of the JV company shall
be convened and presided through the consultation by all shareholders. The
shareholders meeting shall be held twice a year and the specific time will be
arranged by the Board of Directors of the JV company. The shareholders
representing one-tenth or more of the voting power, or one-third or more of the
directors, or any supervisor may propose a special shareholders meeting. A
shareholders meeting shall be convened by the Board, and presided by the
Chairman of the Board. If the Chairman is unable to perform his/her duty, the
Chairman shall appoint a director in writing as his/her behalf to preside the
meeting. 

10.1.7 Whenever a shareholders’ meeting is scheduled, notices
shall be sent to all shareholders in advanced. The shareholders meeting shall
prepare a meeting minutes for the items discussed at the meeting which shall be
signed by the shareholders presented. 

10.2 Shareholders Rights and Obligations 

10.2.1 Shareholders are the investors of the JV company and
have the following rights: 

(1) Voting rights according to their share holding percentage;

(2) Appointing Directors and Supervisors according to this
Agreement; 

(3) Access to, inspect and copy the JV company ‘s Articles of
Association and the minutes of shareholders meeting, the Board resolutions and
financial statements of the JV company. 

(4) Request to inspect the accounting books; 

(5) Receive dividends pursuant to the provisions of articles
12.4; 

21 

(6) Have the pre-emptive right to subscribe shares according to
its shareholding percentage when the JV company is to increase its registered
capitals; 

(7) Transfer its shares according to law, or have the
preemptive right to purchase the shares that other shareholders of the JV
company who want to transfer; 

(8) Right for distribution of the remaining assets according to
the laws after the JV company termination; 

(9) Other rights according to laws, regulations and this
Agreement. 

10.2.2 Shareholders have the following obligations: 

(1) Make capital contribution in full as required on time. 

(2) cannot withdraw its contribution after registration of the
JV company with SAIC unless approved by the law otherwise. 

(3) must exercise their rights lawfully and abided by the laws
and regulations and cannot abuse their rights to harm the interests of the JV
company and other shareholders, and cannot use the independent legal person
identity of the JV company and shareholders’ limited liability nature to harm
the interest of the creditors of the JV company. 

(4) Perform the requirements of this Agreement and exhibits;
and 

(5) Any other obligations required by laws and regulations.

11. Board of Directors 

11.1 Establishment 

The Board of directors is established on the date when the JV
company is established. 

11.2 Composition 

11.2.1 The Board of Director of the JV company shall be
comprised of four directors. Party A shall appoint two directors and Party B
shall appoint two directors. If the contribution percentage of the Parties
change in the future, then Parties shall negotiate the composition of the Board,
if Parties cannot reach an agreement, the it shall be decided based upon
percentage of the actual contributions to the registered capital of the JV
company by the Parties. 

11.2.2 Any shareholder can send a written notice to the JV
company and the other shareholders to dismiss and change the directors appointed
by such party at any time with or without a reason. If there is a vacancy in the Board because of
the retirement, resignation, sickness, incapability, death or dismissal by the
original appointing party, then the original appointing party/shareholder can
appoint a replacement to complete the term of the departure director. 

22 

11.3 Chairman 

11.3.1 The Board of the Directors of the JV company shall have
one Chairman. 

11.3.2 The first Chairman of the JV company shall be Mr. Li
Shufu (Chinese ID: _______). After his first term as Chairman for 3 years, any
director can nominate a candidate to become the Chairman and the Chairman will
be elected by the Board. 

11.3.3 Chairman shall fulfill his responsibilities according to
the company articles of associations and the Chinese laws. If the Chairman can’t
perform his/her duty, he/she shall appoint another director to temporarily
fulfill the duties for him/her. 

11.3.4 The authority and responsibility of the Chairman
includes: convene and preside the Board meetings; exercise his/her vote as a
director; represent the JV company to sign documents upon the authorization of
the Board; other items authorized by the Board within its authority scope. 

11.4 Authority of the Board of directors 

11.4.1 The following items shall be approved in unanimous votes
by the directors (or his/her proxy) present at the Board meeting duly called, or
to be unanimously approved by all the directors of the Board in writing in
absence of a Board meeting. 

(1) Amendment of the Articles of Association of the JV company

(2) Merge or division of the JV company 

(3) Dissolution and liquidation of the JV company. 

(4) The structure change of the JV company 

11.4.2 In addition of the above-mentioned items that require
unanimous approval, other resolutions can be approved by simple majority of the
directors (or his/her representatives) present at the Board meeting duly called,
or to be approved by simple majority of all the directors in writing in absence
of a Board meeting: 

(1) Approve the basic business plan, annual working plan and
invest plan of the JV company; 

23 

(2) Prepare and approve the annual budget plan, annual
financial statements and the amendments to the annual budget plan and financial
statement of the JV company; 

(3) Prepare and approve the profit distribution plan and loss
recovery plan of the JV company; 

(4) Prepare and approve the plans of increase or decrease of
the registered capital of the JV company and plans on the issuance of debenture
note by the JV company; 

(5) Approve important policies of the JV company, including but
not limited to i) the policies for Board meetings; (ii) the decision making
procedure for material matters; (iii) employee guidelines; (iv) compensation
system; (v) reward and punishment system for senior management personnel; (vi)
the employee welfare system; (vii) the financial and accounting rules; (viii)
the forms of agreements to be used by the JV company; and(ix) other important
rules or systems that the Board believes to be important. 

(6) Decide on the establishment and change of internal
management departments and other important departments of the JV company and
their main responsibilities; 

(7) Decide on hire or fire of the General Manager, Deputy
General Manager, Financial Controller and other senior managers of the JV
company and their compensation; 

(8) Approve the JV company to provide guarantees to debts of
any third parties; 

(9) Approve the JV company to enter into or amend any
agreements related to intellectual property rights that involve to obtain,
license or to be licensed or any other methods to dispose trademarks, patents
and proprietary technologies; 

(10) Approve the JV company to enter into or amend any loan
agreements or other debt agreement over RMB 10 million, with or without pledges;

(11) Approve the JV company to set mortgage, pledge or liens
that is over RM 10 million on part or all of its important assets; 

(12) Approve any fixed assets investment and other construction
projects of the JV company that is over RMB 30 million; 

(13) Approve the JV company to transfer, lease, sell or in
other means to dispose part or all of its land use rights or buildings or other
important asset that has over RMB5 million book value; 

24 

(14) Approve to enter into or amend any agreements of the JV
company that is over RMB 50 million, including the selection the other party of
such agreement; 

(15) Approve the hire of legal consul and audit firm of the JV
company; 

(16) Adopt and amend the accounting policies of the JV company
; 

(17) Approve the JV company to enter into or amend any project
that the JV company will purchase the equity or operating assets of a third
party; 

(18) Approve the JV company to establish subsidiaries or joint
ventures with any third party; 

(19) Approve any related party transactions between the JV
company and its shareholder or its related parties. While approving the relate
party transactions, the director appointed by such related party shall not vote;

(20) Decide to bring any law suit or arbitration by the JV
company that is over RMB 10 million, or accept any settlement of a single claim
or complaint that is over RMB 10 million; 

(21) Approved the information disclosure plan of the JV
company; 

(22) Other items that require the approval by the Board
according to the Articles of Association of the JV company and Chinese laws, and
other important decisions for the JV company other than those need to be decided
by the shareholders meetings according to the Articles of Association of the JV
company and Chinese laws. 

11.4.3 The above-mentioned threshold amount as well as those in
the authority of the General Manager, upon the establishment of the JV company,
can be amended by consent of the majority of the directors in consideration of
inflation and other considerations. 

11.5 Fees for the directors 

The JV company shall pay director fees for the meetings and
their business expenses. The details shall be decided by the Board by majority
approval. 

11.6 Management Positions 

The Chairman of the Board or directors of the Board may take
management positions in the JV company. 

11.7 Terms and Remuneration 

The term for the Chairman and other directors of the Board is 3
years, if appointed by the original party again, such member may serve for
another term. The directors are not entitled to receive any remuneration, allowance and fees from the JV
company just because he/she is a director. However, a director may receive
reimbursement for any direct expenses incurred in the course of discharging
his/her duties upon the presentation of proper receipts. Any special situations
shall be discussed and approved by the Board. 

25 

11.8 Board Meeting 

The Board shall at least meet each quarter. The Chairman of the
Board shall convene and preside the Board meeting. Upon the request of one third
of the directors, Chairman shall call for a special meeting. If the Chairman is
unable to preside the Board meeting, it shall follow the requirement of article
11.3.3 of this Agreement. The Boarding meeting shall be held at registered
address of the JV company or at any other places in or out of China decided by
the Board. 

The General Manager may attend the Board meeting and receive
meeting notice and documents. Unless he/she is also a director, the General
Manager cannot vote at the Board meeting. 

The Supervisors may attend the Board meeting and receive
meeting notice and documents and may make inquiries or suggestions of the
resolution items but the Supervisors cannot vote at the Board meeting. 

11.9 Quorum 

The quorum of a Board meeting shall be at least three directors
or their proxies present. 

11.10 Board Meeting Notice 

The Board meeting agenda shall be arranged by the Chairman
based on the request of all the parties. The Chairman shall decide the time of a
Board meeting. The agenda, venue and time of the Board meeting shall be
delivered to all directors 15 days prior to the meeting date. 

11.11 Meeting Procedures 

The items to be discussed at the Board meeting shall be the
items on meeting agenda in the notice . For any item that is not in the notice,
the Board can only discuss and decide on such item when more than half of the
directors present at the meeting approve so. 

11.12 Proxy 

If a director is unable to attend a Board meeting, exercise
his/her right or duty, such director may entrust a proxy to represent him/her at
such meeting, exercise his/her right or duty. Any appointment of a proxy shall be made in writing and signed by
the director and shall be submitted to the person presiding the Board meeting or
sent to the office of General Manager prior to the Board meeting. 

26 

11.13 Voting Right 

Each director or his/her proxy present at the meeting has only
one vote. A director who is also a proxy for one or more other directors will
therefore be able to cast his/her own vote as well as the vote for the director
he/she represents pursuant to the proxy. 

11.14 Meeting Minutes 

The Board meeting minutes shall be taken at the meeting and
prepared by the office of General Manager and sent to all directors within 15
days of the meeting for the signatures and confirmation of each directors
present at the meeting. The meeting minutes shall truthfully reflect the
opinions of each director or its proxy to the resolution items. Any dissent
opinion shall be truthfully recorded in the minutes. A director shall not refuse
to sign the meeting minute just because he/she doesn’t agree the resolutions
passed by the Board. The meeting minutes is the document that records the
discussion and votes of the meeting and shall be filed and implemented by the
General Manager’s office. The copies of meeting minutes shall be signed by the
Chairman (or his/her proxy) and distributed to each of the directors. The Board
meeting shall be conducted in Chinese. All the Board meeting minutes and
resolutions, including Chinese notes in lieu of resolutions, shall be entered
into the company’s meeting record book and filed at the company’s registered
address. 

11.15 Written Consent 

A written consent resolutions can be reached if it is duly
signed by directors on a written document with these resolutions (or on several
counterparts of this document) in the absence of a Board meeting. The effective
date of a written consent is the date when the last director signs the consent
(or on the counterpart copy). 

11.16 Record Book of the Board meetings 

The General Manager office shall keep a record book for Board
meetings . In addition to the Board meeting minutes and resolutions, it shall
also include the appointment, dismissal, resignation of the proxy of each director and related documents as well as
notices and agenda of each Board meeting and other documents that submitted to
the Board. 

27 

12. Management 

12.1 Management Team 

The General Manager is responsible for daily management of the
JV company and other senior managers shall assist the General Manager. 

12.2 The General Manager, Deputy General Manager, Financial
Controller and other Senior Managers 

12.2.1 The JV company shall have one General Manager, several
Deputy General Managers and one Financial Controller 

12.2.2 The first General Manager of the JV company is Mr. Hu
Xiaoming(Chinese ID: _________) and will be appointed by the Board. The General
Manager will be the legal representative of the JV company. 

12.2.3 Deputy General Managers, Financial Controller and other
Senior Managers shall be nominated by General Manager and appointed by the
Board. 

12.2.4 The Financial Controller shall be appointed by Party A.
The General Manager shall nominate the appointee of the Party A to the Board and
to be hired by the Board. The Financial Controller is responsible for the
management of the financials of the JV company. All the expenditures of the JV
company shall be reviewed and verified by Financial Controller and approved by
General Manager first before it can be paid off. 

12.2.5 The term of General Manager, Deputy General Manager,
Financial Controller and other Senior Managers is 3 years, and can be
re-appointed by the Board. 

12.3 Business Department 

According to the business needs of the JV company, the Board
can decide to establish relevant departments. 

12.4 Dismissal and Replacement 

28 

If General Manager, Deputy General Manager or Financial
Controller practice corruption or gross negligence, upon the majority vote of
the Board meeting, they can be dismissed and replaced, and the JV company may
seek legal liabilities for their behaviors. 

12.5 Responsibilities and Authorities of the General Manager

12.5.1 The General Manager is responsible for the daily
business operation and management of the JV company, carry out the decision made
by the Board, and act on behalf of the JV company within the scopes of the
Board’s authorization, Articles of Association of the JV company and Chinese
laws. 

12.5.2 The authorities and responsibilities of the General
Manager includes: 

(1) Preside the production and business management of the JV
company, organize and carry out the decision of the Board. 

(2) Organize and implement the annual working plan and
Investment plan of the JV company; 

(3) Prepare and compile the work report of the last year and
the working plan of next year of the JV company and submit them to the Board for
approval. 

(4) Draft internal management department plan and basic
management system of the JV company; 

(5) Prepare and establish specific rules and policies of the JV
company; 

(6) On behalf of the JV company to negotiate and sign documents
under authorization by the Board; communicate with the relevant government
agencies and appeal for solution of the problems that JV company might have;
represent the JV company or appoint representatives to participate in legal
proceedings involving the JV company, such as mediation, litigation or
arbitration; 

(7) Preside the operation and business meetings of the JV
company and supervise the implementations of the items discussed and decided at
the business meeting. 

(8) For any matters with an
authorization amount threshold under the Board’s authority, if such amount is
below the threshold of Board’s authority, then it should be decided by the
General Manager; 

(9) Propose the appointment and
dismissal of Deputy General Manager and other Senior Managers (excluding the
Financial Controller); 

29 

(10) Decide and carry out other items authorized by the Board
and all the matters related to the daily operation and management of the JV
company that do not require the decisions by the Board according to the Articles
of Association of the JV company and Chinese laws. 

13. Supervisors 

13.1 The JV company shall have two Supervisors and each Party
shall appoint one. The term of the Supervisors is three (3) years and may serve
consecutive terms if re-appointed. The Supervisors exercise the following
duties: 

(1) inspect the financials of the JV company; 

(2) supervise the directors and senior management personnel
performances of their duties and make proposals to remove directors and senior
management personnel who violate laws, regulations, Articles of Association or
resolutions of the shareholders; 

(3) request the director or senior management personnel to
correct if their actions could be detrimental to the JV company's interest; 

(4) submit proposals to the shareholders; 

(5) file lawsuit against the directors or senior management
according to Article 152 of the Corporate Law of China; 

13.2 Directors and Senior Management of the JV company may not
concurrently serve as a Supervisor. 

13.3 Remuneration of the Supervisors 

Supervisors shall not receive any remuneration, allowance or
fees from the JV company just because he/she is a Supervisor of the JV company;
However, a Supervisor may receive reimbursement for any direct expenses incurred
in the course of discharging his/her duties upon the presentation of proper
receipts. 

14. Key Items for the Joint Venture 

14.1 Material Procurement 

Upon the start of the operation of the JV company, it shall
purchase all its needed equipment, raw materials, fuel, components, conveyances,
office supplies and other necessary items under competitive terms, conditions,
quality, quantity, price, delivery terms and dates for the best interest of the JV company inside or outside of China. Under
the same terms and conditions (including but not limited to purchase term,
quality, quantity, price and delivery), the JV company shall take the priority
to buy in China. For the purchases in China and under the same terms and
conditions (including but not limited to purchase term, quality, quantity, price
and delivery), the JV company shall take the priority to purchase from Party A
or Party B or the suppliers recommended by Party A and Party B. For the JV
company’s material procurement, Party A and Party B enjoy the equal rights and
assume equal responsibilities. 

30 

14.2 Quality, Cost and Sale 

The JV company shall set up a quick responsive R&D team,
especially that can support the product application development, to quickly
prepare competitive plans for the mid-level electric vehicles to be developed
and produced by the JV company. In the meantime, through components global
sourcing and strengthen localization, the JV company shall introduce a platform
to facilitate bringing in mature products and utilize existing resources of both
Parties to reduce manufacture and operation costs and achieve the best
competitiveness. For the JV company’s product sales, Party A and Party B enjoy
the equal rights and assume equal responsibilities. 

15. Dividend Distribution 

15.1 Dividend Distribution Plan 

(1) Unless otherwise decided by the shareholders meeting, the
JV company shall distribute dividends once a year. The Board shall prepare a
dividend distribution plan for that fiscal year within three months after the
shareholders meeting’s review and approval of the annual financial report of the
JV company, and submit such plan for shareholders meeting review and approval .

(2) The dividend distribution plan shall be decided according
to the profit situation and development plan of the JV company. The JV company
shall first take ten percent from the after tax net profit of the year and
reserve it as company reservation fund required by the laws. The limit for the
reservation fund required by the law is 50% of the registered capital of the JV
company. 

(3) Any after tax net profits, upon paying off the losses from
previous years and deposition of Reservation Fund, may be used for dividend
distribution and it shall be duly distributed within 30 days after the approval
of the distribution plan by the Shareholders meeting . 

31 

(4) The undistributed profits of the previous years may be
combined into the profits of the current year for distribution. Notwithstanding
the foregoing, the JV company shall not make any dividend distribution before it
has covered all the accumulated deficits from the losses of previous years. 

(5) The JV company shall not make dividend distribution before
its registered capitals have been paid in full. 

16. Financials and Accounting 

16.1 System 

Financial and accounting system of the JV company shall be set
up according to the Rules of Enterprise Accounting by Ministry of Finance of
China, other relevant Chinese laws and regulations, operational situations of
the JV company as well as common international accounting principles. The system
shall be adopted and amended by the Board. 

16.2 Fiscal Year 

The fiscal year of the JV company shall be the calendar year
from January 1st to December 3lst. 

16.3 Accounting Currency 

RMB shall be the accounting currency of the JV company. 

16.4 Financial Statements 

All the accounting vouchers, documents, books, statements, as
well as balance sheets, profit and loss statements, cash flow statements and
working capital reports provided to the General Manager or the Board shall be
written in Chinese. All financial statements shall be truly, entirely and fairly
reflect the financial situations and operational results of the JV company
during the period of time in the statement. 

16.5 Audit 

The JV company shall appoint an independent accounting firm
registered in China to audit its financial statements and reports annually. Upon
the completion of the audit, the audit firm shall submit an audit report to the
Board. 

16.6 Financial Reports 

32 

The JV company shall send financials reports to the joint
venture Parties within 15 days after the end of each month, and shall send it
annual financial report and audit report to the joint venture Parties within 3
months after the end of every fiscal year. 

16.7 Budget 

Within the first 3 months of every fiscal year, the Board shall
lead to prepare operation budgets for that fiscal year and submit it for
approval by the shareholders meeting. 

16.8 Financial Supervision 

Both Parties shall be entitled to inspect accounting books of
the JV company. 

16.9 Financial Personnel 

The Financial Controller shall be responsible for financial
matters of the JV company according to the company financial policies and rules.

16.10 Audit by the Party 

The JV company shall make available all accounting books in
reasonable time to be reviewed and examined by each Party or its authorized
representative (including the accountants retained by such party). If necessary,
each Party has the right to retain an independent accountant to audit accounting
records of the JV company. The JV company and the other Party shall fully
cooperate with such accountants and allow him/her to review and examine all
accounting records of the JV company. The cost related to such audit shall be
borne by the appointing party. However, if the result of such audit show
significant differences to the result of the JV company’s audited report and the
result of such audit is accepted by the Board and both Parties, then the cost
shall be borne by the JV company. The accountants for such audit shall keep all
documents confidential. The JV company shall permit such accountants to review
and exam the accounting books and records of the JV company and provide them
with necessary working place and facilities so the audit work can be conducted
effectively. 

17. Tax 

17.1 Preferential Tax 

The JV company shall pay taxes according to Chinese Tax Law and
Regulations and also enjoy all preferential taxes and other treatments according
to Chinese laws and regulations. 

17.2 Employee Tax 

33 

The employees of the JV company shall pay personal income taxes
according to Chinese Personal Income Law and other relevant laws. 

18. Labor Management 

18.1 Recruitment 

The hire, fire, resignation, retirement, salary, employee
insurance, welfare, bonus and punishment for the employees of the JV company
shall comply with Chinese Labor Law, Chinese Labor Contract law and other
relevant laws, this Agreement, the Articles of Association, policies and plans
approved by the Board. The JV company shall enter into employment agreement with
each employee and the agreement shall be filed with local labor department for
record. 

18.2 Fees of Labor Union 

The JV company shall allocate an amount equals to 2% of the
total actual wages of its employees for labor union activities. The use of the
Union fund shall follow the rules by Chinese National Federation of Unions. 

18.3 Resignation and Dismissal 

The General Manager may on behalf of the JV company dismiss or
fire any employee (other than senior managers) according to relevant laws and
regulations and employee agreement. The fire or dismissal of senior management
personnel must be approved by the Board. 

18.4 Senior Management Personnel 

The appointment, compensation, benefits, social security and
travel allowance standards of General Manager, Deputy General Manager and
Financial Controller shall be decided by the Board. 

19. Insurance 

Based upon its cost management and fees required, the JV
company shall purchase certain insurances, such as fire insurance and insurance
for other risks that the JV company needs to cover during its operation. The
type and coverage of insurance shall be determined by the Board. 

20. Corporate Governance of the Subsidiaries of the JV
company 

34 

Both parties promise to urge the subsidiaries of JV company to
adopt the same corporate governance structure as the JV company, so both parties
may have the same decision-making rights at the subsidiary level as that at the
JV company’s level. 

21. Confidentiality 

21.1 Neither Party nor the JV company shall directly or
indirectly leak or disclose any confidential information to any third party, or
allow any third party to leak or disclose any confidential information to any
other parties. Each Party and the JV company shall guarantee its related
parties, senior managers, the board, employees, agents and other representatives
(for this article 21 purpose, collectively as Representatives) shall not
directly or indirectly leak or disclose any confidential information to any
third party or allow any third party to leak or disclose any confidential
information to other parties. The confidential information shall be the unique
and exclusive property of the disclosing party (hereinafter referred as the
Protected Party). Any materials and documents (including photocopies) which
contain the confidential information shall be returned as soon as the expiration
or termination of this Agreement, except the receiving party can prove it has
destroyed materials and documents. 

21.2 Both Parties and the JV company can only disclose the
confidential information (or only allow the disclosure of the confidential
information) to the entities or their representative on the need-to-know basis
(only limited to the part that need to be disclosed) in order to complete the
deals under this Agreement or to establish or conduct the daily operation and
business of the JV company. Each Party and the JV company shall be responsible
for its representatives for the breach of confidentiality requirement under this
Agreement. 

21.3 If the applicable laws or government agencies lawfully
require any Party, the JV company or their representatives to disclose any
confidential information, then such party shall provide a written notice to the
protected party with respect to such request as soon as possible before any
actual disclosure. If the protected party requests, notifying party shall
provide a legal opinion to the protected party at the protected party’s cost to
explain the reasons that disclosure of the confidential information is requested
by the law. The party that is required to disclose confidential information
shall seek protective order or other proper remedies with the full cooperation of the protected party and try its best to receive
a guarantee that security measures will be taken to protect the confidential
information that to be disclosed. 

35 

21.4 Both Parties and the JV company shall take all other
necessary, appropriate and practical measures to make sure the confidential
information to be kept in confidence. 

21.5 The rights and obligations in this section shall remain
effective after termination of this Agreement or termination, dissolution or
liquidation of the JV company or either Party. 

22. Liability of Breach 

22.1 Breach 

If one Party fails to performs or doesn’t fully perform its
obligations under this Agreement, or makes untrue representation and warranties
under this Agreement, such party shall be deemed as breaching this Agreement.
The breaching party shall compensate the non-breaching party in accordance with
Chinese Contract Law. If both Parties have faults, failing to perform or not
fully perform its obligations, each Party shall take its own liabilities
respectively. 

If a Party does not make its contribution to the registered
capital on time in accordance with this Agreement, it shall be deemed as a
breach. The breaching party shall compensate the non-breaching party 10% of the
contribution amount that should have paid but not paid. If the breaching party
does not fully fulfill its capital contribution obligations for more than 3
months over the due date, the breaching party shall compensate all loss of the
non-breaching party and the JV company caused by such breach. 

22.2 Waiver 

Non-breaching party may waive its right in certain situations
but it shall not be deemed as the non-breaching party will waive its rights for
the same or different breaches in the future. 

23. Force Majeure 

23.1 The Scope of Force Majeure 

Force Majeure Event shall mean the event, situation or matter
that (i) directly or indirectly prevent the performance of a material obligation
under this Agreement; and(ii) which a Party cannot control; and(iii) a Party
cannot fully or partly avoid or overcome even it has adopted reasonable care and measures. On the premise of not conflicting
with (i),(ii),(iii) above, the Force Majeure includes but is not limited to
natural disaster, war, terrorist acts, riot, boycott or embargo, fire,
explosion, earthquake, epidemic disease, flood and storm. 

36 

23.2 Notice 

If a Party can’t perform its obligation under this Agreement
due to Force Majeure, it shall inform the other Party within 10 days of the
Force Majeure event happens and explain the Force Majeure event in details in
the notice. 

23.3. Performance 

If a Party can’t perform or delay its performance under this
Agreement due to the Force Majeure event, it shall not be deemed as breaching or
as a reason to claim damage, compensation or punishment for the other Party. In
such situation, both Parties still have the obligation to use reasonable
measures within the practical scope to perform this Agreement. Once the Force
Majeure event is over, the affected party shall inform the other party as soon
as possible and confirm such notice has been received. 

24. Terms, Early Termination, Takeover and Liquidation

24.1 Terms and Extension 

The term of the JV company is 20 years from the date of
issuance of business license. The Parties shall meet and discuss the extension
two years before the expiration of the term. If the Parties agree to extend the
term of the JV company, the JV company shall apply for the extension with the
Registration Authority at least 6 months prior to the expiration of the JV
company. 

24.2 Early Termination and Take Over 

24.2.1 This Agreement shall terminate upon expiration of the JV
company unless there is an early termination agreed by both Parties or in this
Agreement . If any of the following events occurs, the non-breaching party
(“noticing party”) has the right to terminate this Agreement by advanced notice
in writing: 

(1) If one Party materially breaches Article 5.2, 5.3, 6, 7 ,8,
9 of this Agreement. 

(2) Other unforeseeable event causes the JV company unable to
operate normally; 

37 

(3) The result or the impact of Force Majeure has seriously
affected the operation of the JV company for more than 6 months. 

In the event that a Party gives termination notice pursuant to
article 24.2.1, the Parties shall start the negotiation within one (1) month of
such notice. If the Parties can’t solve the problem or the other Party refuses
to negotiate for one (1) month, the noticing party may terminate this Agreement.
The termination of the Agreement shall not affect the non-breaching party to
seek liabilities of the breaching party. 

24.2.2 Take over and Early Termination if a Shareholder has
material changes. 

After JV company’s establishment, if any one of the followings
happens to a shareholder, it can be considered as a material changes to such
shareholder. 

(1) the actual controlling person of such shareholder has
changed; 

(2) the shareholder, or its controlling shareholder or
controlling person has been taken over by a third party; 

(3) the shareholder, or its controlling shareholder or
controlling person enters into the legal proceeding of merge, spin-off,
bankrupt, dissolution or liquidation; 

(4) the shareholder, or its controlling shareholder or
controlling person or the director appointed to Board of the JV company by the
shareholder has been sued for damage by the third party or is under
investigation or sanctions of the government or securities regulators which has
caused material negative impact to the normal business of the JV company. 

When the material change happens to one shareholder, the other
party has the right to issue a written notice to the changing party within 6
months upon learning the material changes and exercise the following rights: (i)
request to purchase all the shares owned by the changing party and the purchase
price shall be based upon the JV company’s net assets value and the percentage
of the shares in the JV company at that time; or (ii) request an early
termination of this Agreement and liquidate the JV company. 

If the material changes to the one shareholder has caused
damages to the JV company or the other shareholder, the changing shareholder
shall be responsible to compensate the other party and/or JV company’s losses.

24.2.3 The share transfer when the JV company is in the
deadlock. 

38 

After the JV company establishment, at the Board meeting or
shareholder meeting, if Yea and Nay votes are 50% each for two consecutive
rounds, it can be deemed as “Deadlock”. 

When the deadlock happens, each Party (hereinafter referred to
as the initial proposing party) can make a written proposal (hereinafter
referred to as the initial proposal) to purchase the other party’s
(hereinafter referred to as the proposed party) entire shares in the JV
company. The initial proposal shall include the price for the shares. The
proposed party can accept the initial proposal or make a counter proposal with a
higher price, i.e. to buy proposing party’s entire shares in the JV company at a
higher price per share. Within 10 days of the initial proposal, the proposing
party and proposed party can keep make counter proposal each other with higher
price per share until one party has the final highest price to purchase all the
shares of the other party in the JV company. 

If no party makes an initial proposal within 3 months since the
deadlock happens, and the deadlock is still unsolved, then any party has the
right to request the dissolution and liquidate the JV company. 

24.3 Procedures of Liquidation 

If any of the following things happens, the JV company shall be
liquidated according to the Chinese laws and regulations: the shareholders
meeting of the JV company decides to liquidate the JV company; or one party
sends a termination notice according to 24.2 of this Agreement and the other
party doesn’t want to purchase its counterpart’s shares in the JV company; or
the term of the JV company expires; or other liquidation event occurs according
to Chinese laws and regulations. 

(1) In the event of liquidation of the JV company, the
shareholders meeting shall appoint a liquidation committee (the “Liquidation
Committee”) to handle all legal matters on behalf of the JV company. The
Liquidation Committee shall evaluate and liquidate the assets of the JV company
in accordance with applicable laws and regulations . 

(2) The Liquidation Committee shall consist of four members, of
which two members shall be appointed by Party A and two members shall be
appointed by Party B. The members of the Liquidation Committee may be, but not
need to be, the directors of the JV company. Parties may appoint professionals,
such as accountants or lawyers from China or overseas to be the members of the
Liquidation Committee or to assist the work of the Liquidation Committee. 

39 

(3) The Liquidation Committee shall be responsible to prepare a
liquidation plan to make a thorough examination of the assets, credits and debts
of the JV company. The liquidation plan shall be approved by the Board and
executed under the supervision of the Liquidation Committee. 

24.4 Rights and Obligation Before the Termination 

The termination of this Agreement shall not affect the rights
and obligations occurred prior to the termination. 

25. Governing Law 

The execution, validity, interpretation, implementation and any
dispute resolution of this Agreement shall be governed by the laws of People’s
Republic of China. 

26. Dispute Resolution 

26.1 Arbitration 

Any dispute arising from or related to this Agreement
(including but not limited to the effectiveness, interpretation and performance
of this Agreement) shall be settled through friendly negotiation first. In case
no settlement can be reached through consultations in one month from the date
when one party raises the existence of the dispute, then either party can submit
it to the Hangzhou Arbitration Commission for arbitration. The language of the
arbitration shall be Chinese. 

26.2 Final Award 

Any decision made by the Arbitration Commission shall be final
and binding to both parties. 

26.3 Arbitration Fee 

Unless the arbitration award says otherwise, the arbitration
fee shall be borne by the losing party. 

26.4 Complete Performance 

During the arbitration, the Parties shall continue to fully
perform this Agreement, except the items under the arbitration. 

27. Miscellaneous 

27.1 Notice 

All the notice, consent, request, instruction or other
communication shall be made in writing and shall be considered effectively sent
and delivered if made by: (1) delivered by person, (2) delivered by pre-paid certified mail or registered mail, (3)
delivered by reputable courier service company, or (4) delivered by fax. Before
notified otherwise, the Parties shall use the following address for notice: 

40 

To Party A: Shanghai Maple Guorun Automobile Co., Ltd.

Address: Fengjing Industrial Zone, Jinshan District ,Shanghai

Zip code: 

Attention: 

Tel: 

Fax: 

To Party B: Zhejiang Kandi Vehicles Co., Ltd 

Address: Jinhua Industrial Zone, Jinhua City, Zhejiang 

Province 

Zip code: 

Attention: 

Tel: 

Fax: 

27.2 Effective Date 

This Agreement shall become effective when the Parties have
duly received all authorities and approvals to sign and perform this Agreement
from their companies. This Agreement will remain effective during the term of
the JV company. 

27.3 Employee Guidelines 

The JV company may set up employee guidelines, authorities of
the department and working procedures and other relevant policies, however, such
policies shall not violate the Chinese laws and regulations. 

27.4 Exhibits 

The exhibits are an integral part of this Agreement. If there
is a conflict between the provisions of this Agreement and the exhibits, the
provisions of this Agreement shall prevail. 

27.5 Representations and Warranties 

27.5.1 Each party shall represent and warrant to the other
party that it has received all the permission and has gone its corporate
governance procedures to obtain power and authority to enter into this Agreement and to perform its obligations under
this Agreement and the execution and performance of this Agreement are fully
authorized, legal and enforceable under the Chinese Laws and Regulations. 

41 

27.5.2 The execution of this Agreement and related documents
and performance of this Agreement will not violate, breach or conflict with
following items or cause breaches of this Agreement due to the following items,
and the following items will not restrict the Parties to enter this Agreement or
perform its obligations under this Agreement. The items are: existing agreements
of the Parties or other existing binding documents, commitments, policies, rules
or regulations, administrative orders, awards by the arbitration commissions or
verdicts by the court . 

27.5.3 Each Party has approved, signed and delivered this
Agreement according to the requirements and this Agreement will become effective
and will have binding effect according to its articles. 

27.6 Subtitles 

The subtitles of this Agreement is only for reading convenience
and it shall not affect the interpretation of this Agreement. 

27.7 Conflict 

In case of there is any conflict between this Agreement and the
Articles of Association, the provisions of this Agreement shall prevail. 

27.8 Amendment 

After this Agreement takes effect, it may not be amended unless
both parties agree in writing. 

27.9 Copies 

This Agreement shall have 7 original copies, and each party
takes 3 copies and 1 copies shall be submitted to the Registration Authority for
approval and registration. 

This Agreement has been entered by the authorized
representatives of both Parties on the date in the first paragraph of this
Agreement. 

27.10 Exhibits 

The Exhibits are: 

Exhibit 1 . Basic Business Plan 

Exhibit 2 . Shares Transfer Agreement of the New Company 

42 

Exhibit 3 . Trademark License Agreement 

Exhibit 4 . Patents and Technology License Agreement 

Party A: : Shanghai Maple Guorun Automobile Co., Ltd.

By: 

Name: 

Title: 

Party B: Zhejiang Kandi Vehicles Co., Ltd 

By: 

Name: 

Title: 

43Exhibit 10.4

 

FOURTH AMENDMENT TO OFFICE SPACE LEASE

 

THIS FOURTH AMENDMENT TO OFFICE SPACE LEASE (this “Fourth Amendment”) is made as of the 10th day of May, 2013, (“Effective Date”) by and between WASHINGTON STREET ASSOCIATES II, L.P., a Pennsylvania limited partnership (“Landlord”) whose address is 2701 Renaissance Boulevard, 4th Floor, King of Prussia, PA 19406 and NUPATHE INC., a Delaware corporation whose address is 227 Washington Street, Conshohocken, PA 19428 (“Tenant”).

 

RECITALS

 

WHEREAS, Landlord and Tenant entered into that certain Office Space Lease dated January 10, 2008 ( the “Original Lease”), for approximately 11,075 square feet of rentable area (the “Initial Premises”) on the second floor of that certain building commonly known as Millennium III (the “Building”) located at 227 Washington Street, Conshohocken, Pennsylvania (as more fully described in the Lease); and

 

WHEREAS, Landlord and Tenant entered into that certain First Amendment to Office Space Lease dated November 1, 2010 (the “First Amendment”) for an additional approximately two hundred forty (240) square feet of storage space (the “Additional Premises”)  on the ground level of the Building;

 

WHEREAS, Landlord and Tenant entered into that certain Second Amendment to Office Space Lease dated January 31, 2013 (the “Second Amendment”) to extend the Term of the Lease to May 31, 2013;

 

WHEREAS, Landlord and Tenant entered into that certain Third Amendment to Office Space Lease dated March 27, 2013 (the “Third Amendment”) to extend the Term of the Lease to June 30, 2013 (the Third Amendment, Second Amendment and First Amendment together with the Original Lease shall collectively mean, the “Lease”);

 

WHEREAS, Tenant and Conshohocken Associates, L.P. whose address is 2701 Renaissance Boulevard, 4th Floor, King of Prussia, PA 19406 entered into that certain License Agreement dated December 1, 2010 for use of approximately four hundred eighty (480) rentable square feet of office space in that certain building known as Millennium I, located at 20 Ash Street, Conshohocken, PA  19428 (the “License Agreement”); and

 

WHEREAS, Tenant desires to extend the term of the Lease on the terms contained in this Fourth Amendment.

 

TERMS

 

NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows:

 

1.             Incorporation of Recitals.  The foregoing Recitals are hereby incorporated in and made a part of this Fourth Amendment by this reference.

 

 

2.             Certain Definitions.  Except as otherwise defined in this Fourth Amendment, each capitalized term shall have the meaning ascribed to such term in the Lease.

 

3.             Term.  The Term of the Lease is hereby extended so that it shall end on August 31, 2013, unless sooner terminated as provided in the Lease.

 

4.             Base Rent.  As of the Effective Date, Fixed Basic Rent shall be calculated payable as follows:

 

	
 
    	
 
    	
Term
    	
 
    	
Rate Per
   Rentable Square
   Foot
    	
 
    	
Annual
   Base Rent
    	
 
    	
Monthly
   Installment
    	
 
    
	
Initial Premises
    	
 
    	
Effective Date – 8/31/13
    	
 
    	
$
    	
28.00
    	
 
    	
$
    	
310,100.00
    	
 
    	
$
    	
25,841.67
    	
 
    
	
Additional Premises
    	
 
    	
Effective Date-8/31/13
    	
 
    	
$
    	
8.00
    	
 
    	
$
    	
1,920.00
    	
 
    	
$
    	
160.00
    	
 
    

 

5.             Confession of Judgment.  Tenant hereby ratifies, confirms and reaffirms in all respects the provisions for confession of judgment for possession contained in Section 28(b)(v) of the Lease as amended by this Fourth Amendment.

 

6.             Lease in Full Force and Effect; No Conflicts.  The Lease remains in full force and effect and unmodified, except as modified or amended by this Fourth Amendment.  If there shall be any conflict or inconsistency between the terms and conditions of this Fourth Amendment and those of the Lease, the terms and conditions of this Fourth Amendment shall control.

 

7.             Binding Effect.  This Fourth Amendment shall be binding upon and inure to the benefit of Landlord and Tenant and their respective successors and assigns.

 

8.             Counterparts.  This Fourth Amendment may be executed and delivered in any number of counterparts, and by facsimile signature or electronic signature, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of such counterparts shall together constitute one and the same instrument.  This Fourth Amendment shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

9.             Further Assurance Actions.  Each party agrees that it will take all necessary actions requested by the other party to effectuate the purposes of this Fourth Amendment.

 

10.          Entire Agreement.  The Lease, as further amended by this Fourth Amendment, contains, and is intended as, a complete statement of all of the terms of the arrangements between the parties with respect to the matters pertaining to the Initial Premises

 

2

 

and the Additional Premises, supersedes any previous agreements and understandings between the parties with respect to those matters, and cannot be changed or terminated orally.

 

11.          Governing Law.  This Fourth Amendment shall be governed by and construed in accordance with the substantive laws of the Commonwealth of Pennsylvania.

 

12.          Headings.  The Paragraph headings of this Fourth Amendment are for reference purposes only and are to be given no effect in the construction or interpretation of this Amendment.

 

13.          Severability.  Any provision of this Fourth Amendment that 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 provisions of this Fourth Amendment or such provision, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

14.          Parties in Interest; No Third-Party Beneficiaries.  Neither the Lease, this Fourth Amendment nor any other agreement, document or instrument to be delivered pursuant to this Fourth Amendment shall be deemed to confer upon any person not a party hereto or thereto any rights or remedies hereunder or thereunder.

 

15.          Authority.  Landlord and Tenant each represent and warrant to the other party:  (a) the execution, delivery and performance of this Fourth Amendment have been duly approved by such party and no further corporate action is required on the part of such party to execute, deliver and perform this Fourth Amendment; (b) the person(s) executing this Fourth Amendment on behalf of such party have all requisite authority to execute and deliver this Fourth Amendment; and (c) this Fourth Amendment, as executed and delivered by such person(s), is valid, legal and binding on such party, and is enforceable against such party in accordance with its terms.

 

16.          No Effect on the License Agreement.  Notwithstanding anything set forth herein or in the License Agreement to the contrary, this Fourth Amendment does not extend the term of, or otherwise modify or amend the License Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

3

 

IN WITNESS WHEREOF, the duly authorized officers or representatives of Landlord and Tenant have executed this Fourth Amendment under seal as of the day and year first hereinabove written.

 

 

	
 
    	
LANDLORD  
    
	
 
    	
 
    
	
 
    	
WASHINGTON   STREET ASSOCIATES II, L.P., a Pennsylvania limited   partnership 
    
	
 
    	
 
    
	
Date   Signed: 10May2013
    	
By: 
    	
WASHINGTON STREET ASSOCIATES II ACQUISITION   CORPORATION, its sole general partner 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
/s/   Richard Heany 
    
	
 
    	
 
    	
Name:   
    	
Richard   Heany 
    
	
 
    	
 
    	
Title:   
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TENANT  
    
	
 
    	
 
    
	
 
    	
NUPATHE   INC., a Delaware corporation. 
    
	
 
    	
 
    
	
 
    	
 
    
	
Date   Signed: 10May2013
    	
By:   
    	
/s/   Keith A. Goldan 
    
	
 
    	
 
    	
Name:   
    	
Keith   A. Goldan 
    
	
 
    	
 
    	
Title:   
    	
V.P. &   CFO
    
	
 
    	
 
    
	
 
    	
 
    

 

4

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