EXHIBIT 10.1   
                                                     ZAP(Hangzhou) Electric
Vehicle
Co., Ltd  Joint Venture Contract

 
 
 
 
 

Chinese-Foreign Jointly Funded
Zap (Hangzhou) Electric Vehicle Co., Ltd

  Joint Venture Contract
 
Chapter 1   General
.
ZAP (hereafter referred to as Party A), BETTER WORLD LIMITED (hereafter referred
to as Party B) and Holley Group Co., Ltd (hereafter referred to as Party C)
hereby agree to conclude this joint venture contract and jointly fund a
Chinese-foreign joint venture in Hangzhou, Zhejiang Province, the People’s
Republic of China, according to the Law of the People’s Republic of China on
Chinese-Foreign Joint Ventures and other Chinese regulations, in line with the
principles of equality and mutual benefit, and through friendly consultation.

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Chapter2   Joint Venture parties

Article 1: JOINT VENTURE parties for this contract:
 
Party A: ZAP Registered in: USA
Legal address: 501 Fourth Street Santa Rosa, CA 95401
Legal representative: Steven Mark Schneider   Nationality: USA
Telephone: 001-7075258658
 
Party B: BETTER WORLD LIMITED     Registered in: Hong Kong
Legal Address: Apartment 10A Ede Road Kowloon Tong KL
Legal representative: Lu Meiheng               Nationality: USA
Telephone: 85225220551
 
Party C: Holley Group Co., Ltd             Registered in: China
Legal address: 181 Wuchang Avenue, Yuhang District, Hangzhou
Legal representative: Wang Licheng
Telephone: 0571-88900688
 
 
Chapter 3   Establish a joint venture

Article 2: according to the Law of the People’s Republic of China on
Foreign-Funded Enterprises and other related Chinese regulations, Party A, B and
C agree to establish the Chinese-foreign jointly funded Zap (Hangzhou) Electric
Vehicle Co., Ltd, (hereafter referred to as “joint venture”) in China.
 
Article 3: the name of joint venture: Zap (Hangzhou) Electric Vehicle Co., Ltd;
legal address of joint venture: Building 1, 181 Wuchang Avenue, Yuhang District,
Hangzhou; zip code: 310011.
 
Article 4: all the activities of joint venture must be in accordance with the
laws, acts and related regulations of the People’s Republic of China.
 
    Article 5: the organizational form of joint venture is Limited Liability
Company. . Party A, B and C shall assume the debt of joint venture according to
their own amount of contribution to capital.  The parties shall also share the
profits, risks and loss according to their own amount of contribution to
registered capital.
 

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Chapter 4    Business purpose, scope and scale

Article 6: the purpose of Party A, B and C to establish a joint venture: being
desirous of enhancing economic cooperation and technical exchange, through
advanced and applicable technology and rational operating management methods,
the three parties will improve economic performance and gain satisfactory
economic interests..
 
Article 7: business scope of joint venture: research & development, production
and sale of battery system, driving system, electronic control system for
electric vehicle; research & development of electric vehicle and consultation on
electric vehicle technology..
 
Article 8: business scale of joint venture: annual revenue of 10 Million US
dollars..
 

Chapter 5    Total amount of investment and registered capital

Article 9: the total amount of investment for joint venture is 3 Million US
dollars. . Registered capital of joint venture is 3 Million US dollars..
 
Article 10: the total amount of investment by Party A, B and C is 3 Million US
dollars taken as the registered capital of joint venture. . Proportions: 1.125
Million US dollars from Party A accounts for 37.5%; 1.125 Million US dollars
from Party B accounts for 37.5%; and 750 Thousand US dollars from Party C
accounts for 25 %..
 
             Article 11: Party A, B and C will contribute their investment in
the following way:.
 
Party A: 1.125 Million US dollars, at current exchange rate of US dollars.
 
Party B: 1.125 Million US dollars, at current exchange rate of US dollars.
 
Party C: 750 Thousand US dollars, Equivalent in RMB . (US dollars converted into
RMB at the exchange rate on the day of registration)..
 
Article 12: the registered capital of joint venture will be paid up by Party A,
B and C according to their ratio of contribution within two months from the
issue date of joint venture business license..
 
Article 13: any one of Party A, B and C shall not wholly or partly transfer his
amount of investment to any third party without the prior permission of the
other two parties and without the approval from original approving authority.
The other two parties have the first right of refusal to purchase the investment
amount, wholly partially transferred by the third party when any one party
wholly or partly transfers his amount of investment.

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Chapter 6   Responsibility of JV parties
 
Article 14: Party A, B and C shall be responsible for the following business:
 
Responsibility of Party A and B:.
 
1. Contribute investment according to the provisions of Chapter V;.
 
2. Make transactions related to purchase of mechanical equipment and material
etc. outside China for the joint venture;.
 
3. Provide technical staff for equipment installation and testing, production
and quality inspection;.
 
4. Provide technical training to joint venture staff; .
 
5. Conduct other business under the entrustment of joint venture.
 
Responsibility of Party C
 
1. Apply to relevant authorities of China for establishment approval,
registration and business license of joint venture, of which, the expenses shall
be assumed by joint venture;.
 
2. Contribute investment according to the provisions of Chapter 5;.
 
3. Assist the joint venture to apply to authorities in charge of land for
land-use right;.
 
4. Assist the joint venture to complete import entry procedures for purchase of
equipment and material etc. outside of China and the transportation within
Chinese territory;.
 
5. Assist the joint venture to purchase or rent equipment, raw material, office
supplies, vehicles and communication facilities etc. within Chinese territory;.
 
6. Assist the joint venture to complete the basic facilities related to water,
electricity and transportation etc..
 
7. Assist the joint venture to recruit local Chinese operating management
personnel, technologists, workers and other required personnel;.
 
8. Assist foreign working personnel to apply for entry visa, work permit and
handle their travel procedures;.
 
9. Conduct other business under the entrustment of joint venture.
   
Chapter 7      Sales
 
Article 15: selling of products of joint venture in the market within Chinese
territory.
 
Article 16: for the purpose of selling products and providing after-sale service
in and outside of China, the joint venture can establish branches in and outside
of China with the approval of the Chinese authorities..
 
Article 17: the trademark used for products of joint venture is determined by
the board of directors, and relevant procedures shall be handled according to
the Trademark Law of the People’s Republic of China.
 
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Chapter 8   Company organization and its establishment method, authority and
rules of procedure

Article 18: establish the board of directors of joint venture.  Board of
directors is the highest authority of joint venture. . The board of directors
makes decisions on all significant events of the joint venture and has the
following authority:
 
1. Determination and approval of important reports presented by general manager;
 
2. Define the joint venture’s business plans and investment programs;
 
3. Determine the annual financial budget and final account schemes of joint
venture;
 
4. Make profit distribution and loss recovery plans of joint venture;
 
5. Make the joint venture’s plans for the increase or reduction of registered
capital and for the issue of debenture;
 
6. Make plans for stock share transfer, consolidation, separation, change of
company structure, and dissolution of the company;
 
7. Determine the internal structure of administrative organization of the
company;
 
8. Decide the appointment or dismissal of general manager, deputy general
manager, chief engineer and chief financial officer and their remuneration, and
decide the appointment or dismissal of deputy general manager, chief engineer,
chief financial officer and their remuneration according to the name list
submitted by general manager;
 
9. Establish the fundamental management system of company;.
 
10. Approve the transaction related to share holders, the enterprises actually
controlled by share holders or the affiliated enterprises of share holders;
 
11. Decide the matters related to the provision of security to foreign parties
and the lending of capital by the company;
 
12. Make decisions on other significant events that shall be decided by the
board of directors.
 
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Article 19: the board of directors is composed of 5 directors, of which, 2 are
from Party A, 2 are from Party B and 1 is from Party C. The term of the chairman
and directors is three years, and can be re-appointed..
 
Article 20: the first board chairman shall be appointed by Party B; after the
expiration of the term of three years, the board chairman shall be appointed by
Party A; the chairman rotates every three years..
 
Article 21: Party A, Party B and Party C shall issue a written notice to Board
of Directors in case of appointing and replacing any director candidate. In case
of replacing Chairman or Vice Chairman, a written notice shall be issued to
Board of Directors as well as other parties and shall be submitted to approving
authority for approval.
 
Article 22: Regular meetings of the Board shall be convened at least twice every
year by the Chairman in January and July. In case meeting of the Board is
proposed by Chairman or one third of directors or requested by General Manager
due to operation and management requiring discussion and resolution of the
Board, Chairman must convene interim meeting of the Board within 45 days after
receiving the proposal or request.
 
Article 23: In principle, meetings of the Board shall be convened at the
locality of the Company. Otherwise, approval of more than three fourth of
directors shall be obtained.
 
Article 24: Board meetings shall be convened and presided over by Chairman.
Chairman shall entrust other directors to convene and preside over the Board
meeting in case he fails to convene the meeting. If Chairman fails to convene
the meeting and entrust other directors to convene the meeting, a new Chairman
shall be elected by more than one third of directors to convene meeting of the
Board.
 
Article 25: Chairman shall issue written notices to all directors 30 days before
meeting of the Board, with content of meeting, time and venue included.
 
Article 26: In case of failing to attend the meeting, any director can authorize
representative to attend the meeting. If any director fails to attend the
meeting and fails to authorize any representative to attend the meeting, the
director is deemed to approve all proposals on the meeting.
 
Article 27: Meeting of the Board shall be effective only when a quorum of two
thirds of directors attend the meeting and at least one director from Party A,
Party B and Party C respectively attend the meeting. In case the number of
directors fails to reach the quorum, decisions made on the meeting shall be null
and void.
 
Article 28: Detail written records shall be made on each meeting of the Board
and shall be signed by all directors attending the meeting. In case
representative is entrusted to attend the meeting, the representative shall sign
the record which is written in Chinese and filed by the Company.
 
Article 29: Decision on issues hereunder shall be made only after all directors
of the Company have reached unanimous agreement through negotiation:
 
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 (1) Revision of By-law of the Joint Venture;
 
 (2) Termination and dissolution of the Joint Venture and extension of joint
venture period;
 
 (3) Addition and transfer of registered capital of the Joint Venture;
 
 (4) Merger of the Joint Venture and other economic organizations;
 
 (5) Affiliated transaction (including dealings of raw materials and different
charges) between the Joint Venture and shareholders, other enterprises
controlled by shareholders or affiliated enterprises of shareholders;
 
 (6) Investment by the Joint Venture;
 
 (7) The decision to appoint or dismiss General Manager, Deputy General Manager,
Chief Engineer and CFO, and issues related with their remuneration; General
Manager’s proposal to appoint or dismiss Deputy General Manager, Chief Engineer
and CFO, and issues related with their remuneration; General Manager’s proposal
for salary and incentive system, annual salary system and the year-end staff
rewards solution;
 
 (8) Decision on external guarantee (excluding guarantee for loans of the Joint
Venture) by the Joint Venture;
 
 (9) Decision on capital loan of the Joint Venture to outside (fund of
disbursement for staff is executed as per management system of the Company).
 
Article 30: Decision on other issues shall be effective after obtaining approval
of more than two thirds of directors on the meeting.
 
Article 31: Board of Supervisors is not established in the Joint Venture. One
supervisor shall be appointed by Party A.
 
Article 32: Supervisor shall have three years of tenure of office and can serve
for another term of office through election. Chairman, Manager and financial
administrator shall not be appointed as Supervisor.
 
Article 33: Supervisor shall be in the charge of Board of Directors and shall
execute rights hereunder as specified by Law of Company,
 
 (1) Audit on finance of the Joint Venture;
 
 (2) Supervise directors and management staff of the Joint Venture and propose
to dismiss any director or management personnel who has breach laws,
administrative regulations, By-law of joint venture or decisions made on the
meeting of Shareholders;
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 (3) Require directors or management staff to make rectification when any act
thereof causes harm to company interests;
 
 (4) Propose to convene interim meeting of the Board of Directors. Convene and
preside over meeting of the Board if the Board of Directors fails to perform its
duty to convene and preside over the meeting as specified by the Law;
 
 (5) Submit proposal to the meeting of shareholders;
 
 (6) Take proceedings against any director or management staff as per Article
152 of the Law;
 
 (7) Other rights as specified By-law of the joint venture.
 
Article 34: Supervisor can be present at meeting of the Board of Directors and
raise questions or suggestions on proposals on the meeting.
 
Article 35: Executive management team of the Joint Venture shall include
Manufacturing Department, Technical Department, Financial Department, Sales
Department and General Administration Department.
 
Article 36: The Joint Venture shall have a General Manager appointed by the
Board of Directors.
 
Article 37: General Manager shall report to the Board of Directors to execute
decisions thereof and manage daily manufacturing, technical, operation and
management.
 
Article 38: General Manager shall have three years of term of office and can
continue in office if re-appointed by the Board of Directors. Deputy General
Manager, Chief Engineer and CFO shall be nominated by General Manager and
appointed or dismissed by the Board of Directors.
 
Article 39: Chairman or any director can also serve as General Manager or other
senior positions after appointed by the Board of Directors.
 
Article 40: General Manager shall not take office as general manager of other
economic organizations and shall not take part in commercial competition
conducted by other economic organizations against the Joint Venture.
 
Article 41: General Manager Assistant as well as director or above as set in the
Joint Venture shall be nominated by General Manager and appointed or dismissed
by the Board of Directors.
 
Article 42: Senior management staff such as engineers and accountants shall be
under the Management of General Manager.
 
Article 43: When General Manager and other senior management personnel resign,
they shall submit prior written report to the Board of Directors before
resignation.
 
The above-mentioned personnel shall be dismissed after resolution is made by the
Board of Directors in case of graft, serious dereliction of duty or serious
breaching of management system of the Joint Venture. 

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Chapter 9   Legal Representative of the Company
 
Article 44: The Legal Representative of the Company is held by the Chairman

Chapter 10   Materials, Equipment Purchases and Land Use
 
Article 45: Materials, component parts, transportation vehicles and office
supplies needed by the Joint Venture shall be purchased in China with the same
quality.
 
Article 46: When the Joint Venture entrusts Party A with the purchase of
equipments in foreign markets, Party B shall be invited to involve in the
purchase.
 
   Article 47: The Joint Venture shall be responsible for entering into the land
use contract with respect to the area and scope of the land needed by the Joint
Venture by the approval of the land authority.

Chapter 11 Labor Management

    Article 48: the Joint Venture and the trade union of the Joint Venture shall
enter into, collectively or individually, labor contracts between employees of
the Joint Venture with respect to issues such as their employments, dismissals,
wages, labor insurances, welfares and incentives according to the “Labor Law of
the People’s Republic of China” and other relevant provisions guided by a
program set up by the Board of Directors. Such labor contracts shall be filed
with the local labor management department after signing.

Chapter 12 Taxation, Finance, Auditing, Foreign Exchange

Article 49: the Joint Venture and its employees should pay all the taxes in
accordance with relevant laws and regulations of China.
 
Article 50: All the matters concerning foreign exchange of the Joint Venture
shall be executed in accordance with the “Regulations on the Foreign Exchange
System of the People’s Republic of China” and the relevant regulations.
 
Article 51: In accordance with the “Foreign Enterprise Law of the People’s
Republic of China”, the Joint Venture shall extract all sorts of funds, the
ratio of which shall be discussed and determined by the Board of Directors based
on business situation of the Company.
 
Article 52: the Joint Venture’s fiscal year is from January 1 to December 31
each year. All accounting vouchers, receipts, reports, books shall be written in
Chinese.
 
Article 53: the Joint Venture shall engage in the accountants registered in
China to review and audit its finance, and report to the Board of Directors and
the General Manager on the results.
 
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If any party of Party A, B and C think it necessary to individually engage in an
accountant registered in China to carry out the review and auditing, the Joint
Venture will consent to it, however, all the expenses required will be borne by
that party.
 
Article 54: The General Manager shall organize the preparation of the balance
sheet, profit and loss statement and profit distribution plan for the previous
year in the first three months of each fiscal year, and submit to the Board
meeting for review and approval.
 
Article 55: If the Joint Venture’s foreign exchange cannot be balanced, Party A,
B, C will distribute the profits in RMB.

Chapter 13  Duration of the Joint Venture

Article 56: The duration of the Joint Venture is 20 years. The incorporation
date of the Joint Venture is the date on which the Joint Venture’s business
license is issued.
 
Each of the parties may propose, by the unanimous passing in the Board meeting,
to apply to the original approval authority for the extension of the duration of
the Joint Venture six months before its expiry.

Chapter 14 Properties Treatment upon Expiry of the Joint Venture

Article 57: If the Joint Venture expires on its duration or early termination,
it shall be liquidated in accordance with the laws and regulations of the
People’s Republic of China. Properties upon liquidation shall be allocated among
Party A, B and C in proportion to their investments.

Chapter 15 Insurance

     Article 58: The Joint Venture shall cover all of its insurances in an
insurance institution in the People’s Republic of China. The insurance cover,
insurance value and the insurance period shall be discussed and determined by
the Board meeting of the Joint Venture in accordance with relevant provisions.
 
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Chapter 16 Amendment, Alteration and Termination of the Contract

Article 59: The amendments of the contract and other appendices shall come into
force only after a written agreement has been reached among Party A, Party B and
Party C and approved by the original Examination and Approval Authority.
 
Article 60: In case of inability to fulfill the contract as a result of force
majeure, or to continue operation due to heavy losses of the joint venture
company in successive years, the duration of the joint venture and the contract
shall be terminated prior to the time of expiration after being unanimously
agreed upon by the board of directors and approved by the original Examination
and Approval Authority.
 
Article 61: Should the joint venture company be unable to continue its operation
or achieve its business purpose hereto due to the fact that one of the
contracting parties fails to fulfill the obligations prescribed by the contract
and By-law, or seriously violates the provisions of the contract and By-law,
that party shall be deemed to have unilaterally terminated the contract, for
which, the observant party shall have the right to terminate the contract in
accordance with the provisions of the contract after approval by the original
Examination and Approval Authority, and to claim damages. In case Party A, Party
B and Party C of the joint venture company agree to continue the operation, the
party who fails to fulfill its obligations shall be liable for the economic
losses caused thereby to the joint venture company.
 
 
Chapter 17 Liability for Breach of Contract

Article 62: Should any Party A, Party B and Party C fail to pay on schedule the
contributions in accordance with the provisions defined in Chapter 5 of this
contract, the party in breach shall be subject to the Law of the PRC on
Chinese-Foreign Equity Joint Ventures, relevant laws and regulations.

Article 63: Should all or part of the contract and its appendices be unable to
be fulfilled owing to the fault of one party, the party in breach shall bear the
liability therefore. Should it be the fault of the three parties, they shall
bear their respective liabilities according to the actual situation.
 
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Chapter18   Force Majeure
 
Article 64: Should any of the parties to the contract be prevented from
executing the contract by force majeure, such as earthquake, typhoon, flood,
fire, war or other unforeseen events for which the occurrences and consequences
are unpreventable and unavoidable, the prevented party shall notify the other
parties by telegram without any delay, and within 15 days thereafter provide
detailed information of the events and a valid document for evidence issued by
the relevant public notary organization explaining the reason of its inability
to execute or delay the execution of all or part of the contract. The three
parties shall, through consultations, decide whether to terminate the contract
or to exempt part of the obligations for implementation of the contract or
whether to delay the execution of the contract according to the effects of the
events on the performance of the contract.
 
Chapter 19  Applicable Law
 
Article 65: The formation, validity, interpretation, execution and settlement of
disputes in respect of this contract shall be governed by the relevant laws of
the People s Republic of China.
 
 
Article 66: Any disputes arising from the execution of, or in connection with,
the contract shall be settled through friendly consultations among the three
parties. In case no settlement can be reached through consultations, the
disputes shall be submitted to the China International Economic and Trade
Arbitration Commission for arbitration in accordance with its rules of
procedure. The arbitral award is final and binding upon all parties.
 
Article 67: During the arbitration, the contract shall be observed and enforced
by all parties except for the matters in dispute.
 
Chapter 20   Effectiveness of the Contract and Miscellaneous
 
Article 68: The contract and its appendices are compiled in Chinese.
 
Article 69: The ancillary agreements drawn up in accordance with the principles
of this contract are integral parts of this contract, including By-law of the
Joint Venture.
 
Article 70: The contract and its appendices shall come into force commencing
from the date of approval of the Ministry of Foreign Trade and Economic
Cooperation of the People s Republic of China (or its entrusted examination and
approval authority).
 
Article 71: Should notices in connection with any party’s rights and obligations
be sent by any Party by telegram or fax, etc., the written letter notices shall
be also required afterwards. The legal addresses of Party A, Party B and Party C
listed in this contract shall be the posting addresses thereof.
 
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(This page contains no text and be only used for signature regarding the Joint
Venture Contract)

 

 
Party A: ZAP
Signature of Legal representative:
 
/s/ Steven M. Schneider

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Party B: BETTER WORLD LIMITED
Signature of Legal representative:
 
/s/ Priscilla Lu  

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Party C: Holley Group Co., Ltd.
Signature of Legal representative:
 
/s/ Richard Wong 

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Date of signature: December 11, 2009

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