8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):  November 9, 2007 (November 5, 2007)

ZAP

(Exact name of Registrant as specified in its charter)

California	001-32534		94-3210624
(State or other jurisdiction of incorporation or organization)	Commission File Number		IRS Employer Identification Number
501 Fourth Street Santa Rosa, CA		95401
(Address of principal executive offices)		(Zip Code)

(707) 525-8658

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01  Entry into a Material Definitive Agreement

On November 5, 2007, ZAP (the “Company”) entered into a Regulation S Securities Purchase Agreement (the “Purchase Agreement”), with Al Yousuf LLC (the “Purchaser”), pursuant to which the Company sold to the Purchaser 5,813,954 shares of the Company’s common stock (the “Shares”),  and a three-year warrant to purchase 1,744,186 shares of the Company’s common stock at an exercise price of $1.25 per share (the “Warrant”), in a private placement transaction (the “Transaction”) pursuant to Regulation S under the Securities Act of 1933, as amended (the “Securities Act”).  The Transaction closed on November 5, 2007.  Gross proceeds from the Transaction to the Company were $5,000,000. The Shares and the Warrant are collectively referred to herein as the “Securities.”

In connection with the Transaction, the Company, Steven M. Schneider, chief executive officer of the Company and the Purchaser entered into a Side Letter Agreement (the “Letter Agreement”), pursuant to which the Company granted to the Purchaser certain piggy-back registration rights (the “Registration Rights”).  Under such Registration Rights the Company shall notify Purchaser at least 30 business days prior to the filing of a registration statement with respect to any offering of the Company’s shares of common stock and shall offer the Purchaser the opportunity to register such number of Shares as the Purchaser may request in writing within 5 days after receipt of the notice from the Company.

In addition, the Letter Agreement grants the Purchaser a right of first refusal in the case of a proposed sale or transfer of shares or equity interest in the Company by Mr. Schneider where the sum of i) the affected shares or equity interests of such sale or transfer and ii) the aggregate amount of shares or equity interests in the Company sold or transferred by Mr. Schneider over the preceding 12 month period is equal to or greater than 1% of the outstanding equity interests in the Company.  The Purchaser has also been granted the right, exercisable in its sole discretion, to tag along on a pro rata basis and on similar terms with any sale or transfer of shares by Mr. Schneider where the sum of i) the affected shares or equity interests of such sale or transfer and ii) the aggregate amount of shares or equity interests in the Company sold or transferred by Mr. Schneider over the preceding 12 month period is equal to or greater than 1% of the outstanding equity interests in the Company.

In addition, the Purchaser was granted the right to select one member of the Company’s Board of Directors (the “Board”), and Mr. Schneider agreed to vote his shares of common stock in the Company (“Company Stock”) to elect such director and the Company agreed to take or cause to be taken all action permissible in accordance with applicable law and within its power to effect such person’s election to the Board.  Further, Mr. Schneider agreed to vote his shares of common stock in the Company, and the Company agreed to take or cause to be taken all action permissible in accordance with applicable law and within its power, to maintain the sixe of the Board at five to seven persons.

So long as the Letter Agreement is in effect, Mr. Schneider agreed to vote his Company Stock in a manner intended to cause none of the following actions to be taken, and the Company agreed to take or cause to be taken all action permissible in accordance with applicable law and within its power to effect that none of the following actions are taken, without the prior written approval of the Purchaser (such approval not to be unreasonably withheld):

·   liquidate, dissolve or wind up the affairs of the Company

·   create or authorize the creation of any new class of equity security having rights, preferences or privileges senior to or on parity with the Shares

·   issue convertible notes or grant warrants or options (other than certain, limited compensatory options)

·   purchase or redeem, or pay any dividend or distribution on, any capital shares or other equity interest in the Company, except as required by any existing contractual rights

·   create or authorize the creation of any indebtedness for money borrowed, or grant any guarantees, liens or other security interests in respect thereof in an amount in aggregate in excess of $1,500,000, except in the ordinary course of business

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·   sell all or substantially all of the assets of the Company or enter into any merger, consolidation, business combination, or recapitalization

The Letter Agreement will expire as of the earlier of (a) the November 5, 2014 or (b) the first date on which the Purchaser’s beneficial ownership, as calculated in accordance with regulations under Section 13 of the Securities Exchange Act of 1934, as amended, of the common stock of the Company is less than 5% of the issued and outstanding common stock of the Company.

The foregoing description of the Transaction and related documents does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, Warrant, and Letter Agreement which are attached to this Current Report as Exhibits 10.1, 10.2, and 10.3, respectively, and incorporated herein by reference.

Item 3.02.  Unregistered Sales of Equity Securities

The disclosures under Item 1.01 are incorporated in this Item 3.02 by reference.

The Securities have been offered and sold to the Purchaser in reliance on an exemption from the registration requirements of United States federal securities laws under Regulation S promulgated under the Securities Act (“Regulation S”).  The Company has relied on the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth in the Purchase Agreement in order to determine the applicability of such exemption and the suitability of the Purchaser to acquire the Securities.  The Purchaser has represented and warranted to the Company that he is not a U.S. Person (as defined in Regulation S) and is not an affiliate (as defined in Rule 501(b) under the Securities Act) of the Company.  Neither the Company nor the Purchaser has engaged in any ‘Directed Selling Efforts’ in the U.S. as defined in Regulation S.

Item 9.01.  Financial Statements and Exhibits

(d)   Exhibits
Exhibit Number	Exhibit Title or Description
10.1	Regulation S Securities Purchase Agreement, dated November 5, 2007
10.2	Common Stock Purchase Warrant, dated November 5, 2007
10.3	Side Letter Agreement, dated November 5, 2007

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ZAP
Date: November 9, 2007	By:  /s/ Steven M. Schneider
	Steven M. Schneider
	Chief Executive Officer

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EX-10.1

EXHIBIT 10.1

REGULATION S SECURITIES PURCHASE AGREEMENT

This Regulation S Securities Purchase Agreement (“the Agreement”) is made as of November 5, 2007 by and between ZAP, a California corporation (the “Company”), the address of which is 501 Fourth Street, Santa Rosa California 95401, and Al Yousuf LLC, a United Arab Emirates limited liability company, the address of which is P.O. Box 25, Dubai, United Arab Emirates (the “Purchaser”). The Company and the Purchaser, intending to be bound and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, covenant and agree as follows:

ARTICLE I

PURCHASE, SALE AND TERMS OF SHARES

1.1.   Purchase and Sale.  At the Closing (as defined in Section 1.2), the Company agrees to sell to the Purchaser in an offshore transaction negotiated outside the U.S. and to be consummated and closed outside the U.S. and, in consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Purchaser agrees to purchase, subject to the conditions hereinafter set forth, 5,813,954 shares of the Company’s common stock (the “Shares”) and warrants for the Purchaser to purchase an additional 1,744,186 shares of the Company’s common stock in accordance with the terms and conditions of a warrant, the form of which is attached hereto as Exhibit A (the “Warrant”, the shares underlying the Warrant, the “Warrant Shares”, and collectively with the Shares, the “Securities”), which Warrant shall be executed and delivered by an authorized officer of the Company on the date hereof. The purchase price shall be Five Million Dollars ($5,000,000 USD) (“Purchase Price”). Subject to the terms and conditions of this Agreement, the Company has authorized the sale and issuance to the Purchaser of the Securities (the “Issuance”). This is a binding, irrevocable commitment to purchase the Securities in an exempt transaction subject to Regulation S.

1.2.   Closing. The closing of the Issuance to the Purchaser (the “Closing”) shall take place simultaneously with the execution and delivery of this Agreement at the offices of the Purchaser. At the Closing, the Company shall deliver to the Purchaser the Agreement duly executed by the Company, against receipt by the Company of a check or wire transfer in an aggregate amount equal to the Purchase Price and the Agreement duly executed by the Purchaser. The wire transfer shall be sent pursuant to the following instructions:

Richardson & Patel LLP
Client Trust Account
Bank Name:	Comerica Bank of California
	Westwood Office
	10900 Wilshire Boulevard
	Los Angeles, California 90024
	Telephone:	800-888-3595
	ABA Number:	121137522
	ACCT. Number:	1891937581

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Beneficiary:	Richardson & Patel LLP
	Client Trust Account
Re:	Client Name: ZAP

1.3.   Representations by the Purchaser.  The Purchaser makes the following representations and warranties to the Company:

A.   Access to Information The Purchaser, in making the decision to purchase the Securities, has relied upon the representations and warranties contained in this Agreement as well as independent investigations made by it and/or its representatives, if any.  The Purchaser and/or its representatives during the course of this transaction, and prior to the purchase of the Securities, has had the opportunity to ask questions of and receive answers from the management of the Company concerning the business of the Company and to receive any additional information, documents, records and books relative to the business, assets, financial condition, results of operations and liabilities (contingent or otherwise) of the Company.  The Purchaser has carefully reviewed all filings of the Company with the United States Securities and Exchange Commission.

B.   Sophistication and Knowledge. The Purchaser and/or its representatives has such knowledge and experience in financial and business matters that it can represent itself and is capable of evaluating the merits and risks of the purchase of the Securities.  The Purchaser is not relying on the Company with respect to the tax and other economic considerations of an investment in the Securities, and the Purchaser has relied on the advice of, or has consulted with, only the Purchaser's own advisor(s). The Purchaser represents that it has not been organized for the purpose of acquiring the Securities.

C.   Lack of Liquidity.  The Purchaser acknowledges that the purchase of the Securities involves a high degree of risk and further acknowledges that it can bear the economic risk of the purchase of the Securities, including the total loss of its investment.  The Purchaser acknowledges and understands that the Securities may not be sold to a U.S. Person (as hereinafter defined) or into the United States for a period of one (1) year from the date of purchase and that the Purchaser has no present need for liquidity in connection with its purchase of the Securities.  The Purchaser shall comply in all respects with US federal and state securities laws, particularly with respect to any resale of the Securities in any transaction subject to United States jurisdiction.

D.   No Public Solicitation.  The Purchaser is not subscribing for the Securities as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting, or any solicitation of a subscription by a person not previously known to the Purchaser in connection with investments in securities generally.  Neither the Company nor the Purchaser has engaged in any ‘Directed Selling Efforts in the U.S.’ as defined in

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Regulation S promulgated by the Securities and Exchange Commission (“SEC”) pursuant to The Securities Act of 1933 (the “Securities Act”).

E.   Authority.  The Purchaser has full right and power to enter into and perform pursuant to this Agreement and make an investment in the Company, and this Agreement constitutes the Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms. The Purchaser is authorized and otherwise duly qualified to purchase and hold the Securities and to enter into this Agreement.  This Agreement, and the transactions contemplated hereby, has been duly approved by the governing body of the Purchaser.  No other corporate proceedings on the part of the Purchaser are necessary to authorize the execution and delivery of this Agreement or the consummation by the Purchaser of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by the Purchaser.

F.   Brokers or Finders.  No person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or valid claim against or upon the Company for any commission, fee or other compensation as a finder or broker because of any act or omission by the Purchaser or its respective agents.

G.   Requirements for Transfer.  After the Securities have been fully paid for, the Company shall not be required to transfer the Securities unless (i) the transferee certifies that he, she or it is not a U.S. Person, as defined in Regulation S, if such transfer is requested prior to one year from the date the Securities were fully paid for, (ii) such transfer complies in all respects with all applicable US federal and state securities laws and (iii) the Purchaser has paid the Company the Purchase Price.  The Purchaser shall provide an opinion of counsel if requested.

H.   Compliance with Local Laws. Any resale of the Securities during the ‘distribution compliance period’ as defined in Rule 902(f) to Regulation S shall only be made in compliance with exemptions from registration afforded by Regulation S.  Further, any such sale of the Securities in any jurisdiction outside of the United States will be made in compliance with the securities laws of such jurisdiction.  The Purchaser will not offer to sell or sell the Securities in any jurisdiction unless the Purchaser obtains all required consents, if any, and has complied with all applicable laws.

I.   Regulation S Exemption.  The Purchaser understands that the Securities are being offered and sold to it in reliance on an exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the Securities Act and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Securities.  In this regard, the Purchaser represents, warrants and agrees that:

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a.    The Purchaser is not a U.S. Person (as defined in Regulation S) and is not an affiliate (as defined in Rule 501(b) under the Securities Act) of the Company.

b.    At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, the Purchaser was outside of the United States.

c.    The Purchaser will not, during the period commencing on the date of issuance of the Shares and/or the Warrant Shares and ending on the first anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Shares and/or the Warrant Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S.

d.    The Purchaser will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Shares and/or the Warrant Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable federal, state and foreign securities laws.

e.    Neither the Purchaser nor any person acting on its behalf has engaged in, and prior to the expiration of the Restricted Period will engage in, any short selling of or any hedging transaction with respect to the Securities, including without limitation, any put, call or other option transaction, option writing or equity swap.

f.    Neither the Purchaser nor or any person acting on its behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Securities and the Purchaser and any person acting on its behalf have complied and will comply with the “offering restrictions” requirements of Regulation S under the Securities Act.

g.    The transactions contemplated by this Agreement have not been pre-arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act.

h.    Neither the Purchaser nor any person acting on its behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Securities.  The Purchaser agrees not to cause any advertisement of the Securities to be published in any newspaper or periodical or posted in any public place and

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not to issue any circular relating to the Securities, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any federal, state and local applicable securities laws.

i.    Each certificate representing the Shares and/or the Warrant Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

(A)“THE SHARES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(B)“THE SHARES REPRESENTED HEREBY HAVE BEEN ISSUED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(C)“TRANSFER OF THESE SHARES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SUCURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

j.    The Purchaser consents to, and the Company shall, make a notation on its records and give instructions to any transfer agent of the Company in order to implement the restrictions on transfer of the Securities set forth in this Article 1.3.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Purchaser as follows, which representations and warranties shall be true and correct in all material respects on the effective date hereof:

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2.1   Organization. The Company is duly organized, validly existing and in good standing under the laws of the State of California and is qualified to conduct its business as a foreign corporation in each jurisdiction where the failure to be so qualified would have a material adverse effect on the Company.

2.2   Authorization. The Company has full legal right, power and capacity to enter into this Agreement and perform its obligations hereunder and thereunder.  Upon execution and delivery of this Agreement by the parties hereto and thereto, this Agreement shall constitute the valid and binding obligation of the Company, enforceable against it in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditor rights generally and by general equitable principles. This Agreement, and the transactions contemplated hereby, has been duly approved by the Board of Directors of the Company.  No other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement or the consummation by the Company of the transactions contemplated hereby.  This Agreement has been duly executed and delivered by the Company.  Neither the Company nor any of its subsidiaries is in violation of any of the provisions of their respective certificate of incorporation, bylaws or equivalent organizational documents in any material respect.

2.3   Outstanding Stock. All issued and outstanding shares of capital stock of the Company and each of its subsidiaries have been duly authorized and validly issued and are fully paid and nonassessable. The Securities, upon issuance, are, or will be, free and clear of any security interests, liens, claims or other encumbrances, subject to restrictions upon transfer under the Securities Act of 1933, as amended (the “Act”) and any applicable state securities laws; have been, or will be, duly and validly authorized and on the date of issuance, validly issued, fully paid and nonassessable; and will not subject the holders thereof to personal liability by reason of being such holders. As of September 30, 2007, the authorized capital of the Company consisted of (i) 200,000,000 shares of common stock, no par value, of which 49,470,529 shares were issued and outstanding and 64,375,263 shares were reserved for issuance pursuant to the exercise of outstanding options to purchase common stock, warrant or convertible notes and (ii) 50,000,000 shares of preferred stock, no par value, of which no shares are issued and outstanding.  Except with respect to the Securities or as set forth above or disclosed in the Company SEC Reports, there are no outstanding options, warrants, subscriptions, calls, convertible securities or other rights, agreements, arrangements or commitments (contingent or otherwise) (including any right of conversion or exchange under any outstanding security, instrument or other agreement) obligating the Company or any of its direct or indirect subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, any shares or obligating them to grant, extend or enter into any such agreement or commitment.  Except as disclosed in the Company SEC Reports, there are no outstanding contractual obligations of the Company or any of its direct or indirect subsidiaries to repurchase, redeem or otherwise acquire any shares or make any investment (in the form of a loan,

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capital contribution or otherwise) in any other person other than a subsidiary of the Company.

2.4   Listing. The Company’s common stock is quoted on the OTC Bulletin Board under the symbol “ZAAP”. The Company has not received any oral or written notice that its common stock is not eligible nor will become ineligible for quotation on the OTC Bulletin Board nor that its common does not meet all requirements for the continuation of such quotation and the Company satisfies and as of the Closing, the Company will satisfy all the requirements for the continued quotation of its common stock on the OTC Bulletin Board.

2.5   No Public Solicitation.  Neither the Company, nor any of its affiliates, nor to its knowledge, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising in connection with the Securities, including any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or seminar or meeting.

2.6   Non-contravention.   The execution, delivery and performance of this Agreement by the Company: (i) does not violate or conflict with any provisions of the certificate of incorporation or bylaws of the Company or any of its subsidiaries, (ii) does not conflict with or constitute a violation of any applicable law, order, injunction, regulation or ruling of any governmental authority applicable to the Company or any of its subsidiaries or by which the Company or any of its subsidiaries or any of their respective properties or assets are bound, and (iii) does not, either alone or with the giving of notice or the passage of time, or both, violate, conflict with, or accelerate the performance required by, any agreement, note, license, franchise, permit or other instrument to which the Company or any of its subsidiaries is a party and will not result in the creation or imposition of (or the obligation to create or impose) any lien on any of the Company's or any of its subsidiaries' assets.

2.7   SEC Reports; Financial Statements.

A.   During the period from January 1, 2005 through the date hereof, the Company has filed with the SEC all forms, statements, reports and documents (including all exhibits, post-effective amendments and supplements thereto) required to be filed by it under each of the Securities Act and the Exchange Act (collectively, the “Company SEC Reports”), all of which complied when filed in all material respects with all applicable requirements of the appropriate act and the rules and regulations thereunder.

B.   Except as noted in any subsequent Company SEC Report filed with the SEC prior to the date hereof, each of the consolidated financial statements included in the Company SEC Reports, together with the related notes and schedules (collectively, the “Company Financial Statements”), has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applied

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on a consistent basis, and fairly presents the consolidated financial position of the Company and its subsidiaries as of the respective dates thereof and the results of their operations and cash flow for the periods then ended, subject, in the case of unaudited interim financial statements, to normal year-end adjustments (none of which the Company reasonably believes are or will be material in amount) and the omission of footnotes.

C.   The Company SEC Reports filed with the SEC prior to the date hereof do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein not misleading.

2.8   Absence of Undisclosed Liabilities.  Neither the Company nor any of its subsidiaries had, at September 30, 2007 or has, as of the date hereof, any liabilities or obligations, except for (a) liabilities reflected in Company SEC Reports filed prior to the date hereof, (b) current liabilities which were incurred after September 30, 2007 in the ordinary course of business and consistent with past practice, (c) liabilities which are of a nature not required to be reflected in the Company Financial Statements in accordance with GAAP consistently applied and which were incurred in the ordinary course of business and (d) other liabilities in an aggregate amount not exceeding Five Hundred Thousand Dollars ($500,000 USD).

2.9   Absence of Certain Changes or Events. Except as disclosed in the Company SEC Reports, during the period from September 30, 2007 to the date hereof, the business of the Company and its subsidiaries has been conducted in the ordinary course consistent with past practice and there has not been any event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect.

2.10   Insurance.  The Company and each of its subsidiaries has in effect insurance coverage, including directors and officers' liability insurance, with reputable insurers which, in respect of amounts, premiums, types and risks insured, constitutes reasonably adequate coverage against all risks customarily insured against by companies comparable in size and operations to the Company and its subsidiaries.  Neither the Company nor any of its subsidiaries has received any notice of cancellation of any insurance policy or binder currently in effect.

ARTICLE III

COVENANTS AND CONDITIONS OF THE COMPANY

             The Company shall comply with the following covenants:

3.1   Operations.  From and after the date hereof through the date that is two years from the date hereof, the Company will comply with the reporting requirements of the Securities Exchange Act of 1934, as amended.

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3.2   Share Registry; Removal of Legend.  Subject to the terms and conditions set forth in this Agreement, the Purchaser may resell the Shares at any time.  The Company shall record the ownership of such Shares in book entry form or otherwise as permitted by the Company’s transfer agent, and shall remove the restrictive Regulation S legend after the Distribution Compliance Period or as permitted under applicable federal and state securities laws and regulations.

ARTICLE IV

CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL

4.1   Closing Date.  The obligation of the Company hereunder to issue and sell the Securities to the Purchaser at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing the Investor with prior written notice thereof:

A. The Purchaser shall have executed the Agreement and delivered the same to the Company.

B. The Purchaser shall have delivered to the Company the Purchase Price for the Securities at the Closing by check or by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

C. The representations and warranties of the Purchaser shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to the Closing Date.

ARTICLE V

CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE

5.1   Closing Date.  The obligation of the Purchaser hereunder to purchase the Securities at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Purchaser's sole benefit and may be waived by the Purchaser at any time in its sole discretion by providing the Company with prior written notice thereof:

A. The Company shall have executed and delivered to the Investor (A) the Agreement, (B) stock certificates representing the Shares at the Closing pursuant to this Agreement, and (C) the Warrant at the Closing pursuant to this Agreement.

B. The representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the

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Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

C. The board of directors of the Company shall have resolved to appoint one new director to be nominated by the Purchaser upon the Closing.

ARTICLE VI

MISCELLANEOUS

6.1   No Waiver; Cumulative Remedies.  No failure or delay on the part of any party to this Agreement in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

6.2   Amendments, Waivers and Consents.  Any provision in the Agreement to the contrary notwithstanding, and except as hereinafter provided, changes in, termination or amendments of or additions to this Agreement may be made, and compliance with any covenant or provision set forth herein may be omitted or waived, if the Company shall obtain consent thereto in writing from the Purchaser.  Any waiver or consent may be given subject to satisfaction of conditions stated therein and any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

6.3   Addresses for Notices.  All notices, requests, demands and other communications provided for hereunder shall be in writing (including telegraphic communication) and delivered to each applicable party via any reputable international courier service at the address first above written in respect of the Company and at Mezzanine Floor, Yamaha Showroom, Sheikh Zayed Road, Dubai United Arab Emirates in respect of the Purchaser or at such other address as to which either party may inform the other party in writing in compliance with the terms of this Article.  All such notices, requests, demands and other communications shall be considered to be effective on the scheduled delivery date.

6.4   Costs, Expenses and Taxes. All parties to bear their own costs, expenses and taxes in connection with the transactions contemplated hereby.

6.5   Effectiveness; Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the Company, the Purchaser and their respective successors and assigns.  The Purchaser may assign all or any part of its rights and obligations hereunder to any person who acquires or sells any Shares owned by the Purchaser subject to the conditions of this Agreement.  The Company hereby consents to any such assignment provided the sale complies with the terms of this Agreement.

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6.6   Prior Agreements.  This Agreement constitute the entire agreement between the parties and supersede any prior understandings or agreements concerning the subject matter hereof.

6.7   Severability.  The provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of a provision contained therein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement and the terms of the Securities shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of a provision, had never been contained herein, and such provisions or part reformed so that it would be valid, legal and enforceable to the maximum extent possible.

6.8   Governing Law; Venue.

A.   This Agreement shall be enforced, governed and construed in accordance with the laws the State of California or federal securities law where applicable without giving effect to choice of laws principles or conflict of laws provisions. The Purchaser and the Company (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted exclusively in the federal courts located in Los Angeles, California, U.S.A., (ii) waives any objection to the venue of any such suit, action or proceeding and the right to assert that such forum is not a convenient forum, and (iii) irrevocably consents to the jurisdiction of the federal courts located in Los Angeles, California, U.S.A. in any such suit, action or proceeding, and the Purchaser and the Company further agree to accept and acknowledge service or any and all process that may be served in any such suit, action or proceeding in the federal courts located in Los Angeles, California, U.S.A. in person or by certified mail addressed as first above written.

B.   The Purchaser and the Company hereby waive, and agree not to assert against each other, or any successor assignee thereof, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, (i) any claim that the Purchaser is not personally subject to the jurisdiction of the above-named court, and (ii) to the extent permitted by applicable law, any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of any such suit, action or proceeding is improper or that this Agreement may not be enforced in or by such court.

3.2.   Headings.  Article, section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

3.3.   Survival of Representations and Warranties.  All representations and warranties made in this Agreement, the Securities, or any other instrument or document delivered in

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connection herewith or therewith, shall survive the execution and delivery hereof or thereof for a period of one year.

3.4.   Counterparts.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.

3.5.   Further Assurances.  From and after the date of this Agreement, upon the request of the Purchaser or the Company, the Company and the Purchaser shall execute and deliver such instruments, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of the Agreement and the Securities.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Regulation S Securities Purchase Agreement to be executed as of the date first above written.

COMPANY:    ZAP   By: _________________________   Name: Steven M. Schneider Title: Chief Executive Officer  PURCHASER:    AL YOUSUF LLC     By: _______________________ Name: Title:

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Exhibit A

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EX-10.2

EXHIBIT 10.2

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH THE SECURITIES COMMISSION OF ANY STATE UNDER ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THOSE SECURITIES LAWS.

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.

TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SUCURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. 

Warrant No.: 2007AY-001  1,744,186 Warrants 

Void after 5:00 p.m., California time on November 4, 2010

COMMON STOCK

PURCHASE WARRANT

OF

ZAP

ZAP (the “Company”), hereby certifies that, for value received, AL YOUSUF LLC, a United Arabs Emirates limited liability company (the “Initial Warrant Holder”) is the owner of the number of common stock purchase warrants (“Warrants”) specified above, each of which entitles the holder thereof to purchase, at any time during the period commencing on the Commencement Date (as defined in Section 2.1) and ending on the Expiration Date (as defined Section 2.6), one fully paid and non-assessable share of common stock, no par value per share, of the Company (“Common Stock”) at a purchase price equal to the Exercise Price (as defined in Section 1) in lawful money of the United States of America. These Warrants are part of a certain securities

purchase agreement (the “Securities Purchase Agreement”) dated November 5, 2007 between the Company and the Initial Warrant Holder, and are subject to the terms and conditions thereof.

1.WARRANT; EXERCISE PRICE. Each Warrant shall entitle the Initial Warrant Holder or anyone to whom such Warrant has been transferred in accordance with Section 6 hereof (each such transferee and the Initial Warrant Holder, a “Warrant Holder”) the right to purchase one share of Common Stock (individually, a “Warrant Share” severally, the “Warrant Shares”). The purchase price payable upon exercise of each Warrant (“Exercise Price”) shall be US$1.25 per share, subject to adjustment as provided in Section 7.

2.EXERCISE OF WARRANTS; EXPIRATION DATE.

2.1The Warrants are exercisable during the period commencing on November 5, 2007 (“Commencement Date”) and ending on the Expiration Date (as defined below in Section 2.6), in whole, or from time to time, in part, at the option of the Warrant Holder, upon delivery to the Company, the Company’s Transfer Agent and the Company’s counsel, or such other person as the Company may designate, a duly completed and executed form of exercise attached hereto (indicating exercise by payment of the Exercise Price) and payment of an amount equal to the then applicable Exercise Price multiplied by the number of Warrant Shares then being purchased upon such exercise.  The payment of the Exercise Price shall be in cash or by certified check or official bank check, payable to the order of the Company.

2.2Each exercise of a Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which such Warrant shall have been surrendered to the Company as provided in Section 2.1.  At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise in accordance with Section 2.3 shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.

2.3Subject to the provision of Section 6.3, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Warrant Holder, or, subject to the terms and conditions hereof, to such other individual or entity as such Warrant Holder may direct:

(a)a certificate or certificates for the number of full Warrant Shares to which such Warrant Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which such Warrant Holder would otherwise be entitled, cash in an amount determined pursuant to Section 2.4 hereof, and

(b)in case such exercise is in part only (including as a result of Section 6.3 hereof), a new Warrant or Warrants (dated the date hereof) of like tenor, stating on the face or faces thereof the number of shares currently stated on the face of this Warrant minus the number of such shares purchased by the Warrant Holder upon such exercise as provided in Section 2.1.

2.4The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall make an adjustment thereof in cash on the basis of the “last sale price” (as defined below) of the Company’s Common Stock on the trading day immediately prior to the date of exercise.  For purposes of this Section 2.4, “last sale price” means (i) if the

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Common Stock is listed on a national securities exchange, the last trading price per share of the Common Stock for such date, (ii) if the Common Stock is quoted on the NASD OTC Bulletin Board, the closing bid price of the Common Stock on such date, (iii) if the Common Stock is traded in the residual over-the-counter market, the closing bid price for the Common Stock for such date as reported by the Pink Sheets, LLC or similar publisher of such quotations, and (iv) if the last sale price of the Common Stock cannot be determined pursuant to clause (i), (ii) or (iii) above, such price as the Board of Directors of the Company shall determine, in good faith.

2.5If the Company fails to deliver to the Warrant Holder a certificate or certificates representing the Warrant Shares and cash in lieu of any fractional shares in accordance with Section 2.3, then the Warrant Holder will have the right to rescind the exercise of the applicable Warrants.

2.6The term “Expiration Date” shall mean 5:00 p.m., California time on October 31, 2010, or if such date shall in the State of California be a holiday or a day on which banks are authorized to close, then 5:00 p.m., California time the next following day which in the State of California is not a holiday or a day on which banks are authorized to close.

2.7The Warrants are not redeemable by the Company.

2.8The Company hereby represents and warrants that the execution and delivery of this Warrant has been duly authorized by all necessary corporate action on behalf of the Company and does not violate the provisions of the Company’s organizational documents.

3.REGISTRATION AND TRANSFER ON COMPANY BOOKS. The Company (or an agent of the Company) will maintain a register containing the name and address of the Warrant Holder.  The Warrant Holder may change its, his or her address as shown on the warrant register by written notice to the Company requesting such change. The Company shall register upon its books any transfer of a Warrant upon surrender of same as provided in Section 5.

4.RESERVATION OF SHARES.  The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such Warrant Shares and other stock, securities and property, as from time to time shall be issuable upon the exercise of this Warrant.  The Company covenants that all Warrant Shares so issuable when issued will be duly and validly issued and fully paid and non-assessable.

5.EXCHANGE, LOSS OR MUTILATION OF WARRANT.  Warrants are exchangeable, without expense, at the option of the Warrant Holder, upon presentation and surrender hereof to the Company for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder on the same terms and conditions as provided herein.  Subject to the provisions of Section 6, if applicable, this Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the Company’s office together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Warrant Holder hereof.  The term “Warrant” as used herein includes any Warrants into which this Warrant may be divided or exchanged.  Upon receipt by the Company of reasonable evidence of the ownership and the loss, theft, destruction or mutilation

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of this Warrant and, in the case of loss, theft or destruction, receipt of indemnity reasonably satisfactory to the Company, or, in the case of mutilation, upon surrender and cancellation of the mutilated Warrant, the Company shall execute and deliver in lieu thereof a new Warrant of like tenor and date representing an equal number of Warrants.

6.LIMITATION ON EXERCISE AND SALES.

6.1The Warrant Holder acknowledges that the Warrants and the Warrant Shares have not been registered under the Securities Act and the rules and regulations thereunder, or any successor legislation, and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of any Warrant, or any Warrant Shares issued upon its exercise, except in compliance with the requirements of Section 6.2.

6.2The Warrant Holder agrees not to sell, transfer or otherwise dispose of the Warrant or Warrant Shares, unless a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), is in effect with regard thereto or unless such sale, transfer or other disposition is made pursuant to a transaction exempt from such registration and registration or qualification under applicable state securities laws.

6.3The Warrant and the Warrant Shares delivered to the Warrant Holder upon exercise hereof shall be imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH THE SECURITIES COMMISSION OF ANY STATE UNDER ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THOSE SECURITIES LAWS.

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.

TRANSFER OF THESE SHARES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.” 

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7.ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES DELIVERABLE. The Exercise Price and the number of Warrant Shares purchasable pursuant to each Warrant shall be subject to adjustment from time to time as hereinafter set forth in this Section 7:

7.1           The number of Warrant Shares purchasable upon the exercise of the Warrant and the Exercise Price shall be subject to adjustment as follows:

(i)           In case the Company shall at any time subdivide (including, without limitation through a stock split or stock dividend) its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionally reduced and the number of Warrant Shares purchasable hereunder shall be proportionately increased. In case the outstanding shares of the Common Stock of the Company shall be combined (including, without limitation through a reverse stock split) into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares purchasable hereunder shall be proportionately decreased.

(ii)           In case of any capital reorganization, reclassification or similar transaction involving the capital stock of the Company, any consolidation, merger or business combination of the Company with another corporation, or the sale, conveyance or similar transaction of all or substantially all of its assets to another corporation, shall be effected in such a way that holders of the Common Stock shall be entitled to receive stock, securities, or assets (including cash) with respect to or in exchange for shares of the Common Stock, then, prior to and as a condition of such reorganization, reclassification, consolidation, merger, business combination, sale, conveyance or similar transaction (“Fundamental Transaction”), lawful and adequate provision shall be made whereby the Warrant Holder shall thereafter have the right to receive upon exercise of the Warrant prior to the Fundamental Transaction and in lieu of the Warrant Shares, such shares of stock, securities or assets (including cash) as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore purchasable upon the exercise of the Warrant had such reorganization, reclassification, consolidation, merger, business combination, sale, conveyance or similar transaction not taken place. In any such case, appropriate provision shall be made with respect to the rights and interests of the Warrant Holder to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Exercise Price and of the number of Warrant Shares purchasable upon the exercise of the Warrant) shall thereafter be applicable, as nearly as possible in relation to any stock, securities or assets thereafter deliverable upon the exercise of the Warrant.

(iii)           The record date for the holders of Common Stock for the purpose of entitling them (a) to receive a dividend or other distribution payable in shares of Common Stock or Common Stock equivalents, or (b) to subscribe for purchase or otherwise receive any shares of Common Stock or Common Stock equivalents shall be the date determined by the Board as the record date for such purposes or, if none is established by the Board, then the record date shall be the date immediately prior to such action.

(iv)Whenever the number of Warrant Shares purchasable upon the

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exercise of the Warrant or the Exercise Price of such Warrant Shares is adjusted, as herein provided, the Company shall, within twenty (20) business days following the event which triggered such adjustment, deliver via any reputable international courier service to Warrant Holder notice of such adjustment or adjustments and shall deliver to Warrant Holder a copy of a certificate (an “Adjustment Certificate”) of either the Board of Directors of the Company or of a firm of independent public accountants selected by the Board of Directors of the Company (who may be the regular accountants employed by the Company) setting forth the number of Warrant Shares purchasable upon the exercise of the Warrant and the Exercise Price of such Warrant Shares after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

(v)As used in this Agreement and the Warrant, the term “Exercise Price” shall mean the purchase price per share specified in this Warrant until the occurrence of an event specified in this Section 7 and thereafter shall mean said price, as adjusted from time to time, in accordance with the provisions of this Section 7.

(vi)In the event that at any time, as a result of an adjustment made pursuant to this Section 7, the Warrant Holder shall, upon Exercise of the Warrant, become entitled to receive shares and/or other securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets.

(vii)                      If any adjustment to the number of shares of Common Stock issuable upon the exercise of each Warrant or any adjustment to the Exercise Price is required pursuant to Section 7 hereof, the number of shares of Common Stock issuable upon exercise of each Warrant or the Exercise Price shall be rounded up to the nearest 1/100^th cent or 1/100^th Share, as appropriate.

8.VOLUNTARY ADJUSTMENT BY THE COMPANY.  The Company may, at its option, at any time during the term of the Warrants, reduce the then current Exercise Price to any amount deemed appropriate by the Board of Directors of the Company and/or extend the date of the expiration of the Warrants.

9.RIGHTS OF THE WARRANT HOLDER. The Warrant Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Warrant Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein.

10.NOTICES OF RECORD DATE.  In case: (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of any class or any other securities, or to receive any other right, or (b) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity), or any transfer of all or substantially all of the assets of the

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Company, or (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the Warrant Holder a notice specifying, as the case may be: (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this  Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up.  Such notice shall be delivered at least twenty (20) days prior to the record date or effective date for the event specified in such notice, provided that the failure to mail such notice shall not affect the legality or validity of any such action.

11.SUCCESSORS.  The rights and obligations of the parties to this Warrant will inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, successors, assigns, pledgees, transferees and purchasers.

12.CHANGE OR WAIVER.  Any term of this Warrant may be changed or waived only by an instrument in writing signed by the party against whom enforcement of the change or waiver is sought.

13.HEADINGS.  The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

14.GOVERNING LAW.  This Warrant shall be governed by and construed in accordance with the laws of the State of California as such laws are applied to contracts made and to be fully performed entirely within that state between residents of that state.

15.JURISDICTION AND VENUE. The Company (i) agrees that any legal suit, action or proceeding arising out of or relating to this Warrant shall be instituted exclusively in the federal courts located in Los Angeles, California, U.S.A., (ii) waives any objection to the venue of any such suit, action or proceeding and the right to assert that such forum is not a convenient forum, and (iii) irrevocably consents to the jurisdiction of the federal courts located in Los Angeles, California, U.S.A. in any such suit, action or proceeding, and the Company further agrees to accept and acknowledge service or any and all process that may be served in any such suit, action or proceeding in the federal courts located in Los Angeles, California, U.S.A. in person or by certified mail addressed as provided in the following Section.

16.AMENDMENT AND WAIVER.  Any amendment or waiver of any of the terms or conditions of the Warrants by a party hereto must be in writing and must be duly executed by or on its behalf. The failure of a party to exercise any of its rights hereunder or to insist upon strict adherence to any term or condition hereof on any one occasion shall not be construed as a waiver or deprive that party of the right thereafter to insist upon strict adherence to the terms and conditions of this Warrant at a later date.  Further, no waiver of any of the terms and conditions

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of this Warrant shall be deemed to or shall constitute a waiver of any other term of condition hereof (whether or not similar).

17.DELIVERY OF NOTICES, ETC.  All notices and other communications under this Warrant (except payment) shall be in writing and shall be sufficiently given if delivered to the addressees via any reputable international courier service as follows:

Warrant Holder: To his, her or its last known address as indicated on the Company’s books and records.

The Company: To the Company’s Chief Executive Officer at the address of the Company’s principal office as set forth in the last filing by the Company with the SEC

or to such other address as any of them, by notice to the others, may designate from time to time.  Notice shall be deemed given on the scheduled delivery date.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer as of the 5^th day of November, 2007.

ZAP

a California Corporation

By:

Name: Steven M. Schneider

Title: Chief Executive Officer

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Notice of Exercise

To Be Executed by the Warrant Holder

In Order to Exercise Warrants

The undersigned Warrant Holder hereby irrevocably elects to exercise ______ Warrants represented by this Warrant for the shares of Common Stock issuable upon the exercise of such Warrants, and requests that certificates for such shares of Common Stock shall be issued in the name of

(please print or type name and address)

and be delivered to

(please print or type name and address)

and if such number of Warrants shall not be all the Warrants evidenced by this Warrant, that a new Warrant for the balance of such Warrants be registered in the name of, and delivered to, the registered Warrant Holder at the address stated above.

The undersigned hereby represents and warrants to the Company that it is not a U.S. Person (as defined in Regulation S).  The undersigned understands that the shares it will be receiving are “restricted securities” under Federal securities laws inasmuch as they are being acquired from ZAP in transactions not including any public offering and that under such laws, such shares may only be sold pursuant to an effective and current registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act and any other applicable restrictions including the requirements of state securities and “blue sky” laws, in which event a legend or legends will be placed upon the certificate(s) representing the Common Stock issuable under this Warrant denoting such restrictions.  The undersigned understands and acknowledges that the Company will rely on the accuracy of these representations and warranties in issuing the securities underlying the Warrant.

Dated:   (Signature of Registered Holder) 

ASSIGNMENT FORM

To be executed by the Warrant Holder

In order to Assign Warrants

FOR VALUE RECEIVED,____________________________________ hereby sell, assigns and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

(Please print or type name and address)

______________________ of the Warrants represented by this Warrant, and hereby irrevocably constitutes and appoints ________________________ Attorney to transfer this Warrant on the books of the Company, with full power of substitution in the premises.

Dated:   (Signature of Registered Holder)

(Signature Guaranteed) 

EX-10.3

EXHIBIT 10.3

November 5, 2007

Mr. Eqbal Al Yousuf Al Yousuf L.L.C. P.O. Box 25 Dubai, UAE
ZAP 501 Fourth Street Santa Rosa, CA 95401 Attn:  Mr. Steven M. Schneider	Mr. Steven M. Schneider 501 Fourth Street Santa Rosa, CA 95401

Subject: Side Letter Agreement

Gentlemen:

This Side Letter Agreement (the “Letter Agreement”) is made by and between Al Yousuf LLC (the “Investor”), ZAP (the “Company”) and Steven M. Schneider (“Schneider”).  Reference is made to the purchase of shares of ZAP (the “Shares”), a public company organized under the laws of California whose shares trade over the counter on OTCBB, by the Investor in accordance with the Securities Purchase Agreement and associated documents between the parties (the “Investment Documents”).  This Agreement, when accepted by the parties, will become part of the Investment Documents and will evidence our further agreement with respect to the matters set forth below.  All terms used and not defined herein, shall have the same meaning as in the Investment Documents. If there is any inconsistency between the terms of this Agreement and the other Investment Documents, the terms of this Agreement will govern.

The parties hereby clarify the Investment Documents and confirm as follows:

1)   So long as this Letter Agreement is in effect, the Investor and Schneider hereby agree that Schneider shall vote his Shares in a manner intended to cause the following, and the Company shall take or cause to be taken all action permissible in accordance with applicable law and within its power to effect the following:

a)   that the number of members of the Board of Directors of the Company (the “Board”) will be between five and seven persons;

b)   the Investor will select one member of the Board (the “Al Yousuf Director”) which shall be appointed without undue delay;

c)   the Al Yousuf Director shall have similar indemnification, director and officer insurance coverage and similar compensation for service as a director as other directors of the Company and reimbursement of expenses in connection with his service on the Board of Directors of the Company;

d)   in the case of a proposed sale or transfer of shares or equity interests in the Company by Schneider (other than transfers among Schneider’s family members, for estate planning purposes or sales or transfers the proceeds of which are to be used for paying the exercise price of options or warrants to purchase voting capital stock of the Company) where the sum of i) the affected shares or equity interests of such sale or transfer and ii) the aggregate amount of shares or equity interests in the Company sold or transferred by Schneider over the preceding 12 month period is

equal to or greater than 1% of the outstanding equity interests in the Company on a fully diluted basis the Investor shall have, in its sole discretion, a right of first refusal to purchase such shares or equity interests on the same terms as in the proposed sale or transfer.  Such right shall be exercised within ten (10) Business Days (where “Business Day” refers to a day during which banks are open for business in Los Angeles, California and Dubai, United Arab Emirates) after receipt by Investor of Schneider’s notice to Investor of a proposed sale or transfer subject to the right of first refusal;

e)   the Investor shall have the right, exercisable in its sole discretion, to tag along on a pro rata basis and on similar terms with any sale or transfer of shares by Schneider (other than sales or transfers the proceeds of which are to be used for paying the exercise price of options or warrants to purchase voting capital stock of the Company) where the sum of i) the affected shares or equity interests of such sale or transfer and ii) the aggregate amount of shares or equity interests in the Company sold or transferred by Schneider over the preceding 12 month period is equal to or greater than 1% of the outstanding equity interests in the Company on a fully diluted basis; and

f)   any person or entity purchasing any of the shares or other equity interests in the Company owned by Schneider as of the date of this Agreement (other than sales or transfers the proceeds of which are to be used for paying the exercise price of options or warrants to purchase capital stock of the Company) in the aggregate equal to or greater than 1% of the outstanding equity interests in the Company on a fully diluted basis, whether pursuant to a single transaction or multiple transactions, shall be required to become a party to a separate agreement and to agree expressly to comply with the obligations of Schneider which as contained in this Section 1 of this Letter Agreement.

2)   So long as this Letter Agreement is in effect, Schneider shall vote his Shares in a manner intended to cause none of the following actions to be taken, and the Company shall take or cause to be taken all action permissible in accordance with applicable law and within its power to effect that none of the following actions are taken, without the prior written approval of the Investor (such approval not to be unreasonably withheld): (i) liquidate, dissolve or wind up the affairs of the Company, or effect any event which would constitute a liquidation, except as required by law; (ii) create or authorize the creation of any new class of equity security having rights, preferences or privileges senior to or on parity with the Shares; (iii) issue convertible notes or grant warrants or options (other than to the Company’s employees, consultants or service providers where the aggregate amount of shares of any class contemplated by all such convertible notes, warrants and options issued or granted to the Company’s employees, consultants or service providers during any 12 month period does not exceed 1,500,000 shares within any 12 month period); (iv)  purchase or redeem, or pay any dividend or distribution on, any capital shares or other equity interest in the Company, except as required by any existing contractual rights; (v) create or authorize the creation of any indebtedness for money borrowed, or grant any guarantees, liens or other security interests in respect thereof in an amount in aggregate in excess of US$1,500,000, except in the ordinary course of business; or (vi) sell all or substantially all of the assets of the Company or enter into any merger, consolidation, business combination, or recapitalization, whether in any single transaction or series of related transactions occurring within a 12 month period; provided, however, that such prior written approval of the Investor shall not be required to take an action described in clause (ii) or clause (iii) of this Paragraph 2 to the extent the Investor has been given the right of first refusal, exercisable within ten (10) Business Days of notice, to subscribe to such new class of equity or such convertible note, warrant or option, as the case may, on terms similar thereto.

3)   So long as this Letter Agreement is in effect, the Company shall notify the Investor at least thirty business days prior to the filing of a registration statement with respect to any offering of the

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Company’s shares, for its own account or for the account of any shareholder, and shall offer the Investor the opportunity to register such number of Shares as the Investor may request in writing within five days after the above-described notice. The Company shall include in such registration statement all such Shares which are requested to be included therein, on the same terms and conditions as the shares otherwise being sold in such registration; except that in any registration statement of a firm commitment underwriting of shares offered for the account of the Company, Investor shall be subject to customary underwriters’ cutback. If the Investor decides not to include all of its Shares in any registration, the Investor shall nevertheless continue to have the right to include any Shares in any registration as may be filed by the Company, all upon the terms and conditions set forth herein. The rights granted by this paragraph 3 shall not apply to any registration statement previously filed or any amendments thereto.

This Letter Agreement will expire and be of no force and effect as of the earlier of (a) the seventh anniversary of the date hereof or (b) the first date on which Investor’s beneficial ownership, as calculated in accordance with regulations under Section 13 of the Securities Exchange Act of 1934, as amended, of the common stock of the Company is less than 5% of the issued and outstanding common stock of the Company.

The Company and Schneider each represent and warrant that (a) it/he has the relevant power and authority necessary to execute and deliver this Letter Agreement and (b) this Letter Agreement has been duly authorized, executed, and delivered by, and is enforceable against, it/him.  The Company and Schneider each further represent and warrant that the execution and the delivery of this Letter Agreement by it/him and the performance of their respective obligations hereunder will not (a) breach any law or order to which it/he is subject or any provision of the Company’s organizational documents, (b) breach any contract to which it/he is a party or by which it/he is bound, or (c) require any further consent.

This Agreement is made and shall be enforced under the laws of the State of California.  In the event of any conflict between the terms of this Letter Agreement and any provisions of the Investment Documents or any other agreement between the parties, this Letter Agreement shall control.

This Letter Agreement supersedes any and all prior dated letter agreements among the parties hereto relating to the purchase of the Shares by the Investor.

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters addressed above, please indicate your acceptance and approval below.

ACCEPTED AND AGREED AS OF THE 5^th DAY OF NOVEMBER 2007.

AL YOUSUF LLC By: Eqbal Al Yousuf, President	ZAP By: Steven M. Schneider, Chief Executive Officer
	Steven M. Schneider, an individual

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