Agreement on Business Operations Between Zhejiang Kandi Vehicle Co., Ltd. & Zhejiang Yongkang Top Import & Export Co., Ltd.

In order to enhance the cooperation relationship between Zhejiang Kandi Vehicle Co., Ltd.(hereinafter referred as “Kandi”) and Yongkang Import & Export Co., Ltd. (hereinafter referred as “Yongkang”), to achieve win-win situation, after thorough consultation, the two sides have reached to an agreement on product price and payment and other business as follows:

Ⅰ Payment settlement: Production shall be carried out based on order that is a contract between the two sides. The two sides shall deal with payment according to settled prices on the agreement; Kandi shall sign and send back the order within one working day upon receipt of the order; if the products on the order is with standard configuration, the price can be settled as following price; sales to the domestic export trade companies or factories; invoice price will be indicated, Kandi shall provide invoice at the invoice price to export trade companies, while Kandi shall eventually settle with Yongkang at the following prices; according to provisions of the order, Yongkang shall make 83% of  the payment to Kandi immediately after receiving the customer’s deposit or full payment, and make the remaining of the payment after tax refund:

Price settlement is as follows:         RMB:USD=1: 7.8

Prodcut Model	Product name	PriceⅠ( US$)	PriceⅡ( US$)	Notes
KD-49FM2	ATV	357.69	345.77
KD-49FM3	ATV	381.54	369.62
KD-150F	ATV	870.38	834.62
KD-150GKA	ATV	918.08	858.46
KD-150FS	ATV	930.00	894.23
KD-150GKA-2	ATV	965.77	930.00
KD-150GKC-2	ATV	941.92	906.15
KD-250FS	ATV	1,347.31	1,287.69
KD-250GKA-2	ATV	1,585.77	1,526.15	aluminum rim
KD-250GKB-2	ATV	1,585.77	1,526.15	aluminum rim
KD-250GKC-2	ATV	1,371.15	1,311.54
KD-250GKD-2	ATV	2,146.15	2,086.54
KD-970GKD-2	ATV	3,100.00	2,980.77
KD-970GKE-2	ATV	3,338.46	3,219.23

Ⅲ The above price Clause Ⅱ is for the American market and domestic export trade companies or factories, the price ClauseⅠis for other market.

Ⅳ Extra price is added for separate additional configuration increased in customer demand.

Ⅴ Payment for small order for below five units products shall be settled with the factory at the sales price of Yongkang.

Ⅵ The above prices are FOB tax-inclusive price.

Ⅶ If there are new products or price changes, " Confirmed Bill for Product Price " (Annex) established by the two sides shall prevail.

Ⅷ If the RMB exchange rate changes, the price shall be settled by the two sides through negotiation.

ⅨThe price lists shall come into effect since October 1st, 2005.

Zhejiang Kandi Vehicle Co., Ltd                              Yongkang Import & Export Co., Ltd

Seal:                                                        Seal: