EXHIBIT 10.1

Dated 17 September 2007

ZAP

and

 YOUNGMAN AUTOMOBILE  CO., LTD.

and

EV HOLDINGS LIMITED

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SHAREHOLDERS’ AGREEMENT

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LI & PARTNERS
SOLICITORS
22nd Floor, World Wide House
19 Des Voeux Road Central
Hong Kong
Tel. No.: (852) 2501 0088     Fax No.: (852) 2501 0028
Our Ref : TC/TC/TC/4321/01/07

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CONTENTS  
           
Clause
Heading
Page
     
1.
DEFINITIONS AND INTERPRETATION
1
     
2.
CONDITIONS PRECEDENT
4
     
3.
SHARE CAPITAL
5
     
4.
MANAGEMENT
5
     
5.
FUNDING
7
     
6.
BUSINESS
7
     
7.
ACCOUNTING
9
     
8.
DIVIDENDS
9
     
9.
BOARD OF DIRECTORS
10
     
10.
MATTERS REQUIRING SPECIAL APPROVAL
11
     
11.
REPRESENTATIONS, WARRANTIES AND CONVENANTS
12
     
12.
INDEMNIFICATION
15
     
13.
TRANSFER OF SHARES
15
     
14.
DEADLOCK RESOLUTION
17
     
15.
TERMINATION
18
   
 
16.
CONSEQUENCES OF NOTICES UNDER CLAUSE 15
19
     
17.
CONFIDENTIALITY
20
     
18.
RESTRICTIVE COVENANTS
21
     
19.
SPECIFIC ENFORCEMENT
22
     
20.
MISCELLANEOUS
22

 

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SHAREHOLDERS’ AGREEMENT

THIS AGREEMENT is made on the 17th day of  September  2007

BETWEEN:

(1)  
ZAP, a corporation incorporated under the laws of California, the United States
having its registered office at 501 Fourth Street, Santa Rosa, California 95401,
United States of America (“ZAP”); and

(2)  
YOUNGMAN AUTOMOBILE CO., LTD., a company incorporated with limited liability
under the laws of the People’s Republic of China having its registered office at
501 Bada Road Jinhua City Zhejiang China. PC 321016  (“Youngman”);

(3)  
EV HOLDINGS LIMITED(環保發展有限公司), a company incorporated with limited liability
under the laws of Hong Kong having its registered office situate at Unit A, 14/F
Shun On Commercial Building, 112-114 Des Voeux Road Central, Hong Kong (the
“Company”).

WHEREAS :

(A)  
The Company was incorporated in Hong Kong on 3 August 2007 with an authorised
capital of HK$10,000.00 divided into 10,000 shares of HK$1.00 par value each. As
at the date hereof, one share has been issued as fully paid to ZAP.

(B)  
ZAP and Youngman have agreed to enter into this Agreement for the purposes of
regulating their relationship with each other and certain aspects of the affairs
of and their dealings with the Company.

(C)  
The Company has agreed with ZAP and Youngman that it will comply with the terms
and conditions of this Agreement insofar as they relate to the Company.

NOW IT IS HEREBY AGREED as follows:

1.  
DEFINITIONS AND INTERPRETATION

1.1  
In this Agreement and the Recitals, unless the context otherwise requires:

“Affiliates” means in respect of any specified person, a person that directly or
indirectly controls such specified person, or is controlled by or is under
common control with such specified person;

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“Allotted Shares” means 9,999 shares of the Company to be allotted to each
Shareholder upon execution of this Agreement as provided under Clause 3.1;
“Articles” means the Memorandum and Articles of Association of the Company in
the form of Schedule B attached hereto, which may be amended from time to time;

“Auditor” means the auditors of the Company appointed from time to time;

“Board” means the board of directors of the Company or the directors present
(personally or by their alternates) at any meeting of the directors of the
Company duly convened and held;

“Brand Name” means the general brand name selected by the Board and used by the
Company;

“Business” means the business of the Company in relation to developing,
producing, marketing and sale of electric vehicles, electric-hybrid vehicles,
and battery/energy recharging infrastructure throughout the Territories as set
forth under Clause 6.1 and the Business Plan;

“Business Plan” means the business plan of the Company to be developed by the
Company and agreed and approved between the Shareholders, including any
amendment and supplement thereto from time to time;

“Capital Loan” means any loan to the Company granted by any Shareholder as
provided under Clause 6.3;

“CEO” means the chief executive officer of the Company appointed from time to
time under Clause 4.2;

“Chairman of the Board” means the chairman of the Board appointed from time to
time under Clause 4.3;

“Companies Ordinance” means the Companies Ordinance (Chapter 32 of the Laws of
HKSAR);

“Employment Agreement” means the Employment Agreement to be entered between the
Company and its Key Employees in the form acceptable to the Shareholders;

 “Holding Company” shall have the meaning ascribed thereto in section 2 of the
Companies Ordinance;

“Hong Kong” means Hong Kong Special Administrative Region;

“Hong Kong Dollars” or the sign “HK$” means the lawfully currency of Hong Kong;

“Initial Capital Contribution” means initial contribution to the share capital
of the Company by each Shareholder upon the execution of this Agreement as set
forth under Clause 4.1;

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“Investment Schedule” means the schedule for Youngman to make a contribution of
US$51,000,000.00 and ZAP to make a contribution of US$49,000,000.00 to the share
capital of the Company by 31 December 2008 as set out in Schedule A hereto;

“Key Employees” means the Chief Operating Officer, VP Engineering, VP Sales &
Marketing, VP Human Resources and VP Finance of the Company;

“Licensing Agreement” means the agreements entered from time to time between the
Company and any other parties for the purpose of licensing the key technology to
be incorporated into the Products;

“Management” means the CEO, and such other executives or managers as determined
by the Board from time to time;

“Management Options” means options of Shares issued by the Company under the
order of the Board to any Key Employees approved by the Board upon terms and
subject to conditions as determined by the Board at its discretion as set out in
this Agreement or any other related documents determined by the Board in
accordance with Clause 14.1.

“Marketing and Distribution Agreements” means the agreements to be entered
between each Shareholder and the Company after execution of this Agreement in
the form acceptable to such Shareholder and the Company with respect to the
marketing and distribution activities to be carried out by the Shareholders
within the Territory, which shall provide that (i) ZAP shall have the exclusive
right of marketing and distribution of the Products in North America and South
America; (ii) Youngman shall have the exclusive right of marketing and
distribution of the Products in the Asia Pacific Region (including the Japan);
and (iii) the Company shall have the exclusive right of marketing and
distribution of the Products in the remaining Territories other than those set
out in (i) and (ii) above;

“PRC” means the People’s Republic of China, which for purposes of this Agreement
excludes Hong Kong;

“Products” means the vehicles developed and manufactured by the Company from
time to time as provided under the Business Plan;

“Shares” means shares of US$1.00 par value each in the authorized capital of the
Company;

“Shareholders” means the holders of the Shares; a “Shareholder” means any of
them;

“Subsidiary” shall have the meaning ascribed thereto in section 2 of the
Companies Ordinance;

“Territories” means the United States, Asia and all other countries, territories
and jurisdictions worldwide, without restriction;

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“Total Capital Contribution” means the aggregate amount of the contributions to
the share capital of the Company made by each Shareholder;

“Transfer Notice” means the notice to transfer or otherwise dispose of any
Shares or any interest in such Shares as defined under Clause 13.2 (a);

“United States” means the United States of America;

“US Dollars” or the sign “US$” means the lawfully currency of the United States;

1.2  
Words importing one gender include all other genders and words importing the
singular include the plural and vice versa.

1.3  
References to Recitals, Clauses and Schedules are references to recitals,
clauses and schedules of this Agreement.

1.4  
Reference to a person includes bodies corporate or unincorporated.

1.5  
The headings are inserted for convenience only and shall not affect the
construction of this Agreement.

1.6  
Reference in this Agreement to any legislation shall include any legislation
which amends, consolidates or replaces the same or which has been amended,
consolidated or replaced by the same and shall include any subsidiary and
subordinate legislation made under the relevant legislation.

1.7  
“Including” or similar expressions are not words of limitation.

1.8  
Words and expressions defined in the body of this Agreement (including its
schedules) shall have the meanings thereby attributed to them whenever the
context requires.

2.  
CONDITIONS PRECEDENT

This Agreement and everything contained herein are conditional upon the
fulfilment of all the following terms and conditions upon execution of this
Agreement:

(a)  
each Shareholder shall procure the authorized share capital of the Company to be
increased to US$100,000,000.00;

(b)  
each Shareholder shall subscribe the Allotted Shares and pay the Initial Capital
Contribution in accordance with Clause 3;

(c)  
the Shareholders shall procure that the persons named in Clauses 9.2 and 9.3 and
not already directors are appointed directors of the Company;

(d)  
the Shareholders shall procure adoption of the Articles by the Company; and

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(e)  
meetings of the Shareholders and the Board shall be held at which such
resolutions as are necessary to give effect to and implement the provisions of
this Agreement shall be passed.

3.  
SHARE CAPITAL

3.1  
Upon execution of this Agreement and fulfilment of the condition under Clause 2
(a), each Shareholder shall subscribe Shares as provided under Clause 3.2 below
and pay the consideration for subscription of the Shares (the “Initial Capital
Contribution”).

3.2  
After subscription of the Allotted Shares in accordance with Clause 3.1, the
Shares shall be beneficially owned and registered as follows:

 

 
Shareholders
No. of Shares
Consideration
 
ZAP
4,899
HK$4,899.00
 
Youngman
5,100
HK$5,100.00

 
3.3  
Unless otherwise agreed between the Shareholders, the Initial Capital
Contribution shall be paid by Youngman by way of cash within 10 days from the
date of this Agreement; and the Initial Capital Contribution shall be paid by
ZAP by way of cash within 10 days from the date of this Agreement.

3.4  
The Shareholders shall make additional contributions to the share capital of the
Company from time to time in accordance with the requirements of the Business
Plan and the Investment Schedule by way subscription of the Shares, so that the
Total Capital Contribution, if required, made by Youngman shall be
US$51,000,000.00 and ZAP shall be US$49,000,000.00 (which provides the Company
its share capital of US$100,000,000.00) by 31 December 2008. Each Shareholder
shall be offered the right to participate in each subscription of the Shares in
proportion to its respective percentage of the Shares at the time of the
subscription.

3.5  
Save as otherwise provided in Clause 5 or other provisions in this Agreement,
any further issuance of Shares shall be made as and when the Board may so
determine and in accordance with this Agreement and the Articles. The parties
hereto shall procure to each other that any new shareholders shall first agree
in writing in terms acceptable to all the parties hereto to be bound by and
observe the provisions of this Agreement (including this Clause) so far as such
provisions are applicable.

4.  
MANAGEMENT

4.1  
The Board shall be responsible for supervising the activities of the Company and
for determining, subject to the provisions of this Agreement, the overall
policies and objectives of the Company, provided that all business of the
Company shall be conducted in the best interests of the Company on sound
commercial principles.

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4.2  
The Company shall have a Chief Executive Officer (the “CEO”) who shall be
responsible for the day-to-day operation of the business of the Company.  The
CEO shall be appointed on such terms as may be approved by the Board and the
first CEO shall be Mr. Albert Lam.

4.3  
The Company shall have a chairman of the Board (the “Chairman of the Board”) who
shall be responsible for chairing all meetings of the directors. The Chairman of
the Board shall be appointed on such terms as may be approved by the Board and
the first Chairman of the Board shall be Mr. Albert Lam.

4.4  
The Board shall determine the remuneration, compensation and benefits of the
Management, which shall be reasonably in conformity with the current local
market standard adopted by other companies of similar scale, expertise and
nature of business to the Company.

4.5  
ZAP shall procure and arrange its staff to be transferred to the Company as
necessary to carry on the Business by the Company. The Company shall enter into
employment agreements with such staff and provide remuneration, compensation and
benefits reasonably in conformity with the prevailing market standard based on
the working hours, performance, experience and any other factors which the
Management may consider significant.

4.6  
Appointment, removal or replacement of any of the Key Employees of the Company
as well as their remuneration, compensation and benefits shall be jointly
decided by the Management.

4.7  
Save and except the matters requiring action, consent or agreement of the Board
as set out in Clause 5.11 and 5.12 below, the CEO shall, subject to the
supervision of and directions given from time to time by the Board, be vested
with overall responsibility and authority for and control of the operation,
management, maintenance and administration of the Business, including but not
limited to:

(a)
soliciting and negotiating business on behalf of the Company with size of the
deal up to amounts approved by the Board from time to time;

(b)
dealing with day-to-day staff (other than the Management) employment issues;

 
(c)
recruiting employees of the Company and setting benefit plans and programs for
the employees of the Company;

(d)
handling routine banking relationships and treasury functions;

(e)
managing day-to-day operations relating to the Business;

 
(f)
preparing and implementing annual and three-year business plan, budget and
forecasts of the Company from time to time approved by the Board; and

 
(g)
authorizing capital expenditure of up to US$100,000.00 without approval of the
Board.

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5.  
FUNDING

5.1  
Financing for the business of the Company shall be provided by (i) cash
subscription for the Shares, (ii) loan(s) from the Shareholders and/or (iii)
external funding including loans from banks or other third parties as provided
under this Agreement.

5.2  
In the event that the Company in the course of carrying on the Business requires
funds in addition to the capital contributions set forth in Clause 3.1 and 3.4,
the Company may allot additional Shares as necessary to raise sufficient funds
for carrying on the Business, and ZAP and/or Youngman may, but neither of them
shall be obliged to, subscribe such Shares as additional contribution to the
capital of the Company.

5.3  
For purposes of financing any acquisition of assets or properties by the
Company, it shall, with the approval of holders of a majority of the Shares,
obtain such financing as set forth in the Business Plan of the Company.  In the
event that the financing described in this Clause is not sufficient to enable
the Company to pursue the Business, then:-

 
(i)
ZAP or Youngman may grant loans to the Company on terms and conditions that are
commercially reasonable under the circumstances and approved by a majority of
the Board (the “Capital Loan”); or

 
(ii)
if the Board considers that granting of the Capital Loan is unfeasible or not in
the best interests of the Company, the Company shall, to the extent economically
feasible, obtain loan or other financing arrangement from other third party.

5.4  
If the Company shall obtain any loan from any third party, the Shareholders
agree to execute and deliver to such lender all documents and instruments to
pledge to such lender, and grant to such lender security interests in, (i) the
Shares; and/or (ii) the assets and properties of the Company to the extent as
permitted by the existing financing arrangements of the Company, in order to
secure repayment of the loan by the Company.

5.5  
All costs of financing the Company mentioned in this Clause shall be considered
an expense of the Company, and shall be paid before any dividends or
distributions are made to any of the Shareholders.

6.  
BUSINESS

6.1  
Subject to other provisions in this Agreement, the Company shall engage solely
and exclusively in the business of developing, producing, marketing and sale of
electric vehicles, electric-hybrid vehicles, and battery/energy recharging
infrastructure throughout the Territories, as provided under the business plan
of the Company to be developed and agreed between the Shareholders, which may be
supplemented or amended by the Shareholders from time to time (the “Business
Plan”).

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6.2  
(a) All the products licensed to the Company or its subsidiaries by  Youngman
and the products researched and developed by the Company and its subsidiaries
should be produced by the manufacturer exclusively designated by Youngman.
Without unanimous approval of all the shareholders of each party, the Company
and its subsidiaries are not entitled to license or transfer to any other party
the right of manufacturing any of the above-mentioned products. Youngman will
consign the production to the enterprise controlled by Youngman. The plants,
land and equipments required for the production should be invested or
manufactured by such enterprise designated by Youngman and the sites for
production should be determined by Youngman. The prices for the products sold to
the Company and its subsidiaries by the enterprise designated by Youngman should
be set in the Contract on Consigned Manufacturing based on the following
standards:

 
(i)
ex-work price determined by Youngman;

 
(ii)
if required to increase the exclusive parts of the electric vehicle, the price
shall be based on the ex-work price determined by Youngman plus the purchasing
costs for those exclusive parts of the electric vehicle;

 
(iii)
if there are any unnecessary parts, the price shall be based on the ex-work
price determined by Youngman minus the purchasing costs for those unnecessary
parts.

 
(b)
The company and all its subsidiaries shall sell the products to Youngman and ZAP
for the exclusive distribution within defined territories. Based upon the above
guiding principle, the distributor pricing and pricing structure shall be
defined within the related agreement.

6.3  
Each Shareholder shall use its best endeavour to assist the Company to develop
the Business and carry out the Business Plan.

6.4  
The Company may enter into any transactions with any Shareholder but, save in
respect of transactions expressly contemplated by this Agreement, such
Shareholder shall disclose to the Board any interest which it may have in a
transaction to be entered into by the Company.

6.5  
The Company shall set up (i) its headquarter office in Hong Kong, (ii) a project
management office in the United Kingdom, (iii) research and development centres
in the United States (in or around San Francisco), Malaysia and the PRC, and
(iv) such other offices as agreed between the Shareholders.

6.6  
The Company shall generally conduct business under its Brand Name, provided that
any products produced or manufactured by the Company or the Shareholders may
bear the respective brand name(s) of each Shareholder, or such other brand
name(s) as agreed between the Shareholders.

6.7  
The Company shall use its best endeavour to enter into the Licensing Agreement

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with any other parties that own or control key technology to be incorporated
into the products being manufactured by the Company, and shall (subject to
approval of the Board from time to time) aim to make equity investments in these
technology firms.

 
 
7.  
ACCOUNTING

The Company shall maintain accurate and complete accounting records and the
Shareholders or their respective appointed representatives shall each have the
right to inspect all accounting and other records of the Company at all
reasonable times.  The accounts of the Company shall be kept in accordance with
generally accepted international accounting principles in Hong Kong and shall be
audited annually.  The first Auditors shall be a firm to be selected at the
discretion of the Board, and successor Auditors may be selected from time to
time as determined by the Board.  The financial year of the Company shall end on
31 December in each year commencing from 1 January or such other date as may be
determined by the Board.
 
 
8.  
DIVIDENDS

8.1  
Upon the sales of the products within the defined territories, both shareholders
have agreed to pay 2% of the sales revenue to the Company. The sum collected
from Zap shall be paid to Youngman and the sum collected from Youngman shall be
paid to Zap every year by the Company.

8.2  
If in respect of any financial year the Company shall have net profits after tax
available for distribution, the parties hereto shall procure that such profits
shall be applied in the following manner and order of priority:

(a)  
provision of working capital to finance the continuing operations and internal
growth of the Business;

(b)  
repayment of any interest accrued on the outstanding Capital Loan;

(c)  
repayment of any outstanding principal of the Capital Loan;

(d)  
transfer to reserves consistent with the normal commercial requirements of
businesses similar to those carried on by the Company;

(e)  
payment of cash dividends to the Shareholders after deduction of the above items
within months after the end of such financial year.

8.3  
In deciding whether in respect of any financial year, the Company had or has
profits available for distribution, the parties hereto shall procure that the
Auditors shall certify whether such profits are available or not and the amount
thereof (if any).  In giving such certificate the Auditors shall act as experts
and not arbitrators and their determination shall be final and binding on the
parties hereto, except in the case of manifest error.

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9.  
BOARD OF DIRECTORS

9.1  
Unless otherwise agreed by the Shareholders, the Board shall consist of minimum
of 3 and a maximum of 7 directors.

9.2  
At any time during the continuance in force of this Agreement, ZAP shall be
entitled to first appoint in office one (1) directors and to appoint one
additional director for every two directors added to the Board subsequently and
to remove any such director(s) so appointed.  For this purpose, the first
directors appointed by ZAP shall be Mr. Steven Schneider.

9.3  
At any time during the continuance in force of this Agreement, Youngman shall be
entitled to first appoint one (1) director and to appoint one additional
director for every two directors added to the Board subsequently and to remove
any such director(s) so appointed. For this purpose, the first director
appointed by Youngman shall be Mr. Pang Qingnian.

9.4  
Save for the specific appointments made pursuant to Clauses 9.2 and 9.3, any
exercise by any Shareholder of the power of appointment or removal conferred on
it pursuant to the above provisions shall be served upon the other Shareholder
and the Company whereupon the parties hereto shall forthwith join in to take
such action as is necessary under the Articles to effect the appointment or
removal (as the case may be).

9.5  
Any Shareholder removing a director appointed by it shall indemnify the other
Shareholder and the Company against any claim by such director for wrongful
dismissal arising out of such removal.

9.6  
Each director shall be entitled to appoint and remove from time to time without
the consent of any other director any person to act as his alternate.

9.7  
The quorum necessary for the transaction of business at a Board meeting shall be
two (2) directors at least, and the two directors shall be appointed by ZAP and
Youngman respectively. Such quorum shall be increased by one (1) director for
every two directors added to the Board subsequently.

9.8  
Save as otherwise provided in this Agreement, resolutions shall be passed at a
meeting of the Board by a simple majority vote of the directors (or their
respective alternates) present at the meeting.

9.9  
Unless otherwise agreed or waived by all directors (or their respective
alternates), not less than 7 days’ notice of each directors’ meeting specifying
(wherever practicable) the nature of the business to be transacted thereat, the
time, the place and the date shall be given to each director.

9.10  
The directors (or their respective alternates) may participate in a meeting of
the directors by means of conference telephone whereby all persons participating
in the meeting can hear each other and participation in the meeting in such
manner shall be deemed to constitute presence in person at such meeting and all
the provisions in this Agreement and the Articles as to meetings shall, mutatis
mutandis, be applicable.

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9.11  
A resolution in writing signed by all the directors entitled to receive notice
of a meeting of directors (or their respective alternates) shall be valid and
effectual as if it had been passed at a duly convened meeting of directors and
may consist of several documents in the like form each signed by one or more
directors (or their respective alternates).

 
 
10.  
MATTERS REQUIRING SPECIAL APPROVAL

10.1  
Each Shareholder shall exercise all such voting rights and other powers or
control as may be available to them in relation to the Company so as to promote
the development and prosperity of, and shall generally use all reasonable
endeavours to promote and assist the Company in developing and promoting the
Business.

10.2  
Notwithstanding any provisions of this Agreement or of the Articles to the
contrary, no resolution shall be passed or other decision or action shall be
taken by or on behalf of the Company or the Board concerning any of the
following matters with respect to the Company without (i) approval of the
majority of the Board and (ii) approval of the holders of at least 66% of the
then issued Shares (provided that such approvals shall not be unreasonably
withheld):-

 
(a)
any material change in the compensation or benefits of the Management or any of
the Key Employees;

 
(b)
incurring of any indebtedness, and any prepayment or repayment of any
indebtedness of the Company, other than in the ordinary course of business of
the Company;

 
(c)
granting by the Company of any collateral security, or allowing the Company to
incur any charge, lien or other encumbrance on its properties or assets to
secure any indebtedness;

 
(d)
participation in any business activity beyond the scope of the Business;

 
(e)
entering into any partnership agreement with any third party, other than in the
ordinary course of business of the Company;

 
(f)
any change in the auditor of the Company, or termination of legal counsel acting
for the Company;

 
 
(g)
acquisition of any properties or assets for an aggregate consideration in excess
of US$500,000.00;

 
(h)
issuance of any shares to any third parties, save and except the shares to be
issued to the Key Employees as provided under Clause 15;

 
(i)
any change to the fidelity, casualty or other insurance policies obtained by the
Company;

 
(j)
any expenditure which causes the Company to exceed its budget by 3% as set forth
in the Business Plan;

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(k)
assignment of any assets or properties of the Company in trust for the benefit
of any creditors;

 
(l)
settlement, compromise or acceptance of any judgment against the Company; or

 
(m)
entering into any agreement to do any of the foregoing.

10.3  
Notwithstanding any provisions of this Agreement or of the Articles to the
contrary, no resolution shall be passed or other decision or action shall be
taken by or on behalf of the Company or the Board concerning any of the
following matters with respect to the Company without (i) unanimous approval of
the Board and (ii) approval of the holders of at least 85% of the then issued
Shares (provided that such approvals shall not be unreasonably withheld):

 
(a)
alteration to the scope of the Business;

 
(b)
any amendments that causes any fundamental change in the Business Plan;

 
(c)
Any petition for liquidation or winding up of the Company;

 
(d)
Any sale, assignment, transfer, charge, hypothecation, or any other disposition
of all or substantial parts of the assets or properties of the Company; or

 
(e)
Entering into any agreement or arrangement between the Company and any of its
shareholders, directors or managers.

 
 
11.  
REPRESENTATIONS, WARRANTIES AND COVENANTS

11.1  
ZAP hereby represents and warrants as follows:

 
(a)
ZAP is, and shall be, validly existing and in good standing under the laws of
the jurisdiction of its incorporation;

 
(b)
ZAP has all requisite corporate powers and authorities to enter into this
Agreement and all other agreements in connection with the consummation of the
transactions contemplated hereby (including but not limited to all exhibits and
documents attached hereto) (the “Additional Agreements”), and perform its
obligations there under, and no other approval, consent, action or proceedings
shall be necessary to authorize such execution, delivery and performance;

 
(c)
this Agreement and each of the Additional Agreements are valid and binding upon
ZAP as well as enforceable against ZAP in accordance with the terms thereof;

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(d)
the execution, delivery and performance of this Agreement and the Additional
Agreements and the consummation by ZAP of the transactions contemplated thereby
or relating thereto do not and will not (i) result in a violation of the
constitutions, bylaws or other organizational documents of ZAP, or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both may become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which ZAP is a party or by which its properties or
assets are bound, or (iii) result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to ZAP;

 
(e)
No petition has been taken out or threatened to be taken out for liquidation or
winding up of ZAP;

 
(f)
Neither ZAP nor any affiliate of ZAP has engaged any broker, finder or
investment banker in connection with the Company; and

 
(g)
ZAP shall cause one or more of its officers to attend a monthly meeting with the
officer or officers of Youngman to be held at the principal office of the
Company or via teleconference, or at such other time and place as agreed between
the Shareholders.

11.2  
Youngman hereby represents and warrants as follows:-

 
(a)
Youngman is, and shall be, validly existing and in good standing under the laws
of the jurisdiction of its incorporation;

 
(b)
Youngman has all requisite corporate powers and authorities to enter into this
Agreement and all other agreements in connection with the consummation of the
transactions contemplated hereby (including but not limited to all exhibits and
documents attached hereto) (the “Additional Agreements”), and perform its
obligations there under;

 
(c)
this Agreement and each of the Additional Agreements are valid and binding upon
Youngman as well as enforceable against Youngman in accordance with the terms
thereof and no other approval, consent, action or proceedings shall be necessary
to authorize such execution, delivery and performance;

 
(d)
the execution, delivery and performance of this Agreement and the Additional
Agreements and the consummation by Youngman of the transactions contemplated
thereby or relating thereto do not and will not (i) result in a violation of the
constitutions, bylaws or other organizational documents of Youngman, or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both may become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of any agreement, indenture
or instrument or obligation to which Youngman is a party or by which its
properties or assets are bound, or (iii) result in a violation of any law, rule,
or regulation, or any order, judgment or decree of any court or governmental
agency applicable to Youngman;

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(e)
No petition has been taken out or threatened to be taken out for liquidation or
winding up of Youngman;

 
(f)
Neither Youngman nor any affiliate of Youngman has engaged any broker, finder or
investment banker in connection with the Company; and

 
(g)
Youngman shall cause one or more of its officers to attend a monthly meeting
with the officer or officers of ZAP to be held at the principal office of the
Company or via teleconference, or at such other time and place as agreed between
the Shareholders.

11.3  
Each Shareholder and the Company hereby agree and covenant that:-

 
(a)
the Shareholders shall negotiate in good faith and enter into the Marketing and
Distribution Agreements with the Company within sixty (60) days after the date
of this Agreement;

 
(b)
the Company shall use its best endeavour to prepare a definitive and detailed
Business Plan within sixty (60) days of the date of this Agreement, the content
of which shall be agreeable to the Shareholders;

 
(c)
the Company shall enter into the Employment Agreement with its Key Employees in
the form acceptable to the Shareholders;

 
(d)
the Company shall use its best endeavour to enter into the Licensing Agreements
with any other parties that own or control key technology to be incorporated
into the products to be manufactured by the Company, and shall (subject to
approval of the Board from time to time) aim to make equity investments in such
companies or firms that own or control the key technology.

 
 
(e)
the Board shall hold its regular meetings once every calendar month and such
meetings shall be attended in person or via conference telephone;

 
 
(f)
each Shareholder shall not engage in any activities through joint venture
cooperation with any electric vehicle company, whose businesses are in direct or
indirect competition with the Company.

 
11.4  
Without written approval from both the shareholders, the Company and its
subsidiaries shall not, at any time, provide any products and technologies
researched and developed by the Company to any third parties in any ways.
Without written approval from Youngman, the company shall not provide any
Youngman licensed products and technologies to any third parties in any ways.

       11.5
The Shareholders hereby agree that the Company shall establish a wholly owned
subsidiary in the PRC, with a registered capital of US$90,000,000.00, in
accordance with the laws of the PRC within eighteen (18) months from the date
hereof.

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12.  
INDEMNIFICATION

       12.1
None of the Shareholders shall be liable to the Company or to any other
Shareholder in damages or otherwise for any actions taken in good faith or
reasonably believed by such Shareholder to be in or not in any conflict with the
best interests of the Company, provided that such actions are within the scope
of the Business. In the event that any actions has been taken by any Shareholder
outside of the scope of the Business Plan, such Shareholder shall only be liable
for those actions which constitute wilful misconduct, gross negligence, fraud,
or any material breach of its obligations under this Agreement.

       12.2 
The Company shall indemnify and hold harmless against any Shareholder in respect
of any threatened, pending or completed actions, suits or proceedings to which
such Shareholder is a party or threatened to be made a party by reason of the
fact that it is or was a shareholder of or participant in the Company, or any
alleged cause of action for damages to any third party caused by its performance
in management or operation of the Company. The Company shall fully indemnify
each Shareholder against all claims, damages, compensations, judgments or
settlements provided that such Shareholder has acted in good faith all along and
in a manner reasonably believed to be in or not in any conflict with the best
interests of the Company and the actions or conducts of such Shareholder do not
constitute any wilful misconduct, gross negligence, fraud, or a material breach
of its obligations under this Agreement.

 
 
13.  
TRANSFER OF SHARES

13.1  
Save as otherwise provided in this Agreement, a Shareholder shall not sell,
transfer, charge, incumber, grant options over or otherwise dispose of any of
the Shares or any beneficial interest in any of the Shares now owned or to be
acquired after the date of this Agreement by it to any person without prior
written consent of all other Shareholders. Any such consent, if given, may be
subject to the condition (inter alia) that such person shall first agree in
writing in terms acceptable to such other Shareholders to be bound by as one of
the Shareholders under this Agreement and observe all the provisions hereunder
(including this Clause) so far as such provisions are applicable.

 
13.2  
(a)
Every Shareholder who intends to transfer or otherwise dispose of any Shares or
any interest in such Shares (the “Proposing Transferor”) shall, before so doing
or agreeing so to do, inform the Company of his intention by giving it notice in
writing (the “Transfer Notice”).  The Transfer Notice shall constitute the
Company the Proposing Transferor’s agent empowered to sell the Shares referred
to in the notice (together with all rights then attached to them) at the
Prescribed Price (as hereinafter defined) to any Shareholder in the manner
appearing below and shall not be revocable except with the unanimous agreement
of the Board.

 
 
(b)
If not more than 14 days after the date on which the Transfer Notice was  given
the Proposing Transferor and the Board shall have agreed in writing a price per
share as representing its fair value, or as being acceptable to the Proposing
Transferor and not more than its fair value, then such price shall be  

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the Prescribed Price (the “Prescribed Price”).  In the absence of any agreement
having been reached within the said period of 14 days the Board shall
immediately request the auditors for the time being of the Company to determine
and certify in writing to the Company the sum per share considered by them to be
fair value as between a willing seller and a willing purchaser as at the date on
which the Transfer Notice was given and the sum per Share so determined and
certified shall be the Prescribed Price.  The auditors shall act at the cost and
expense of the Proposing Transferor as experts and not as arbitrators and their
determination shall be final and binding for all purposes (save in respect of
manifest error).

 
 
 
(c)
Within 7 days of the Prescribed Price being so agreed or determined and fixed
all Shares included in any Transfer Notice shall be offered for purchase at the
Prescribed Price by notice in writing (the “Offer”) given by the Company to all
Shareholders (other than the Shareholder to whose Shares the Transfer Notice
relates).  The Offer shall be on the basis that in the case of competition for
them the Shares so offered shall (in accordance with, but subject to Clause 13
be sold to acceptors in proportion (as nearly as may be without involving
fractions or increasing the number sold to any Shareholder beyond that applied
for by it) to their existing shareholdings.  Any such Offer shall specify a
period (being not less than 21 days and not more than 42 days) within which it
must be accepted or will lapse.

 
(d)
If the Shareholders or any of them (hereinafter called the “Purchasers”) shall
within the said period of the Offer agree to purchase any of the Shares
concerned, the Company shall immediately give notice in writing as mentioned
below to the Proposing Transferor and to the Purchasers and on payment of the
Prescribed Price the Proposing Transferor shall be bound to transfer such Shares
to the respective Purchasers accordingly.  Every such notice shall state the
name and address of each Purchaser and the number of Shares agreed to be
purchased by it and the sale and purchase shall be completed at a place and time
to be appointed by the Board being not less than 7 days nor more than 30 days
after the date of such notice Provided always that if the Transfer Notice shall
state that the Proposing Transferor is not willing to transfer part only of the
Shares the subject of the Transfer Notice then this Clause shall not apply
unless the Company shall have found Purchasers for all of such Shares and if the
Company fails to find such Purchasers then any such Offer shall be deemed to
have lapsed without having been validly accepted.

 
(e)
If a Proposing Transferor shall fail or refuse to transfer any Shares to a
Purchaser under this Clause13, the Board may authorise some person to execute
the necessary transfer and may deliver it on its behalf and the Company may
receive the purchase money in trust for the Proposing Transferor (which it shall
pay into a separate bank account in the Company’s name) and cause the Purchaser
to be registered as the holder of such Shares.  The receipt of the Company for
the purchase money shall be a good discharge to the Purchaser (who shall not be
bound to see to the application of the purchase money) and after the Purchaser
has been registered in purported exercise of the said powers the validity of the
proceedings shall not be questioned by any person.

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(f)
If at the expiry of the period referred to in Clause 13.2 the Shareholders shall
not have agreed to purchase all the Shares so offered, the Company shall
immediately give notice in writing of that fact to the Proposing Transferor and
subject to the previous sanction of the Board it shall then be at liberty at any
time up to the expiration of 3 months after the giving of such notice to
transfer those Shares which the Shareholders shall not have so agreed to
purchase to any person on a bona fide sale at any price not being less than the
Prescribed Price Provided that:

 
(i)
if the Transfer Notice shall state that the Proposing Transferor is not willing
to transfer part only of the Shares the subject of the Transfer Notice, then the
Proposing Transferor shall not be entitled under this Clause to transfer any of
such Shares unless in aggregate the whole of such Shares are so transferred; and

 
(ii)
the Board may require to be satisfied that such Shares are being transferred in
pursuance of a bona fide sale for the consideration stated in the instrument of
transfer without any deduction rebate or allowance whatever being given to the
Purchaser and if not so satisfied may refuse to register the instrument of
transfer.

       13.3
Subject to the provisions of Clause 13.2, no transfer of any share of the
Company shall be made or registered without the previous sanction of the Board
which may, in its absolute and uncontrolled discretion, without assigning any
reason, refuse to give such sanction.

 
 
14.  
MANAGEMENT OPTIONS

14.1  
The Company shall have such number of Shares reserved for allotment or issue
(the “Reserved Shares”) not exceeding 12% of the then issued Shares, on an all
as-if-converted basis, for granting of any Management Options in favour of any
Key Employees.

14.2  
The Management Options may be granted by the Board from time to time to any Key
Employees upon terms and subject to conditions as determined by the Board at its
discretion and all Management Options shall be subject to annually vesting
stipulation for a period of not less than three (3) years.

 
 

14.3  
Any holder of the Management Options or any rights thereof will be required to
execute stock restriction agreements with the Company to be approved by the
Board providing for certain restrictions on transfer and for the first refusal
of the Shareholders and assumption of the rights and obligations of a
Shareholder under this Agreement.

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15.  
TERMINATION

15.1  
This Agreement shall continue in full force and effect until terminated in
accordance with the provisions of this Clause.

15.2  
Any of the Shareholders (the “First Party”) shall be entitled to terminate this
Agreement immediately by notice in writing (but not after 90 days of the event
in question first coming to the attention of the First Party) if any of the
events set out below shall occur. Such notice shall be served upon the
Shareholder in respect of which the event or events relate (“Such Other Party”)
and copies of such notice shall be given to all other Shareholders.  The effect
of such notice shall be to terminate this Agreement as between Such Other Party
and the remaining party or parties to this Agreement but this Agreement shall
continue in full force and effect as between such remaining parties (if more
than one) but not if otherwise. The said events are:

(a)  
if Such Other Party shall commit any persistent or material breach of any of its
obligations under this Agreement and shall fail to remedy such breach (if
capable of remedy) within 30 days after being given notice by the First Party so
to do; or

(b)  
if Such Other Party shall go into liquidation whether compulsory or voluntary
(except for the purposes of a bona fide reconstruction or amalgamation with the
consent of all other Shareholders, such consent not to be unreasonably withheld)
or if Such Other Party shall have an administrator appointed or if a receiver,
administrative receiver or manager shall be appointed over any part of the
assets or undertaking of Such Other Party; or

(c)  
if, without the prior written consent of the all other Shareholders, there shall
be any change in the person or persons who owns or own a majority of the voting
shares in, or otherwise has or have effective control of, Such Other Party.

15.3  
This Agreement shall terminate in respect of any Shareholder (but shall continue
between the other Shareholders (if more than one) but not otherwise) if at any
time as a result of a transfer of Shares made in accordance with this Agreement
that Shareholder holds no Shares in the capital of the Company but without
prejudice to any rights which any party may have against any other party arising
prior to such termination.

15.4  
This Agreement shall terminate immediately upon an initial public offering of
the Shares (or the shares of any new holding company formed for such purpose on
a recognized stock exchange, or if an effective resolution is passed to wind up
the Company, or if a liquidator is otherwise appointed (but without prejudice to
any rights any party may have against any other party arising prior to such
termination).

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16.  
CONSEQUENCES OF NOTICES UNDER CLAUSE 15

16.1  
If any Shareholder shall serve a notice of termination under Clause 15.2, that
Shareholder (the “Terminator”) shall be entitled by that notice to require the
recipient of such notice (the “Terminatee”) either to purchase all (but not some
only) of the Shares of the Terminator or to sell to the Terminator all (but not
some only) of the Shares of the Terminatee at a price determined in accordance
with the provisions of Clause 16.2 below.  On the exercise of any such right by
the Terminator, it and the Terminatee shall become bound respectively to sell or
purchase on the terms set out below.  If in a valid termination notice no such
power of sale or purchase is exercised by the Terminator, the parties hereto
shall procure that the Company shall be immediately wound up.

16.2  
The purchase price of the Shares to be bought and sold pursuant to Clause 16.1
shall be their fair value as agreed between the parties to such sale and
purchase or in default of agreement within 45 days after the service of the
notice of termination such sum as shall be certified (at the request of any such
party) by the auditors for the time being of the Company to be the fair value of
such Shares on the date when the termination notice was served.  In so
certifying the auditors are irrevocably instructed to value the Shares at fair
value as between a willing seller and a willing purchaser on that date but
otherwise they shall take into account all such circumstances as shall seem to
them relevant.  In so acting such auditors are instructed to act as experts and
not as arbitrators and their decision shall (save in respect of manifest error)
be final and binding on the parties to such sale and purchase of purposes and
their costs shall be borne in equal shares by all of such parties.

16.3  
Completion of the sale and purchase of Shares pursuant to the provisions of
Clause 16.1 shall take place at the Hong Kong business office of the Company at
10.00 am on the fifth business day after the price payable for such Shares has
been agreed or determined in accordance with the provisions of Clause 16.2 (or
such other time and/or place as the parties to such sale and purchase may agree)
and in respect of which the provisions of Clauses 16.4, 16.5, 16.6 and 16.7
shall then have effect.

16.4  
At any completion of the sale and purchase of Shares pursuant to Clause 16.1, in
return for a certified cheque or cashier order drawn on any licensed bank in
Hong Kong (or such other means of payment which is agreed by the seller) for the
full amount of the purchase money for the Shares being bought and sold
(determined in accordance with the foregoing provisions of this Clause) and such
other amounts as referred to in Clause 16.5, the seller(s) shall deliver to the
purchaser(s) duly executed share transfers for the Shares being sold in favour
of the purchaser(s) (in accordance with their respective entitlements) or as
they may direct together with the relevant share certificate(s) (or an
acceptable indemnity in lieu).  Any Shares sold under or pursuant to the above
provisions shall be sold free of all liens charges and incumbrances and together
with all rights now or in future attaching to them.

16.5  
If any Shareholder (the “Outgoing Party”) shall elect or become bound to
transfer all its Shares to any other Shareholders under or pursuant to the

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provisions of this Clause, such other Shareholders shall upon or immediately
prior to completion of such transfer procure:

 
(a)  
the immediate release of all guarantees, indemnities and similar covenants (if
any) given by the Outgoing Party in favour or for the benefit of the Company
(and pending such release shall indemnify and keep the Outgoing Party fully and
effectively indemnified from and against all claims arising under such
guarantees, indemnities and similar covenants (if any)); and

(b)  
the immediate repayment to the Outgoing Party of all money advanced to the
Company by the Outgoing Party by way of loan or loan stock, including any
Capital Loans, then outstanding (if any) together with all interest (if any)
down to the date of actual payment (as well before as after judgment).

16.6  
In the event of any Shareholder ceasing to be a shareholder in the Company where
the corporate name of such Shareholder or its subsidiary or any part thereof
contains EV or similar expressions or any word or words the same or similar to
the corporate name or any distinctive part of the corporate name of Company,
such Shareholder shall procure that within 30 days the corporate name of such
Shareholder or its subsidiary or any thereof shall be changed so as to exclude
such word or words.

16.7  
The Shareholders shall exercise all voting and other rights available to them to
ensure the implementation of the preceding provisions of this Clause and that
any provisions contained in the Articles restricting transfers of Shares shall
be waived or suspended to allow such sales and purchases to proceed as provided
above and the Shareholders shall procure the registration of any transfer of any
Shares any pursuant to this Agreement accordingly.

17.  
CONFIDENTIALITY

17.1  
The Shareholders undertake to each other and the Company that they will not at
any time hereafter use or divulge or communicate to any person other than to
officers or employees of the Company whose province is to know the same or on
the instructions of the directors any confidential information concerning the
business, accounts, finance or contractual arrangements or other dealings,
transactions or affairs of the Company which may come to their knowledge and
they shall use their best endeavours to prevent the publication or disclosure of
any confidential information concerning such matters by themselves, their
respective employees and officers.

17.2  
The obligations of each Shareholder contained in Clause 17.1 shall continue
without limit in point of time but shall cease to apply to any information
coming into the public domain otherwise than by breach by any such Shareholder
of its said obligations Provided that nothing contained in this Clause shall
prevent any party from disclosing any such information to the extent required in
or in connection with legal proceedings arising out of this Agreement or any
matter relating to or in connection with the Company.

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17.3  
All notes and memoranda (whether in the form of originals, reproductions or
electronically stored data) of any trade secrets or confidential information
concerning the business of the Company or any of its suppliers, agents,
distributors or customers which shall be acquired, received or made by a
Shareholder during the continuance of this Agreement shall be the property of
the Company and shall be surrendered by the Shareholder to someone duly
authorized by the Company in that behalf at the termination of this Agreement or
at the request of the Board at any time during the continuance of this
Agreement.

18.  
RESTRICTIVE COVENANTS

18.1  
Each Shareholder shall not, engage in the following activities for a period of
two years after the date on which he or she ceased to be a shareholder of the
Company:

(a)  
In any location where the Company carries on the Business at the Relevant Date
(as hereinafter defined), carry on or be engaged in any activity or business
which shall be in competition with the Business at the Relevant Date;

(b)  
Solicit or endeavour to entice away from or discourage from dealing with the
Company any person who was at any time during the period of one year preceding
the Relevant Date a manufacturer for or supplier, customer or client of the
Company;

(c)  
supply or provide any goods or services to any person who was at any time during
the period of one year preceding the Relevant Date a customer or client of the
Company to whom the Company had during that period supplied or provided goods or
services in the ordinary course of its business;

(d)  
solicit or endeavour to entice away from or discourage from being employed by
the Company any person who was at the Relevant Date an officer or employee of
the Company whether or not such person would commit a breach of contract by
reason of leaving service; or

(e)  
Employ or engage or attempt to employ or engage or negotiate or arrange the
employment or engagement by any other person, firm or company of any person who
was at the Relevant Date an officer or employee of the Company.

18.2  
The restrictions contained in Clause 18.1 are considered reasonable by the
parties hereto but in the event that any such restriction shall be found to be
void but would be valid if some part thereof were deleted or the period or area
of application reduced such restriction shall apply with such modification as
may be necessary to make it valid and effective.

18.3  
For the purposes of this Clause, the “Relevant Date” means the date in question
or the Termination Date (whichever shall be the earlier).

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19.  
SPECIFIC ENFORCEMENT

Each Shareholder acknowledges and agrees that each Shareholder will be
irreparably damaged in the event any of the provisions of this Agreement are not
performed by any Shareholder in accordance with their specific terms or are
otherwise breached.  Accordingly, it is agreed that the Company and the
Shareholders shall be entitled to an injunction to prevent breaches of this
Agreement and to specific enforcement of this Agreement and its terms and
provisions in any action instituted in any court of competent jurisdiction, in
addition to any other remedy to which the Shareholders may be entitled at law or
in equity.  Each Shareholder hereby consents to the jurisdiction in any such
action brought in the courts of Hong Kong.

20.  
MISCELLANEOUS

20.1  
Implementation of Agreement

 
Each Shareholder agrees that it will at all times:

(a)  
use all means reasonably available to it (including its voting power, direct or
indirect, in relation to the Company) so as to ensure that the Company and any
director of the Company nominated or appointed by it (and any alternate to such
director) shall implement the provisions of this Agreement relating to the
Company; and

(b)  
co-operate in good faith and execute such further documents and take such other
action as may be reasonably required in order to give full effect to the
provisions and intent of this Agreement.

20.2  
Agreement Prevails

 
In the event that there is any inconsistency between the provisions of this
Agreement and the provisions of the Articles, the provisions of  Articles shall
prevail.

20.3  
Further Assurance

The Shareholders shall use their reasonable efforts to do and execute or procure
to be done and executed all such acts, deeds, documents and things as may be
necessary to give effect to this Agreement.

20.4  
Entire Agreement

This Agreement constitutes the entire agreement between the parties hereto, and
supersedes any previous agreement, understanding, arrangement, communication or
expression of intent with respect to the subject matter hereof.

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20.5  
Amendments

No amendment of or addition to this Agreement shall be effective unless in
writing and signed by or on behalf of all the parties hereto.

20.6  
No Representations

Each Shareholder acknowledges that it has made its own independent evaluation of
the business to be undertaken by the Company pursuant to this Agreement and has
not been induced to enter into this Agreement or any of the transactions
contemplated hereby by any representation made or advice given by any other
Shareholder.

20.7  
No Partnership

Nothing contained in or relating to this Agreement shall or shall be deemed to
constitute a partnership or agency relationship between any of the parties
hereto.

20.8  
No Waiver

No omission or delay on the part of any party hereto in exercising its rights
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise by any party hereto of any such right preclude the further or
other exercise thereof or the exercise of any other right which it may have.

20.9  
Severability

If at any time any one or more of the provisions hereof is or becomes illegal,
invalid or unenforceable in any respect under the applicable laws of any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions hereof, nor the legality, validity or enforceability of such
provision under the applicable laws of any other jurisdiction, shall in any way
be affected or impaired.

20.10  
Assignment

(a)  
This Agreement shall be binding on the parties hereto and their respective
successors and shall enure to the benefit of each of them and their respective
successors and permitted assigns.

(b)  
The benefit of this Agreement may not, except as otherwise herein provided, be
assigned or transferred in whole or in part by any Shareholder without the prior
consent of the other Shareholders.

20.11  
Time

Time shall be of essence under this Agreement.

20.12  
Notices

(a)  
Every notice, demand or other communication given or made under this

 
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Agreement shall be in writing and delivered or sent by hand or prepaid recorded
delivery or registered post or by facsimile transmission to the relevant party
at its address or fax number set out below (or such other address or fax number
as the addressee shall by not less than 7 days’ prior written notice specify to
the other party):

 

 
To ZAP: 
(1) 
ZAP      Address:  501 Fourth Street        Santa Rosa, California 95401     
Fax Number:  (707) 525-8692      Attention:  Mr. Steven Schneider             
(2) Richardson & Patel LLP       Address:  10900 Wilshire Boulevard, Suite 500 
      Los Angeles, CA 90024      Fax Number:  (310) 208-1154      Attention: 
Edgar D. Park, Esq.            To Youngman: 
Zhejiang Youngman Automobile 
     
Group Co., Ltd. 
      Address:  501 Bada Road,         Jinhua City, Zhejiang, PRC      Fax
Number: 
86-579-2256002 
    Attention:
Mr. Pang Qingnian 
          To the Company: 
EV Holdings Limited 
     
Address: 
Unit A, 14/F Shun On         Commercial Building, 112-114 Des         Voeux Road
Central,        Hong Kong      Fax Number        Attention:   

 
(b)  
Any notice, demand, or other communication so addressed shall be deemed to have
been delivered (i) if given or made by letter postage prepaid, within 72 hours
after posting (or 10 days later if overseas) (ii) if given or made by letter
delivered by hand, upon delivery (iii) if given or made by facsimile
transmission, at the time of despatch, provided that the original is posted or
delivered to the recipient immediately after the facsimile transmission.

20.13  
Counterparts

(a)  
This instrument may be executed in several counterparts, all or any of which
shall be treated for all purposes as one original and shall be and constitute
one and the same instrument.

(b)  
This instrument may be executed by the parties in original or telecopy 

 
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produced by fax machine or other means of electronic communication producing a
printed copy.

 
20.14  
Governing Law and Jurisdiction

This Agreement shall be governed by and construed in accordance with the laws of
Hong Kong. The parties hereto submit to the non-exclusive jurisdiction of the
courts of Hong Kong.

 
[Remainder of Page Intentionally Left Blank]

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IN WITNESSWHEREOF this Agreement has been entered into the day and year first
above written.

SIGNED BY                                                                 
          )
)
on behalf of ZAP                                                             
     )
in the presence
of:                                                                 )

/s/ Steven Schneider

 

SIGNED
BY                                                                            )
)
on behalf of Youngman                                                        )
Automobile Co.,
Ltd.                                                             )
in the presence
of:                                                                 )

/s/ Pang Qingnian

 
SIGNED BY                                                                       
    )
)
on behalf of EV Holdings Limited                                      )
in the presence
of:                                                                 )

/s/ Steven Schneider

 
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SCHEDULE A

Investment Schedule

 
 
 

 
27

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SCHEDULE B

Memorandum and Articles of Association

 
 
 

 
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