Kandi Suit First Amended Complaint

5

10

15

20

25

2

3

4

6

7

8

9

11

12

13 14

16

17

18

19

21

22 23

24

26

27

28

CARLYLE (CARY) w. HALL III (CA Bar No. 184842; AZ Bar No. 026958) ~ «:» lPr POLSINELLI SHUGHART PC Security Title Plaza 3636 N. Central Ave., Suite 1200 Phoenix, AZ 85012 TEL: (602) 650-2000 / FAX: (602) 264-7033 EMAIL: [email protected]

RYAN D. LAPIDUS (Bar No. (96838) DANIEL C. LAPIDUS (Bar No. 227170) LAPIDUS & LAPIDUS, PLC 177 South Beverly Drive Beverly Hills, California 90212 TEL: 310-550-8700 / fAX: 310-943-2471 EMAIL: dan@lapiduslaw·.com

FILED CLERK. U.S. DISTRICT COURT

NOV 16 2009'.;

CENTRAL 01 TRICT OF CALIFORNIABY DEPUTY

Attorneys for Plaintiffs CONG WANG, an individual; SEASENG, INC., aIkIa KMD POWERSPORTS, a California corporation

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CONG WANG, an individual; SEASENG, INC., a/k:/a KMD POWERSPORTS, a California corporation,

Plaintiffs,

v.

ZHEJIANG KANDI VEHICLES CO., LTD., a/kIa KANDI TECHNOLOGIES CORP, a foreign corporation; KANDI TECHNOLOGIES CORP., a Delaware Corporation, flkJa STONE MOUNTAIN RESOURCES INC.; ZHEJIANG YONGKANG TOP IMPORT AND EXPORT CO. LTD., a/k1a DINGJI, a foreign corporation; ZHEJIANG MENGDELI ELECTRONIC CO., LTD.; a foreign corporation; XIAO MING BU, an individual; WANG YUAN HU, an individual; and KANDI USA, INC., a California corporation,;

Case No. CV09-7145 JFW (JEMx)

FIRST AMENDED COMPLAINT

1. Civil RICO (18 U.S.C.1962); 2. Breach of Distributorship

Agreement; 3. Breach of Stock Exchange

Agreement; 4. Fraud; 5. Interference with Contract; 6. Abuse of Process; 7. Trade Secret Misappropriation; 8. Lanham Act Unfair Competition

(15 U.S.C. 1125); 9. Unfair Business Practices; 10. Infliction of Emotional Distress; 11. Declaratory Relief; 12. Injunctive Relief 13. Quantum Meruit.

Defendants. I DEMAND FOR TRIAL BY JURY

. -FIRST AMENDED COMPLAINT

Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 of 48 Page ID #:162

5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

Plaintiff Cong Wang, and Plaintiff Seaseng Inc. a/k/a KMD Powersports, by and

through counsel undersigned, bring this civil action for damages and equitable and

injunctive relief against Defendants, and demanding a trial by jury, complain and allege

as follows:

SUMMARY OF ACTION

1. This action arises out of Defendants' fraudulent and unlawful attempts to

take over Plaintiffs' business. Defendants fraudulently induced Plaintiffs to enter into

distributorship and stock exchange by promises that Defendants had no intention of

fulfilling. Defendants then proceeded to steal Plaintiff Seaseng Inc. 's corporate

documents, including trade secrets and other confidential information, and falsely

declared themselves to be the owners of Seaseng. Defendants have employed a variety of

unlawful means, including threats of violence on Plaintiff Wang and his family, and

frivolous lawsuits, in an attempt to force Plaintiffs to relinquish control of Seaseng to the

Defendants. Plaintiffs bring this action under the Racketeer Influenced and Corrupt

Organizations (RICO) Act, and also seek relief for Defendants' violations of the Lanham

Act, as well as state law breach of contract and tort claims.

JURISDICTION AND VENUE

2. This civil action arises under the laws of the United States.

3. This complaint seeks civil remedies and is filed pursuant to 18 U.S.C. §

1964(c).

4. Plaintiffs allege a violation of their rights under Title IX of the Organized

Crime Control Act of 1970, as amended, 18 U.S.C. §§ 1961et seq.

5. The Court has jurisdiction over the federal claims under 28 U.S.C. § 1331.

6. The Court has jurisdiction over the state law claims under 28 U.S.C. ~ 1367

because those claims are so related to the federal claim that they form part of the same

case or controversy.

2 FIRST AMENDED COMPLAINT


5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

7. The Court may also have jurisdiction over the state law claims under 28

U.S.C. § 1332 because the amount in controversy exceeds the sum or value of $75,000,

and, unlike Plaintiffs, neither Defendant is a resident of the state of California.

8. Venue herein is proper under 18 U.S.C.A. § 1965(a) and 28 U.S.C.A. §

1391(b) because Defendants transact business or are found within this District, and a

substantial part of the events giving rise to the claims arose in this District.

9. The activities of the Defendants, as described herein, were within the flow

of, were intended to, and did have a substantial effect on the foreign and interstate

commerce of the United States.

PARTIES

10. Plaintiff Cong Wang ("Wang") is a Chinese citizen residing in California

since 2006.

11. Plaintiff Seaseng Inc. ("Seaseng"), also known as KMD Powersports, is a

privately held corporation existing under and by virtue of the laws of the State of

California, established in May 2006, and registered to do business in California as a

motorsport importer.

12. On information and belief, Defendant Kandi Technologies Corporation

("Kandi") is a publicly traded corporation existing under and by virtue of the laws of the

State of Delaware, incorporated on March 31, 2004, formerly known as Stone Mountain

Resources, Inc. On information and belief, Stone Mountain Resources, Inc. changed its

name to Kandi Technologies, Corp. ("Kandi"), on August 13,2007.

13. On information and belief, Defendant Zhejiang Kandi Vehicles Co., Ltd.

("Kandi China") is a foreign corporation existing under and by virtue of the laws of the

People's Republic of China. Defendant Kandi China is a manufacturer of off-road

vehicles, which include all terrain vehicles ("ATVs"), utility vehicles ("UTVs") and go

carts (collectively, "Kandi product"). On information and belief, Defendant Kandi

acquired Defendant Kandi China as its wholly owned subsidiary on or about June 2007.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

On infonnation and belief, Defendant Kandi conducts substantially all of its operation in

China through its wholly owned subsidiary Defendant Kandi China.

14. Defendant Zhejiang Top ImportlExport Co., Ltd. ("Zhejiang") is a foreign

corporation existing under and by virtue of the laws of the People's Republic of China.

On information and belief, Zhejiang was a wholly owned subsidiary of Kandi and/or

Kandi China. On information and belief, Defendants Kandi and/or Kandi China sold

Zhejiang to a third party sometime in May 2008.

15. Defendant Zhejiang Mengdeli Electric Co., Ltd. ("Mengdeli") is a foreign

corporation existing under and by virtue of the laws of the People's Republic of China.

16. On infonnation and belief, Defendant Xiao Ming Hu ("Xiao Ming") is a

Chinese citizen and resident who owns 100% of the shares of Kandi China. On

information and belief, Defendant Xiao Ming is the CEO, President and Chairman of the

Board of Directors of Kandi since March 2002. Defendant Xiao Ming is also the

chairman and CEO of Kandi China.

17. On infonnation and belief, Defendant Wang Yuan Hu ("Wang Yuan") is

Xiao Ming Hu's son, and a Vice President and Director of Kandi China

18. Defendant Kandi USA, Inc. ("Kandi USA") is a corporation existing under

and by virtue of the laws of California.

19. Plaintiffs are informed and believe and based thereon allege that, at all

material times, each of the Defendants was acting in a corporate, parent, subsidiary,

affiliate, supervisor, agency, associate, employee, employer, proprietor, conspiratorial,

and/or other capacity as the parent, subsidiary, agent, supervisor, affiliate, employer,

employee, proprietor, co-conspirator, aider and abetter and/or alter ego of the other

Defendants and with the permission, consent, knowledge, authorization, ratification and

direction of the other Defendants.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

GENERAL ALLEGATIONS

A. The Parties' Agreement Regarding Distributorship.

20. Upon information and belief, starting in 2006, Def<:mdants Kandi, Kandi

China, Kandi USA, Zhejiang andlor Mengdeli began expanding their presence in the

United States, California, by reaching out to various businesses who would be interested

in selling Kandi products.

21. Plaintiff Seaseng agreed to act as a distributor of Kandi products, in turn,

Defendants Kandi, Kandi China, Kandi USA, Zhejiang andlor Mengdeli agreed to give

Plaintiff Seaseng exclusive representation rights for Defendants' products in California.

Defendants provided an authorization letter to Seaseng confirming that Seaseng had the

right to distribute Kandi products.

22. Defendants further promised to develop ten (10) new product lines annually

for Seaseng's exclusive distribution.

23. Defendants represented that they would cooperate with product quality

control measures as well as product adjustments and development. Defendants agreed to

provide two-year service warranties and free parts to Seaseng for customer service issues.

24. Sometime in early 2007, Defendant Xiao Ming and Plaintiff Wang agreed

to swap shares in their respective companies so that Defendants Kandi China and

Zhejiang would take ownership interest in Plaintiff Seaseng. Plaintiff Wang would then

take 30% ownership interest in Defendants Kandi China and Zhejiang.

25. On February 7, 2007, Defendant Zhejiang issued a one-paragraph

document titled "Certificate" stating that Plaintiff Wang owns a 30% interest in Zhejiang.

26. As part of the agreement, Defendants Kandi and Top agreed to contribute

$300,000.00 in working capital to Plaintiff Seaseng on or before June 1, 2007 for

purposes of advertising and promotion of Kandi products.

27. Defendants Kandi and Top did not remit the $300,000.00 in working

capital as promised and thus Plaintiff Seaseng did not issue any share certificates. In the



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

end, Defendant Xiao Ming and Plaintiff Wang, did not issue or exchange any actual

certificates of shares to document their exchange and agreement.

28. Plaintiff Wang assisted Defendant Wang Yuan m obtaining a

manufacturer's occupational license [# 68885] from the California Department of Motor

Vehicles on June 4,2007.

29. On June 25, 2007, Plaintiff Wang obtained a distributor's occupational

license [#68886] to be able to market and sell Kandi products.

30. Beginning in June 2007 through November 2007, Defendants Kandi, Kandi

China and/or Zhejiang shipped 56 containers with Kandi products to Plaintiffs Seaseng

and/or Wang. This shipment was received without any purchase orders or contracts.

31. In December 2007, Defendants Kandi, Kandi China and/or Zhejiang

shipped their second shipment of 70 containers to Plaintiff Seaseng.

32. Plaintiff Seaseng used its own funds to clear customs, pay duties and store

the goods.

33. Plaintiff Seaseng received approximately 7 million dollars worth of Kandi

products since June 2007, and was actively marketing Kandi products to various

dealerships.

B. Defendants' Attempts To Get Rid Of Plaintiff Wang By Taking

Control Over His Company, Plaintiff Seaseng.

34. Upon information and belief, in December 2007, Defendant Xiao Ming

through Defendants Kandi, Kandi China, Kandi USA, andlor Zhejiang began negotiating

a stock-exchange agreement to acquire yet another company, SunL Group, Inc. ("SunL"),

a distributor of ATVs, UTVs, and go-karts, by exchanging these companies' shares with

SunL.

35. Defendant Xiao Ming wanted Plaintiff Wang to sell a controlling 51%

share to SunL. Defendant Xiao Ming also wanted Plaintiffs Wang and Seaseng to agree

to allow SunL to distribute product that was specifically designed and made for Seaseng

to distribute.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

36. On January 25, 2008, Defendants brought corporate executives of SunL

from China to meet with Plaintiff Wang to discuss a potential venture between

Defendants Kandi, Kandi China and/or Zhejiang, Plaintiff Seaseng and SunL.

37. At the January meetings, Plaintiff Wang came to discover that Defendants

Kandi, Kandi China, and/or Zhejiang treated Plaintiff Seaseng as their subsidiary while

refusing to acknowledge that Plaintiff Wang had any ownership interest in Defendants

Kandi, Kandi China and/or Zhejiang, or that Plaintiff Wang had any interest in proceeds

from the sale of Kandi products.

38. Defendants Kandi, Kandi China, Kandi USA, and/or Zhejiang used

Plaintiffs Wang and Seaseng to help them set up their own presence and business in

California, to train their employees and to steal from Plaintiff Wang his good reputation

and customer base.

39. Once they accomplished those goals, Defendants Kandi, Kandi China,

Kandi USA, and/or Zhejiang began looking for ways to take over Plaintiff Seaseng's

business and fire Plaintiff Wang.

C. Defendants' Theft of Plaintiff Seaseng's Corporate Documents.

40. Plaintiff Wang refused to surrender control over his company to Defendants

or to disclaim his interest in the profits earned or to be earned through the sale of Kandi

products.

41. Defendants Kandi, Kandi China, Kandi USA, and/or Zhejiang then stole

Plaintiff Seaseng's corporate documents, including but not limited to customer contact

lists, customer invoice lists, Seaseng corporate documents and unsigned Seaseng stock

certificates.

42. During Plaintiff Wang's lengthy meeting with the representatives of SunL

and Defendants Kandi, Kandi China, Kandi USA, and/or Zhejiang, Defendant Wang

Yuan stole Plaintiff Wang's notebook and Plaintiff Seaseng's corporate documents

(including business license, blank shares, customer list, and business minutes) - an event

that was captured on a surveillance video tape.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

43. Plaintiff Wang discovered that Seaseng's documents were missing in early

February 2008 and filed a police report on February 6, 2008.

D. Defendants' Threats And Defendant Zhejiang's First Lawsuit.

44. In addition to Defendants' theft of Plaintiff Seaseng's corporate

documents, in February, 2008, Plaintiff Wang learned that his relatives in China were

harassed and threatened by representation of the Defendants.

45. Upon information and belief, Defendants Xiao Ming and Wang Yuan

caused a warrant to be issued for Plaintiff Wang's arrest in China under the theory that

Plaintiff Wang was an employee of Defendants Kandi, Kandi China, Kandi USA, and/or

Zhejiang and that Plaintiff Wang misappropriated company documents from the

Defendants.

46. On or about February 13, 2008, Defendant Zhejiang filed a lawsuit, case

number KC052313 ("First Lawsuit"), in the Superior Court of California, County of Los

Angeles, against Plaintiff Wang and Plaintiff Seaseng, stating claims for fraud,

conversion, breach of fiduciary duty, appointment of receiver, accounting, constructive

trust, equitable lien, injunctive and declaratory relief and seeking to take control over

Plaintiff Seaseng.

47. The First Lawsuit, however, was never served on Plaintiffs.

48. Plaintiff Wang did not learn about the First Lawsuit until after it was

dismissed with prejudice by the state court for lack of service and lack of appearance by

the very party who brought it, i. e., Defendant Zhej iang.

E. The Parties' Purported Settlement.

49. At approximately midnight on February 27, 2008, Defendant Xiao Ming

called Plaintiff Wang's father and threatened Plaintiff Wang's welfare. At approximately

4:00 a.m. on February 28, 2008, Defendant Xiao Ming demanded that Plaintiff Wang

meet him to sign a promissory note and settlement agreement drafted by Xiao Ming

and/or his attorneys.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

50. On February 28, 2008, Plaintiff Wang met with Defendant Xiao Ming who

purported to represent the interests of Defendants Kandi, Kandi China, Kandi USA,

Zhejiang and Mengdeli. Plaintiff Wang sought to address any miscommunications,

restore control over his company Plaintiff Seaseng, and to settle any disputes with

Defendants.

51. The parties entered into a Settlement Agreement, consisting of

Memorandum (Exhibit A), Payment Plan (Exhibit B), Declaration of Defendants Kandi

China and Zhejiang (Exhibit C), and Declaration of Plaintiff Wang (Exhibit D).

52. In the Memorandum, Plaintiff Seaseng acknowledged the receipt of Kandi

products and promised to return some of the products. With respect to the remaining

Kandi inventory (labeled with Plaintiff Seaseng's trademark), the parties agreed that

Plaintiff Seaseng would pay for these goods according to the terms of the Payment Plan.

53. As part of the settlement, Defendants Kandi China and Zhejiang

acknowledged that they own no shares of Plaintiff Seaseng, and Plaintiff Wang

acknowledged that he likewise owns no shares in Defendants Kandi China or Zhej iang.

54. Following the Settlement Agreement, Plaintiff Seaseng made the following

payments to Defendants, timely and consistently with the Payment Plan:

a) On March 7, 2008, Seaseng paid $90,000.00 to Kandi.

b) On March 17,2008, Seaseng wired $164,256.00 to Kandi.

c) On May 30, 2008, Seaseng paid Kandi $181,850.00.

55. Plaintiff Seaseng also returned the Kandi products/inventory, except those

products already branded with Plaintiff Seaseng's trademark/labels, which Plaintiff

Seaseng was supposed to continue to distribute and pay for under the terms of the

Settlement Plan.

F. Defendants' Breach of Settlement Agreement, Second Lawsuit and

Interference with Plaintiff Seaseng's Business.

56. Despite Plaintiff Seaseng's compliance with the February 28, 2009

Settlement Agreement, in July 2008, Defendant Zhejiang filed another lawsuit against



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

Plaintiff Wang and Plaintiff Seaseng, case number CIVRS 806472 ("The Second

Lawsuit") in the Superior Court of California, County of San Bernardino, making

essentially the same allegations as in its First Lawsuit, including stating that Plaintiff

Wang was a salaried employee of Defendants Kandi, Kandi China and/or Zhejiang, and

that he had a fiduciary duty to make Seaseng the wholly-owned subsidiary of Defendant

Zhejiang, and claiming that the Settlement Agreement should be declared void and

rescinded.

57. Plaintiffs Seaseng and Wang had to hire an attorney to defend the Second

Lawsuit and incurred substantial attorneys' fees and costs.

58. On or about November 24, 2008, Defendant Zhejiang withdrew its Second

Lawsuit, dismissing it without prejudice.

59. Because Defendant Zhejiang denied the validity of the Settlement

Agreement when it filed the Second Lawsuit in July 2008, Plaintiff Seaseng suspended

his August payment to Defendants Kandi China and Zhejiang under the Payment Plan.

60. On or about October 30, 2008, Plaintiffs Seaseng and Wang received a

letter from the California DMV stating that their distributor license was canceled; and

that these Plaintiffs were not unauthorized to sell Kandi vehicles as of September 2008.

61. Around the same time, Plaintiffs Seaseng and Wang began receiving

numerous complaints from the ultimate purchasers of Kandi products regarding their

poor quality and performance, missing parts and defects who were seeking Plaintiff

Seaseng's assistance with obtaining new parts or receiving refunds.

62. Throughout 2008-2009, Plaintiffs Seaseng and Wang continued to

forward/relate these requests for assistance to Defendants Kandi, Kandi China, Kandi

USA, and/or Zhejiang made in accordance with Defendants' warranties - all to no avail.

Defendants refused to send replacement parts to Plaintiff Seaseng and Wang, interfering

with Plaintiffs' ability to conduct business.

63. Without a valid dealership license as of September 2008 and unable to

service the Kandi products, Plaintiff Seaseng's reputation began to suffer.



2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

64. Plaintiff Seaseng faced increasing storage costs and a slew of customer

complaints, which the company was without authority or power to address.

65. Defendants remained unresponsive to PlaintiffSeaseng's concerns.

66. Plaintiff Seaseng had no choice but to liquidate the Kandi products to

distributors in Mexico at heavy losses.

G. Defendants' Final Threats and Harassment of Plaintiff Wang.

67. On or about December 23,2008, Hong Feng Zhu ("Zhu"), a bodyguard and

driver for Defendant Xiao Ming, appeared at Plaintiff Seaseng's place of business to

threaten Plaintiff Wang.

68. Mr. Zhu first met with Neng Da Hu, Plaintiff Wang's friend, and told him

that he was "warning" Plaintiff Wang, and that Defendant Xiao Ming had already made a

deposit with someone to "take care of Mr. Wang."

69. Plaintiff Wang was out of the office when this happened but when he came

back to the office, Mr. Zhu was still at this office and relayed the same message

personally to Plaintiff Wang.

70. On or about December 24, 2008, Plaintiff Wang filed a police report

regarding the threats.

71. On or about June 8, 2009, Defendants Kandi China and Zhejiang filed yet

another lawsuit, case number CIVRS 906194 ("The Third Lawsuit") in the Superior

Court of California, County of San Bernardino, seeking to now enforce the terms of the

Settlement Agreement, which these Defendants previously repudiated, and seeking to

compel Plaintiffs Seaseng and Wang to pay for the balance of the Kandi products, which

they previously refused to accept or service, let alone allow Plaintiffs to distribute.


5

10

15

20

25

2

"j

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

CLAIMS FOR RELIEF

FIRST CAUSE OF ACTION

CIVIL RICO

(Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli,

Xiao Ming, Wang Yuan)

72. Plaintiffs incorporate each of the foregoing allegations as if fully set forth

herein.

73. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao

Ming and Wang Yuan have been engaging in the following activities affecting interstate

and foreign commerce, to wit: the manufacture, marketing, sale and service of Chinese

made ATYs, UTYs, and go-karts within the United States.


Ming and Wang Yuan combined their efforts as one partnership, association or enterprise

("RICO enterprise") for purposes of:

a) Increasing their share in the market for ATYs, UIYs, and go-karts in

the United States through expansion of their operations in the United States; and

b) Acquiring, by means of fraud, securities fraud, extortion and

harassment, the United States companies who would store, market, distribute, service and

be otherwise responsible for Kandi products.


Ming and Wang Yuan engaged in racketeering activity when they:

a) Abused process by filing a series of frivolous actions against

Plaintiffs Seaseng and Wang for ulterior reasons of harassment, extortion, and

interference with Plaintiffs' business;

b) Sought to deprive Plaintiff Wang of his ownership and management

rights in Plaintiff Seaseng without valid consideration, essentially ousting him from his

own company by means of fraud, intimidation and harassment.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

76. The following are some of the predicate criminal acts which constitute a

pattern of racketeering activity and which Defendants knowingly committed:

a) Acting for Defendants Kandi, Kandi China, Kandi USA, Zhejiang,

or Mengdeli, Defendants Xiao Ming and/or Wang Yuan stole corporate documents and/or

misappropriated trade secrets from Plaintiffs Seaseng and Wang.

b) Acting for Defendants Kandi, Kandi China, Kandi USA, Zhejiang,

or Mengdeli, Defendants Xiao Ming and/or Wang Yuan made and/or directed death

threats and threats of bodily harm to Plaintiff Wang and/or his relatives, which are

punishable as criminal offenses.

77. The above-referenced actions of Defendants Kandi, Kandi China, Kandi

USA, Zhejiang, Mengdeli, Xiao Ming and Wang Yuan have sufficient continuity so as to

pose a threat of continued criminal activity.

78. The above-referenced acts of racketeering, occurring within ten years of

one another, constitute a pattern of racketeering activity within the meaning of 18 U.S.C.

§ 1961(5).

79. Plaintiffs Seaseng and Wang were injured in their business and property by

reason of this violation of 18 U.S.C.A. § 1962, in that, as a direct and proximate result of

Defendants' complained acts, Plaintiffs suffered damages, including damages to their

business, property and person.

80. As a result of actions of Defendants Kandi, Kandi China, Kandi USA,

Zhejiang, Mengdeli, Xiao Ming and Wang Yuan, Plaintiffs Seaseng and Wang's business

reputation and trade name were tarnished; Plaintiffs Seaseng and Wang lost their

customers and opportunity to continue as a distributor of the Kandi products in

California; and Seaseng and Wang sustained other monetary and emotional losses arising

from Defendants' breach of distributorship, ownership, settlement agreements and/or

outright scheme by these Defendants to defraud Plaintiffs.


Ming and Wang Yuan are liable pursuant to the provisions of the Racketeer Influenced



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

and Corrupt Organizations Act (RICO), alleging a violation of Title 18 U.S.C. § 1962(a),

(b), (c) or (d).

82. By reason of the Defendants' violation of 18 U.S.C. § 1962, Plaintiffs are

entitled, pursuant to 18 U.S.C. § 1964(c), to threefold the damages sustained, with

interest thereof at 10% per annum, and a reasonable attorney's fee in connection

herewith.

A. Violation of 18 V.S.C.A. § 1962(A).

83. It is unlawful for any person who has received any income derived, directly

or indirectly, from a pattern of racketeering activity or through collection of an unlawful

debt in which such person has participated, to use or invest, directly or indirectly, any

part ofsuch income, or the proceeds of such income, in acquisition of any interest in, or

the establishment or operation of, any enterprise which is engaged in, or the activities of

which affect, interstate or foreign commerce. 18 U.S.C.A. § 1962(a).


Ming and Wang Yuan are persons within the meaning of 18 U.S.C.A. § 1961(3), who

received income derived, directly or indirectly, from a pattern of racketeering activity or

through collection of an unlawful debt, in violation of 18 U.S.C.A. § 1962(a).


Ming and Wang Yuan used or invested all or part of such income to establish their

presence and operations in the United States, which affected interstate and foreign

commerce.

B. Violation of 18 V.S.C.A. § 1962(8).

86. It is unlawful for any person through a pattern of racketeering activity or

through collection of an unlawful debt to acquire or maintain, directly or indirectly, any

interest in or control of any enterprise which is engaged in, or the activities of which

affect, interstate or foreign commerce. 18 V.S.C.A. § 1962(b).


Ming and Wang Yuan as persons within the meaning of 18 U.S.C.A. § 1961 (3), through a



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

pattern of racketeering activity, acquired and maintained, directly or indirectly, an interest

and control in enterprise of Plaintiff Seaseng, a California business engaged in interstate

commerce, in violation of 18 U.S.C.A. § 1962(b).

C. Violation of 18 V.S.C.A. § 1962(c).

88. It shall be unlawful for any person employed by or associated with any

enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to

conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs

through a pattern of racketeering activity or collection of unlawful debt. 18 U.S.C.A.

§ 1962(c).


Ming and Wang Yuan, as persons within the meaning of 18 U.S.C.A. § 1961(3) and as

persons associated with one enterprise, conducted and participated, directly and

indirectly, in the conduct of the affairs of the said enterprise through a pattern

racketeering activity in violation of 18 U.S.C.A. § 1962(c).

D. Violation of 18 V.S.C.A. § 1962(d).

90. It shall be unlawful for any person to conspire to violate any of the

provisions of subsection (a), (b), or (c) of section 1962.


Ming and Wang Yuan knowingly agreed or conspired to operate or manage their

combined activities as a RICO enterprise.

SECOND CAVSE OF ACTION

BREACH OF DISTRIBUTORSHIP AGREEMENT

(Defendants Kandi, Kandi China, Zhejiang)


herein.

93. Defendants Kandi, Kandi China, and/or Zhejiang entered into a

distributorship agreement with Plaintiffs Seaseng and Wang.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

94. Defendants Kandi, Kandi China, and/or Zhejiang authorized Plaintiffs

Seaseng and Wang to market and sell the Kandi products in California.

95. Defendants Kandi, Kandi China, and/or Zhejiang shipped over 100

containers of the Kandi products to Plaintiffs in June and December 2007.

96. Defendants Kandi, Kandi China, and/or Zhejiang shipped their goods to

Plaintiff without any written agreement or documents specifying any of the terms of the

parties' distributorship arrangement.

97. Plaintiffs Seaseng and Wang expended substantial time and resources in

processing, storing, marketing and selling the Kandi products.

98. By May 2008, at the Defendants' requests, Plaintiffs Seaseng and Wang

paid for or returned most of the Kandi products to Defendants Kandi, Kandi China,

and/or Zhejiang.

99. Before Plaintiffs Seaseng and Wang, however, could distribute the

remaining Kandi products, Defendants Kandi, Kandi China, and/or Zhejiang withdrew

their letter of authorization allowing Plaintiffs Seaseng and Wang to distribute Kandi

products.

100. Defendants Kandi, Kandi China, and/or Zhejiang refused to service the sold

Kandi products thereby damaging Plaintiffs' reputation.

101. Defendants Kandi, Kandi China, and/or Zhej iang refused to pay for storage,

marketing and otherwise mitigate Plaintiffs' damages arising from unaccounted shipment

of 200 containers of product to California.

102. Defendants Kandi, Kandi China, and/or Zhejiang breached their express

and implied promises to Plaintiffs Seaseng and Wang when they wrongfully terminated

Plaintiffs as distributors of Kandi products in California, thereby depriving them of

opportunity to make substantial profits.

103. Defendants Kandi, Kandi China, and/or Zhejiang breached their express

and implied promises to Plaintiffs Seaseng and Wang when they withdrew their

authorization of distributorship before Plaintiffs had an opportunity to market and sell all



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

of the Defendants' goods, thereby making it impossible for Plaintiffs to perform their

duties under the parties' agreement.

1,04. Defendants Kandi, Kandi China, and/or Zhejiang breached their express

and implied promises to Plaintiffs Seaseng and Wang when they refused to service their

products, thereby damaging Plaintiffs' reputation and interfering with Plaintiffs'

relationship with their customers.

105. Plaintiffs sustained damages as a result of Defendants' conduct.

THIRD CAUSE OF ACTION

BREACH OF STOCK EXCHANGE AGREEMENT

(Defendants Kandi, Kandi China, Zhejiang, Xiao Ming)

106. Defendant Xiao Ming promised to transfer 30% of his ownership interest in

Defendants Kandi, Kandi China, and/or Zhejiang in exchange for Plaintiff Wang's

promise to transfer his ownership interest in Plaintiff Seaseng to Defendant Xiao Ming.

107. As part of the agreement, Defendants Kandi and Top agreed to contribute

$300,000.00 in working capital to Plaintiff Seaseng on or before June 1, 2007 for

purposes of advertising and promotion of Kandi products.

108. Defendants Kandi and Top breached the agreement to contribute the

$300,000.00 in working capital

109. Except as other excused or prevented by Defendants, Plaintiffs performed

their obligations pursuant to this agreement.

110. Upon information and belief, as a result of the promises to exchange stock,

Defendants Kandi, Kandi China, Zhejiang and/or Xiao Ming claimed to own Plaintiff

Seaseng.

111. Defendants Kandi, Kandi China, Zhejiang, and Xiao Ming, however, failed

to deliver stock certificates to Plaintiff Wang or otherwise recognize his ownership

interest in these companies.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

112. Because Defendants Kandi, Kandi China, Zhejiang and Xiao Ming

breached their agreement, and no stock was exchanged, Plaintiff Seaseng remains a

company solely owned by Plaintiff Wang.


FOURTH CAUSE OF ACTION

FRAUD

(Defendants Kandi, Kandi China, Zhejiang, Xiao Ming)


herein.

115. Defendants Kandi, Kandi China, Zhejiang and Xiao Ming agreed that

Plaintiffs Seaseng and Wang would distribute the Kandi products in California and would

receive the resulting profits from the sale of Kandi products in California.

116. In or about February 2007 Defendants Xiao Ming and Wang Yuan

represented to Plaintiff Wang that Plaintiff Wang would own 30% interest in Defendants

Kandi, Kandi China, or Zhejiang, in exchange for shares of Plaintiff Seaseng.

117. Defendants Kandi, Kandi China, Zhejiang and Xiao Ming subsequently

breached their promises and misrepresentations when, upon information and belief,

Defendant Xiao Ming and other officers of Defendants Kandi, Kandi China, Zhejiang

declared that Plaintiff Wang was merely an employee of Defendants Kandi, Kandi China,

Kandi USA, Zhejiang, who was entitled to no more than a salary, and who had no

ownership interest in Plaintiff Seaseng or any of the Defendants.

118. In reliance on Defendant Xiao Ming's promises, Plaintiff Wang expended

substantial time and efforts in assisting Defendants Kandi, Kandi China, Zhejiang and

Xiao Ming to establish their presence in California and in using his company Plaintiff

Seaseng to effectuate the sale of Kandi products.

119. Defendants Kandi, Kandi China, Zhejiang and Xiao Ming never intended to

perform them when they excluded Plaintiff Wang from distributorship and ownership



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

agreements while seeking to appropriate Plaintiff Seaseng as their own subsidiary

company.

120. Plaintiff Wang would not have agreed to work for or with Defendants

Kandi, Kandi China, Zhejiang and Xiao Ming and devote his time and efforts to market

and sell their products in California if he knew they only intended to breach their

promises.

121. Through false promises of a long-term distributorship and co-ownership

agreements between Defendants Kandi, Kandi China, Zhejiang and Plaintiff Seascng,

Defendant Xiao Ming fraudulently induced Plaintiff Wang to work for Defendants Kandi,

Kandi China, Zhejiang, and/or Mengdeli.

122. In reality, Defendant Xiao Ming planned to breach all of his promises when

convenient after he and his son Defendant Wang Yuan had an opportunity to steal all of

Plaintiff Seaseng's customers and information and after they no longer needed Plaintiff

Wang's services.

123. Defendants Kandi, Kandi China, Zhejiang and Xiao Mings's actions

constitute fraudulent conduct.

124. Plaintiff Wang suffered damages as a direct and proximate result of the

Defendants' fraudulent misrepresentations.

FIFTH CAUSE OF ACTION

INTERFERENCE WITH EXISTING CONTRACTUAL AGREEMENTS

(Defendants Xiao Ming, Wang Yuan)


herein.

126. At all times relevant hereto, Defendants Xiao Ming and Wang Yuan acted

as officers or directors of Defendants Kandi, Kandi China, Kandi USA, and/or Zhejiang.

127. Defendants Xiao Ming and Wang Yuan acted in breach of their fiduciary

duties and contrary to the interests of their companies and exceeded the scope of their

authority when they made promises to Plaintiffs Seaseng and Wang that they did not



5

10

15

20

25

2

3

4

6

7

8

9

1]

12

13

14

16

17

18

19

21

22

23

24

26

27

28

intend to fulfill, when they made threats to Plaintiff Wang and his relatives, and when

they misappropriated Plaintiff Seaseng's trade secrets and sanctioned the filing of

frivolous lawsuits against Plaintiffs Seaseng and Wang.

128. Acting out of their self interest, Defendants Xiao Ming and Wang Yuan

thereby interfered with the existing contractual agreements between Plaintiff Seaseng and

Defendants Kandi, Kandi China, Kandi USA, Zhejiang, causing Defendants Kandi,

Kandi China, Kandi USA, Zhejiang to wrongfully terminate the distributorship

agreement with Plaintiff Seaseng.

129. By stealing Plaintiff Seaseng's corporate documents and, upon information

and belief, by soliciting Plaintiff Seaseng's customers, Defendants Xiao Ming and/or

Wang Yuan impeded the existing contractual relationships between Plaintiff Seaseng and

its customers.

SIXTH CAUSE OF ACTION

INTERFERENCE WITH PROSPECTIVE BUSINESS OPPORTUNITIES AND

CUSTOMER RELATIONS

(Defendants Xiao Ming, Wang Yuan)


herein.

131. At all times relevant hereto, Defendants Xiao Ming and Wang Yuan acted

as officers or directors of Defendants Kandi, Kandi China, Kandi USA, and/or Zhejiang.

132. By wrongfully terminating Plaintiff Seaseng as a distributor, Defendants

Xiao Ming and Wang Yuan also interfered with Plaintiff Seaseng's prospective business

opportunities.

133. By directing the Defendant companies to not supply replacement parts,

Defendants Xiao Ming's and Wang Yuan's actions caused substantial loss of business to

Plaintiffs.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

134. Defendants Xiao Ming's and Wang Yuan's actions amount to interference

with existing contractual relationship between Defendants Kandi, Kandi China, Kandi

USA, Zhejiang and Plaintiff Seaseng

135. Defendants Xiao Ming's and Wang Yuan's actions also amount to

interference with prospective contractual relationships of Plaintiff Seaseng with its

customers.

136. Plaintiff Seaseng sustained damages as a direct and proximate result of the

Defendants Xiao Ming's and Wang Yuan's interference.

SEVENTH CAUSE OF ACTION

WRONGFUL INSTITUTION OF CIVIL PROCEEDINGS AND/OR ABUSE OF

PROCESS

(Defendants Kandi, Kandi China, Zhejiang)


herein.

138. Defendants Kandi, Kandi China, and/or Zhejiang instituted frivolous civil

proceedings against Plaintiffs on at least two occasions.

139. Defendants Kandi, Kandi China, and/or Zhejiang did so out of malice and

with intent to harass Plaintiffs Seaseng and Wang.

140. Defendants Kandi, Kandi China, and/or Zhejiang engaged in unfair and

unlawful practices to extort monies from Plaintiffs Seaseng and Wang.

141. Defendants Kandi, Kandi China, and/or Zhejiang did not have a good cause

to assert claims against Plaintiffs Seaseng and Wang.

142. The first two lawsuits instituted by Defendants Kandi, Kandi China, and/or

Zhejiang against Plaintiffs Seaseng and Wang terminated favorably to Plaintiffs.

143. As a result of Defendants Kandi, Kandi China, and Zhejiang's actions,

Plaintiffs Seaseng and Wang sustained damages, including incurring substantial

attorneys' fees.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

EIGHTH CAUSE OF ACTION

VIOLATION OF LANHAM ACT SECTION 43(A)

(Defendants Wang Yuan, Xiao Ming)


herein.

145. Defendants have made false and misleading representations of fact

regarding the affiliation, connection, and association of Defendants with Plaintiff

Seaseng, including but not limited to false representations that Plaintiff Seaseng is a

subsidiary of or otherwise owned or controlled by Defendants.

146. Defendants have also made false and misleading representations of fact as

to the origin, sponsorship, or approval of Plaintiff Seaseng,s goods and services.

147. Plaintiff Seaseng sustained damages as a direct and proximate result of

Defendants' false and misleading statements.

NINTH CAUSE OF ACTION

TRADE SECRET MISAPPROPRIATION/INVASION OF PRIVACY

(Defendants Wang Yuan, Xiao Ming)


herein.

149. Plaintiff Seaseng's corporate documents, including but not limited to its

customer list, know-how information and corporate minutes, constitute trade secrets that

Plaintiff Seaseng guarded from disclosures and kept confidential.

150. Without Plaintiff Seaseng's or Wang's permission or authority to do so,

Defendant Wang Yuan stole the confidential trade secrets of Plaintiff Seaseng.

151. Upon information and belief, Defendant Wang Yuan acted at the direction

of or in agreement with Defendant Xiao Ming.


Defendants Xiao Mings's and Wang Yuan's misappropriation of its trade secrets and

invasion of Plaintiff s confidences.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

TENTH CAUSE OF ACTION

UNFAIR BUSINESS PRACTICES

(Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao Ming,

Wang Yuan)


herein.

154. Unfair competition occurs when a person engages in any unlawful, unfair

or fraudulent business act or practice. Cal.Bus. & Prof.Code § 17200.

155. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli

unlawfully stole confidential trade secrets from Plaintiffs and then used these trade

secrets for their own gain.

156. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdelie

subsequently started a business located within a five mile radius of Plaintiffs' location of

business to directly compete with Plaintiffs.

157. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli engaged

in practices that harmed its competitor Plaintiff Seaseng, including deceit and fraud.


deceptive practices engaged by Defendants Kandi, Kandi China, Kandi USA, Zhejiang,

Mengde1i, Xiao Ming and Wang Yuan.

ELEVENTH CAUSE OF ACTION

INFLICTION OF EMOTIONAL DISTRESS. (Defendants Wang Yuan, Xiao Ming)


herein.

160. On more than one occasions, Defendants Wang Yuan and Xiao Ming

threatened Plaintiff Wang and his relatives.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

2]

22

23

24

26

27

28

161. Defendants' threats are severe in that they are death threats and, upon

information and belief, included actual beatings of employees who work for Plaintiff

Wang's parents in China.

162. Given that Defendant Xiao Ming uses a body guard (who actually made a

threat on behalf of Xiao Ming), Plaintiff Wang became so concerned with his life and

well being that he is considering hiring his own body guard if he ever needs to return to

China.

163. On or about January 15, 2009, upon information and belief, without lawful

authority, Defendants Xiao Ming and Wang Yuan caused a notice of prosecution to be

posted in China for P1aintiff Wang' s arrest.

164. Defendants Xiao Ming's and/or Wang Yuan's threats exceed the

boundaries of permissible.

165. Defendants' threats are serious in that they threaten commission of bodily

harm to Plaintiff Wang and his family, and threaten criminal prosecution in China.

Defendants have demonstrated their use of civil process in the United States for an

improper purpose.

166. Defendants Wang Yuan and Xiao Ming resorted to these illegal threats in

order to collect an unlawful debt/monies that neither Plaintiff Wang nor Plaintiff Seaseng

owe to them or their companies.

167. Defendants Wang Yuan's and Xiao Ming's threats were intended to subdue

Plaintiff Wang's will so that he surrenders his legal and ownership rights in Plaintiff

Seaseng and pays to Defendants sums which he does not owe to them.

168. As a direct and proximate result of Defendants Wang Yuan's and Xiao

Ming's threats and other racketeering activity, Plaintiff Wang suffered and continues to

suffer a severe emotional distress that no reasonable person should be expected to endure.




5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

TWELFTH CAUSE OF ACTION

DECLARATORY RELIEF

(Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli)


herein.

171. Plaintiffs know of no other equally plain, speedy and adequate remedy

other than seeking declaratory relief.

172. Plaintiffs seek declaratory relief to conclusively establish that Defendants

Kandi, Kandi China, Kandi USA, and Zhejiang have 0% ownership interest in PlaintitT

Seaseng.

173. Plaintiffs seek declaratory relief to conclusively establish that Plaintiffs

Seaseng or Wang owe no monies to Defendants Kandi, Kandi China, Kandi USA,

Zhejiang, or Mengdeli.

THIRTEENTH CAUSE OF ACTION

INJUNCTIVE RELIEF

(Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao Ming, Wang

Yuan)


herein.

175. Plaintiffs seek to enJom Defendants Kandi, Kandi China, Kandi USA,

Zhejiang, Mengdeli, Xiao Ming, and Wang Yuan from harassing Plaintiff Wang or his

family members with extortionate threats, from any further attempts to illegally take over

ownership of Plaintiff Seaseng, and from any other racketeering activities intended to

collect an unlawful debt.

III

III

III

III



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

FOURTEENTH CAUSE OF ACTION

QUANTUM MERUIT

(Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao Ming, Wang

Yuan)


herein.

177. On information and belief, Defendants Kandi, Kandi China, Kandi USA,

Zhejiang and Xiao Ming have been enriched by the realization of a significant increase in

the value of their companies as a result of Plaintiffs Seaseng's and Wang's services.

178. Plaintiffs Seaseng and Wang have been impoverished by actions of

Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao Ming and Wang

Yuan and/or their repudiation of contractual duties under the distributorship, stock

exchange or settlement agreements.

179. It would be inequitable to allow Defendants Kandi, Kandi China, Kandi

USA, Zhejiang, Mengdeli, Xiao Ming and Wang Yuan to retain the benefits conferred

upon them by Plaintiffs Seaseng's and Wang's performance.


181. Defendants should disgorge an amount sufficient to compensate Plaintiffs

Seaseng and Wang for their services performed for Defendants Kandi, Kandi China,

Kandi USA, Zhejiang, Mengdeli, Xiao Ming and Wang Yuan, including but not limited

to processing, customs handling, storage, marketing, advertising, sales, training and other

administrative work.

WHEREFORE, Plaintiff prays for judgment against Defendants, Kandi, Kandi

China, Kandi USA, Zhejiang, Mengdeli, Xiao Ming, Wang Yuan, and each of them, as

follows:

1. For actual, compensatory and consequential damages in an amount to be

determined at trial, but in no event less than one million dollars.



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

2. For threefold the damages actually sustained and the costs of suit, in a sum

not less than $3,000,000, including reasonable attorneys' fees, pursuant to 18 U.S.C.A. §

1964(c) with interest thereon at the legal rate of 10 percent ( %) per annum.

3. For such other and further relief as the Court may deem appropriate

pursuant to 18 U.S.C.A. § 1964.

4. For pre- and post judgment interest at the highest rate allowed by law.

5. For costs and attorneys' fees incurred as a result of Defendants' actions.

6. For declaration that Defendants have no ownership interest in Plaintiff

Seaseng and that Plaintiffs do not owe any monies to Defendants.

7. For injunction against harassment.

8. For punitive damages.

9. For such other and further relief as the Court may deem proper and just.

DATED: November/i,2009 LAPIDUS & LAPIDUS, P.L.C.

-and

POLSINELLI SHUGHART PC

By: hi Carlyle (Cary) HaHllI Attorneys for Plaintiffs



5

10

15

20

25

2

3

4

6

7

8

9

11

12

13

14

16

17

18

19

21

22

23

24

26

27

28

DEMAND FOR TRIAL BY JURY

Plaintiffs hereby demand a trial by jury of all issues which may be tried to ajury.

DATED: November &, 2009 POLSINELLI SHUGHART PC

By: lSI Carlyle (Cary) Hall III Attorneys for Plaintiff



EXHIBIT A


f¥15:Seaseng, Inc. (~DI)

Z1i:~.~~I51lf}~

( Zhejiang Kandi Vehicles Co. LTD.) (*11)

fJi1i:wrtt7.kSfM~mJ:l~Ift*~

(Zhejiang YongKang Top Import & Export Co., LTD. ) (rpllJ)

~~*~~~~M'~Z~s~~~"m~~~~~~ZM~~

{f · Mlll!!.~&#1frrj)c.:m{l~ 2008 ~ 3 .F.JiB:ffl}fiJ] Seaseng,lnc.1}ii]

1#J:t • m:iljtl.EfJ11~.5i~~~ .z.p=fPi1JtritJ'1l~a9.gUTAiI

IfF I =:n~f.OC:ft7t~ii?~' ~HIJ.j.Tm~1.f~ .

j!jij~gij~~Z.~~P.lliH~1®tB~MA ' fiUJm1}a]

~~fU~q'J~~'~NJlRrwM~_~1lJl1}

i5ij~jcitm~l:fjD1i~~lij~.ft~pg1.f.JlJijSeaseng,

Inc:.~m:fifb"tM ' Mi.fi.ft.fJii~.~1t=t'rIRf~irfiiJ3tfll= . R1J~~:Jt;

~*lJWftt.il!!*~m1}~~f:t1fw.m~~~.·

l' EE.~"••~OO6t.8Ma~83~1JmDMSeaesng, Inc.. , [Z,nID~:n]f3 20061f:MJ~~Efl1Jl¥.J~~J1j{it~A:7.959,642

~~(~18~ffi~ff~fS~~iC) . 1Urmt~[ZJj~Jpq/j]§j

D*€irEf311ffi1O 435,OOO(.ta"~;8Hfiff)~~ , ~j;tl~~

7,524,642(~{Ejffirg.lt••1f§fE~h:1Jtt)~ti.

2· tilt. 2008 if. 2 .F3 28 13~J1:Efl1JE.~[Z,1J:fOpf1J]x~~

1,885,588(~fSmaHtfZIJMffi fffE{BmqfEtt5.l0~~ , j;)'lsH!~~HfftC

9S7,363(rA~ffi.~f~1Ei,Ki~~)~11t: . ~m- 2,842,951 (AC{s

,' ,,", -'" J' "

, II1 : ;' J


fflUE-~_ .iCff:t)\mffi.1€t~)~~

3· Efl1.rff(retE 2008 if:: 2 f3 29 B-~~3flEE [ZJ1~JJpg15J~~tt9Jt

¥~nc=1J~~i¥JfI~ft1Jl~3.038.669(~fi3~-~~mgff~ftil¥.l

fftW-)~~~~ . PJTi!!.~t>JJ&MI~.&tl~)jm!I)E . :~~

J.f~a'9J¥l1JfBEE.=:1.H;irJl (J[Mif{'I=1Jf~~) · ~j!{~t±tWL1:J.T

1"FfB ~ nllfF!5t1i3G .1tep-. 101.022(1'€t.flff~m:fl5«Ofl"J

~~. EfI1i=tE 2008 iF: 3 F.l 15 ~mJOJ~ 90%(fBhi.t~ )O%I¥JJJT

m/~f'tt~D1[11~[Z.:n~pt1i] .

4· iIHi&RJt{1 9O,919(~iit~~fJ§jft€tJ;.).(fu~~m 3 t!trplJl

¥IIe'9 1a1.022(tft.W{f*ltffi'It)~Jt:~ 90%)~~1fi:~ Ef! 15 rm J::. rZ1J;fD~j.n 1.542,OOO(ft1EH.lirg-.~~ff)~~1r--.rW~ I Efl

n~ft-~~~M~·~ff~~~~t .. ·

5· [Z1Jf{J~1fJWn'¥11~sunl1}lU. 8easeng, Jnc.0~rr'g

15] ( ${!.f~ : Case No.: EDCV07·807·VAP )JiJf.~~~$Jfm .

20081f. 2 R 28 El [Z,1.ifUp;j:Jj]$'GrRJEfi1.Jx-1"mSUIt 20,OOO(m

If;)~~. ~.~lJtB~~~Efi J.f~[z:.Jj~pii1J]lY-JB{1~

2,842,951(ltffl~Jmt ••ltff-f{faffitft.)~~WJID,[Z1J.fO~

1J]ii~*tJi~1tErS']~~.J4~f5X9tJ-~.ffl&1fJ~1~~· Mntl

Efl Jj?~~~EH1:a:~[z.Jj~~1Jlat.JDJ.M!t1IfD~ .

6· L5l:[z:.1J~lrj:n]~~~15~Pm150cc. 2$Occ. 800cc -~lfi(fj

EPA Et3~ft 42.0-00(_.:at{f)~1?i • BEtJ~11~-.j . Efl15*Ui

~.M[Z:1.i;fDflfjj]1JJf3t~p=F. _~rJI1$r~®Jtm [b [Z

:nmlJ];ij(ta. tLD~ 1:f11J:f~-@j~~F1k~ , [Z15fDp;jn]


'liFf~ 11It~~:ffUt':1 EPA ffJmW,EfJo

7· q]:JJ·Jlt::X3H~!UMZ.1JWW1fJ8'iJh~EB[Z15fOfJ'Jh]~iJi~

AfV, 00 CART *~f¥JIiU 4000 tJ ' [Z.1i~Jpq1iJ:ff1iJ&

~4o/J1& E!ffialJm . ~[JflSl[Z. :1:flO~1J]:fE~~m~tl!It!fI¥.J~ep ,

~~~~~-~~m'W~h_~.~~~1iW~~.~~m

~f;fj[Z 1J~[J~1fJI'flP.tlfMtt!J1&~rrEfl1Jtt~ EPA ~~t5N KMD ~

~1¥J~WF~mfIJ •

8· [6 )j*1JP9JJJjji:ilf~D*aEf£ 15 1'-T{$ BXp:j~~~mJ&Pffli~

ttt~~~W. EfJ1i]JrtiJ[Zjjf[]~1jJL&JflZ~Mi.ffl •

D· rm*-_*JIJAnW l08,312(tEt~m~ff~m~fftlt)~~®~C

,*~ ,~,.:m*NmEflJ:HilW& ' ~15lti.1~:r± 20 r- iT~~1Jl

-m1.~f«J.lD tm!fn*~m~!£- I I¥ ti~-

lfJ/i: Seaseng, Inc.

it~

1iNl:fra:! (Zhejiang Kandi Vehicle! Co., LTD.)

[J=i~a.I (Zhejiang YongKang Top Import &. Export Co., LTD,)

') !/7/

//

/2008if.2.F.1288 /


Translation by Penny Kole, Court Ccrti tied Interpreter CA 30 I0 I 5

MEMO

Party A: SEASENG, INC. (US)

Party B: Zhejiang Kandi Vehicles Co., Ltd. (ZHEflANG KANDI VEHICLES CO. I.TD.) (China)

Party C: Zhejiang Yongkang Top bnport & Export Co., Ltd. (ZHEJIANG YONGKANG TOP IMPORT & EXPORT CO., LTD.) (China)

Through friendly negotiations, Parties A, B, and C have decided to terminate prior cooperation for seeking better developments. Starting March 2008 Kandi Vehicles and Zhejiang Yongkang Top will no longer supply to SEASENG, INC. With the good intentions for Party A's business to get through smoothJy and for minimizing losses to Parties B or C, all three parties have reached a full peaceful understanding and the following resolution is executed.

Mr. Xiaoming Hu is the lawful representative of Party B Zhejiang Kandi Vehicles Co., Ltd. and has the authority to handle all company matters and to execute all company documents. In addition, Mr. Hu and Zhejiang Kandi Vehicles Co., Ltd. have bcen fully authorized by the Zhejiang Yongkang Top Imparl & Export Co., Ltd. to handle all issue~

with SEASENG, INC. and to execute all relevant documents on behalfofPartyC. Mr. Hu and Zhejiang Kandi Vehicles Co., Ltd. guarantee that they indeed have the above power of attorney.

I. Some products manufactured by Kandi Vehicles were exported to SEASENG, INC. through Party C. Starting from 2006 [Parties B and C] have supplied products to Party A in the amount ofUS$7,959,642 (seven million nine hundred fifty nine thousand six hundred and forty two). Through negotiations. [Parties B and C] voluntarily offer a discount ofUSS435,000 (four hWlClred thirty five thousand) to Party A, so the amount is reduced to US$7,524.642 (seven million five hundred twenty four thousand six hundred and forty two).

2. As of February 28, 2008, Party A has paid to [Parties Band C] US$l ,885,588 (one million eight hundred eighty five thousand five hundred and eighty eight) and returned products in the amount of US$957,363 (nine hundred fifty seven thousand three hundred and sixty three), with the total ofUS$2,842.95 I (two million eight hundred forty two thousand nine hundred and fifty one).

3. Party A promises to return products manufactured by [Parties B and C] ill the amount ofUS$3,038,669 (three million thirty eight thousand six hundred sixty nine) based on the price decided by all three parties starting from February 29, 2008. Party A will formulate a return products model list, and all three parties have determined the unit price for the retum products. (please refer to the attached

All English words appeared in the source document are represented in capital.


7

~

Translation by Penny Kole, Court Certified Interpreter CA 301015

price list). Party A shall tmdert3.ke and complete the process relating to shipping the return products. For one of the accounts payable, in the amount of US$J 01,022 (one hundred and one thousand and twenty two), prior to March 15 2008 Party A may pay 90% (at 10% discount/waived amount) to [Parties B and

CJ·

4. After returning the products and making lIdditional payment of90,919 (ninety thousand nine hundred and nineteen) (the amount referred in paragraph 3 which is 90% 0[US$101,022 (one hundred and one thousand and twenty two), Party A will still owe [Parties B and CJ USS 1,542,000 (one million five hundred forty two thousand). Party A is requirel.l to pay the total amount within one year in installments and the attached payment plan describes the detailed payment method.

5. [Parties B and C] is required to be liable for all expense borne by Party A relating to the legal action (case nwnber: CASE NO.: EDCV07-807-VAP) between SUNl company and SEASENG, INC. 00 February 28, 2008 [Parties B and CJ makes a payment of U$$20,ooo (twenty thousand) to Party A as attorney fee, and this amount was already included in the US$2,842,951 (two million eight hundred forty two thousand nine hundred and fifty one) as already paid. [Parties B and C] is further required to be liable for all future expenses and judgment of this legal action, and Party A shall, on its own, deduct the amount based on receipts or documents from the account payable to [Parties B and C].

(,. As previously requested by [Parties Band q, Party A has already made the payment of US$42,OOO to EPA for [Parties B and C] as application fee of models 150cc, 250cc, and 800ec. Party A promises to help [Parties B and C] handle the name transfer process. [Parties Band C] shall be liable for the relating expenses. In the event Party A fails to accommodate and caused the transfer failure, [Parties Band C] may not be held liable for the EPA application fee of the three models.

Party A is returning approximately 4000 units of ATV GO CART to [Parties B and C] as the return products. [Parties B and C] wi II be on their own handling the said products after receiving them. In the event [Parties B and C] sell the said products in the future in the US market, Party A will not be held responsible for any potential issues arising from the transaction or any after-sale issues. Furthennore, Party A declares waiving all legal action rights relating to the EPA label and KMD trademark of the return products to [Parties Band q.

8. [Parties B and C] promises that Party A may charge warehouse storage expense to [Parties 8 and C] if [Parties Band C] fails 10 have arrangements to receive all return products with fifteen working days.

All English words appeared in the source document are represented in capital.


Translation by Penny Kole, Court Ct:rtified Interpreter CA 30101.5

9. An amount 0[U8$108,3"12 (one hundred and eight thousand three hundred and twelve) for parts was not included in the above caJculation pending price verification by Party A. All parties agree that the matter will be handled within 20 days after the price is re-negotiated. In the event negotiation fails, Party A shall {translator's note: in the original there arc words have the right to crossed out, al\(I a signature above the cross line} return all of them.

Party A: SEASENG, INC. Representative {signature}

Party B: Zhejiang Kandi Vehicles Co., Ltd. (ZHEJIANG KANDI VEHICLES CO. LTD) Representative {signature}

Party C: Zhejiang Yongkang Top Jmport & Expolt Co., Ltd. (ZHEJIANG YONGKANG TOP IMPORT & EXPORT CO., LTD.) Representative {signature}

Fehruary 28, 2008

{signatun:}

All nnglish words appeared in the source document are represented in capital.


DECLARATION OF INTERPRETERITRANSLATOR

I, Penny Kole, say; I am a Court Certified interpreter for the State of California; I am familiar with the English and Mandarin Chinese language; I have translated the attached Memo from Chinese to English. The foregoing is a true and correct translation of said document.

I certify under penalty of perjury that the foregoing is true and correct.

Executed on May 5, 2008 at San Marino, California.


EXHIBITB


~h~~i r-t ~i1-~f~e-vjl \tl~) 1>~ ~ 11'\c. (ll~)

~ I~'- ~ vJ1) ;.)~:t Jl-1Ytt'i. ~~~ 111.1)' (~{~f..J~.it ~{'1 til ':!t»;~ :!zfli. J ••1t1r aIt. ;!.~Jl1 -i. ,~~ t,1i 9~ At;, 11 ~. 'WAi i t

:fJp~ fIlidAitjl/l.e.. b ~.tj .,1"'1tJR .h 111~. ltiJf~f&(tt>f Jpt$ ~J.;~.crl\ )~/~~~~I~~~"9;t~,Yhi,;lJu1~fi~ s.~ ~~ vtj~~fq rlJ ~~

brlf.~J7?b-. ~1 ~vt~~f.t, ~v1II.!-, 2'11 ~If;"} T~ ttl

~ A*'I~t ~ -f1!.vt~, (h fM itl~K1lm,t/1- :..-1t';)!Ivt ~ •

~'h/: ~~J l~c

~t-

~ ~'t~'/~ ",-f/' Ii -rtl~f}¥U

. / , '


---_.__._---------

~W,C,c~~1N A Member of American Translator~ Association

AFFIDAVIT OF TRANSLATION OF FOREIGN DOCUMENT

Slale of Cali fomia ) County of Los Angeles ) SS.

The undersigned, being duly sworn, depose andsay: thot Jamfamiliar and competent with both the Chinese language and the English languoge; that I have read and translated the attached documents, and certify that the translation of said document into English is a <:(mlp/ete and accurate translation to the best a/my knowledge,

Description of Document(s): Payment Plan between Zhejiang Kandi Vehicles Co., Ltd. and Seaseng Inc,

.' :7

__ :~~,3.-...::L:::........:.~. Translator: Chung M. Lin

STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS.

SUBSCRmED AND SWORN TO BEFORE ME ON tht: 7 DAY OF July ,2008 by

..\ ("·~·"·ll:: ___ ,_Chung M. Lin . pcnonally : .~.~: .t i" ::'1 i ,.'. ;:!. .

known to me or proved to me on the basis of satisfactory

e'i:'j2lJ:,~Qn[,) who appeared befQre me. N~tJ~~bliC' -v--

1108 W. Valley Blvd, Suite 6 Phone: (626) 300·g1'll Alhilmbrit, U\ Yl80 1 Fax: (62&) 300·89';5

Email: [email protected] U.S 1\.


Payment Plan

Party A: Zhejiang Kandi Vehicles Co., Ltd. (China)

Party B: Seaseng Inc. (USA)

Seaseng Inc. owes Zhejiang Kandi Vehicles Co., Ltd. the payment for goods in the amount of 1.542 million US dollars (One million five hundred fifty-two thousand US dollars) of whkh 200,000 US dollars shall be paid nack before the end of May of 2008, 300,000 US dollars shaH be paid back before the end of August. 400,000 US dollars shall

be paid back before the end of November of 2008 and 600,000 US dollars shall be paid back before the end ofFebruary of2009. The amowlt ofUSS42,OOO shall be used to help

Kandi to transfer the ownership ofthree EPA certificates to Zhejiang Kandi Vehicles Co., Ltd. (China) and after the transfer is completed. the amount of USS42,OOO will be lAln(,;clled.

If any of the above payments is not made on time, 1% interest per month will be imposed for the first three months of delinquency. After the payment is delinquent for more than Ihrec months, a penalty of 10% per day will be imposed.

Borrower: Scaseng Inc.

<signature>

Febmary 28, 2008 at Los Angeles

Guarantor. <signature>

Febmary 28, 2008


EXHIBITC


"- .. " .

.:EJW.~ BA:tm ~ : ±If.tU;]j!1'fJI~mru~7j("mmi!ill:B D 1i ~i}Sj(Zhejiang YongKang Top Import & Export Co.~ LTD.)~

1:tftITg~{)j.~tt.~.

2008~2 f3 28 8


Declaration

r:ong Wang hereby declares: Cong Wang definitely does not own any share i)fZhejiang YongKang Import & Export COOt Ltd.

This declaration is hereby ma.de.

h·{aker ofthi5 declaration: Cong Wang <signed>

February 28; 2008

'"00••, .......

SOPl1IA VA' OI'nl1'1l$$(on t !. j',Jry A.JbIc • C los t\l1(')eJQll C< :orm,. !:1p!~l>. ;1~;-:--~.,


".

..'" ,,:' 'f

~~.~~~ AMember of American Translators Association


~~tatc ofCalifomia ) r:ounty of Los Angeles ) SS.

'rM undersigned, being duly sworn, depose and .~ay: that I amfamiliar and compeJent with ,wth the Chinese language and the English languag(f: that I have read and translated the Ilttached documents, and certify that the. translation ofsaid dr,cument into Englf.sh iti a .:omplete and accurale translation to the best 0/my Irnow/edge.

)escription ofDocument(s): Declaration ofCong Wang

STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) S8.

SUBSCRIBED AND SWORN TO BEFORE ME ON the 16 DAY OF July ,2008 by

Chung M. Lin , personally known to me or proved to me OD the basis of satisfactory evidence to be . nCs) who appeared before me.

N

1108 W. \'Jlley Blvd., SUite 6 Phone: (626) 300-9191 Alhambra. CA 91803 Fax: (626) 300-8955 U.S.A. Email: [email protected]


EXHIBITD


.'

wru!§7J<SJfff.j]JH!i~tfi 0 1if~~5](Zhejiang YongKang Top

Import & Export Co., LTD.)(r:pIl)*tJ~im.~1if~N0a]

(ZheJiang Kandi Vehicles Co., LTD.)(tp 1IJ)!$)@1'R~ Seaseng,

Inc.(~liJ)~fBiiJJB!:f7}.!Nf!lt.~.

'~.Ul: WISfidi••1fIt{1}i!fJ

(Zhejiang Kandi Vehicles Co., LID.)

(Zhejiang YongKang Top Import & Export)

.§IYj.ti~~A.~~·

2008 ~ 2 .F.I 28 8


.'

Declaration

Zhejiang YongKang Top Import & Export Co., Ltd. (China) and ZhejiangKandi Vehicles Co., Ltd. (China) absolutely do not own my share in Seaseng Inc. (USA). This declaration is hereby made.

Declarants: Zhejiang Kandi.Vehicles CO., Ud.

Zhejiang YongKang Top Import & Export

Declarant's Representative: <signed>

February 28,2008

..,.,t..~

SOPHIA Y. C"omrnl:;:llon "

Notary Pubiic • Los ,\ngeIElS

t.1-/Comm. E.'q:lifas to q


,.

~~C,o~~ AMember of American Translators Association


State ofCalifornia ) County ofLos Angeles ) SSe

The undersigned, beingduly sworn. depose andsay: that I am/amiliar andcompetent with both the Chinese language and the English language,' that I have read and translated the attached documents, and certify that the translation ofsaid document into English is a complete and accurate translation to the best ofmy knowledge.

Description of Document{s): Declaration of Zhejiang Kandi Vehicles Co., Ltd. and Zhejiang YongKang Top Import & Export

" ....il'" ~:'. ..--?/L-~--

Translator: Chung M. Lin

STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SSe

SUBSCRIBED AND SWORN TO BEFORE ME ON the 7 DAY OF July , 2008 by

Chung M. Lin , personally known to me or proved to me on the basis of satisfactory .evidence to be the person(s) who appeared before me.

1108 W. Valley Blvd., Suite 6 Phone: (626) 300-9191 Alhambra, CA 91803 Fax: (626) 300-8955 U.S.A. I=rn~il' inFnl'iil:o";"nlinlt "".....


Kandi Suit First Amended Complaint

Documents

Transcript of Kandi Suit First Amended Complaint