EXHIBIT 10.3
 
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF
ANY STATE. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN
EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE, TRANSFER,
PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. THIS WARRANT MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER
AGENT AS A CONDITION PRECEDENT TO THE SALE, TRANSFER, PLEDGE OR HYPOTHECATION OF
ANY INTEREST IN ANY OF THE SECURITIES REPRESENTED HEREBY.
 
WARRANT TO PURCHASE SHARES OF COMMON STOCK
of
ZAP

Dated as of January 12, 2011
Void after the date specified in Section 8

 
Warrant to Purchase
20,000,000 Shares of
Common Stock
 

 
THIS CERTIFIES THAT, for value received, China Electric Vehicle Corporation, a
British Virgin Island company, or its registered assigns (the “Holder”), is
entitled, subject to the provisions and upon the terms and conditions set forth
herein, to purchase from ZAP, a California corporation (the “Company”), shares
of the Company’s Common Stock (the “Shares”), in the amounts, at such times and
at the price per share set forth in Section 1. The term “Warrant” as used herein
shall include this Warrant and any warrants delivered in substitution or
exchange therefor as provided herein. This Warrant is issued in connection with
the transactions described in the Securities Purchase Agreement, dated as of the
date hereof, by and among the Company and the Holder (the “Purchase
Agreement”).  This is the warrant defined in the Purchase Agreement as the
“First Warrant.”
 
The following is a statement of the rights of the Holder and the conditions to
which this Warrant is subject, and to which Holder, by acceptance of this
Warrant, agrees:
 
1. Number and Price of Shares; Exercise Period.
 
(a) Number of Shares. Subject to any previous exercise of the Warrant, the
Holder shall have the right to purchase the number of Shares that equals the
quotient obtained by dividing (x) the Warrant Coverage Amount (as defined below)
by (y) the Exercise Price (as defined below), prior to (or in connection with)
the expiration of this Warrant as provided in Section 8.
 
(b) Warrant Coverage Amount. The “Warrant Coverage Amount” shall be equal to ten
million dollars ($10,000,000.00).
 
(c) Exercise Price.  The exercise price per Share shall initially be equal to
$0.50, subject to adjustment pursuant hereto (the “Exercise Price”).
 
 

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(d) Exercise Period. This Warrant shall be exercisable, in whole or in part, at
any time prior to (or in connection with) the expiration of this Warrant as set
forth in Section 8.
 
2. Exercise of the Warrant.
 
(a) Exercise. The purchase rights represented by this Warrant may be exercised
at the election of the Holder, in whole or in part, in accordance with
Section 1, by:
 
(i) the tender to the Company at its principal office (or such other office or
agency as the Company may designate) of a notice of exercise in the form of
Exhibit A (the “Notice of Exercise”), duly completed and executed by or on
behalf of the Holder, together with the surrender of this Warrant; and
 
(ii) the payment to the Company of an amount equal to (x) the Exercise Price
multiplied by (y) the number of Shares being purchased, by (a) wire transfer or
certified, cashier’s or other check acceptable to the Company and payable to the
order of the Company; (b) surrender and cancellation of promissory notes or
other instruments representing indebtedness of the Company to the Holder; or
(c) a combination of (a) and (b).
 
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(b) Stock Certificates. The rights under this Warrant shall be deemed to have
been exercised and the Shares issuable upon such exercise shall be deemed to
have been issued immediately prior to the close of business on the date this
Warrant is exercised in accordance with its terms, and the person entitled to
receive the Shares issuable upon such exercise shall be treated for all purposes
as the holder of record of such Shares as of the close of business on such date.
As promptly as reasonably practicable on or after such date, and in any event
within thirty (30) days thereafter, the Company shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
that number of shares issuable upon such exercise. In the event that the rights
under this Warrant are exercised in part and have not expired, the Company shall
execute and deliver a new Warrant reflecting the number of Shares that remain
subject to this Warrant.
 
(c) No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of the rights under this
Warrant. In lieu of such fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
 
(d) Conditional Exercise. The Holder may exercise this Warrant conditioned upon
(and effective immediately prior to) consummation of any transaction that would
cause the expiration of this Warrant pursuant to Section 8 by so indicating in
the notice of exercise.
 
(e) Automatic Exercise. If the Holder of this Warrant has not elected to
exercise this Warrant prior to expiration of this Warrant pursuant to Section 8,
then this Warrant shall automatically (without any act on the part of the
Holder) be exercised pursuant to Section 2(b) effective immediately prior to the
expiration of the Warrant to the extent such net issue exercise would result in
the issuance of Shares, unless Holder shall earlier provide written notice to
the Company that the Holder desires that this Warrant expire unexercised. If
this Warrant is automatically exercised, the Company shall notify the Holder of
the automatic exercise as soon as reasonably practicable, and the Holder shall
surrender the Warrant to the Company in accordance with the terms hereof.
 
(f) Forced Exercise.  If (i) a registration is demanded by Holder pursuant to
that certain Registration Rights Agreement dated as of the date hereof by and
among the Holder and the Company, (ii) the volume weighted average sales price
per share of the Common Stock (as reported, absent manifest error, on the OTCBB
or any other internationally recognized exchange or market upon which the Common
Stock is then listed) for the thirty (30) Trading Days prior to the effective
date of such registration statement is equal to or greater than $1.00 per share
and (iii) the Company delivers a written notice to Holder stating its intent to
force the Holder to exercise this Warrant under this Section 2(g) within ten
(10) business days of Holder demanding a registration, then, contingent upon
such registration statement being declared effective, Holder shall exercise this
Warrant for at least that number of shares of Common Stock equal to twenty-five
percent (25%) of the Warrant Coverage Amount divided by the Exercise Price;
provided, however, that the Company shall be able to force the Holder to
exercise this Warrant under this Section 2(g) one (1) time only.
 
(g) Reservation of Stock. The Company agrees during the term the rights under
this Warrant are exercisable to reserve and keep available from its authorized
and unissued shares of common stock solely for the purpose of effecting the
exercise of this Warrant such number of shares as shall from time to time be
sufficient to effect the exercise of the rights under this Warrant; and if at
any time the number of authorized but unissued shares of common stock shall not
be sufficient for purposes of the exercise of this
 
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Warrant in accordance with its terms, without limitation of such other remedies
as may be available to the Holder, the Company will use its best efforts to take
such corporate action as may be necessary to increase its authorized and
unissued shares of its common stock to a number of shares as shall be sufficient
for such purposes. The Company represents and warrants that all shares that may
be issued upon the exercise of this Warrant will, when issued in accordance with
the terms hereof, be validly issued, fully paid and nonassessable.
 
3. Replacement of the Warrant. Subject to the receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at the expense of the Holder shall execute and deliver, in lieu of
this Warrant, a new warrant of like tenor and amount.
 
4. Transfer of the Warrant.
 
(a) Warrant Register. The Company shall maintain a register (the “Warrant
Register”) containing the name and address of the Holder or Holders. Until this
Warrant is transferred on the Warrant Register in accordance herewith, the
Company may treat the Holder as shown on the Warrant Register as the absolute
owner of this Warrant for all purposes, notwithstanding any notice to the
contrary. Any Holder of this Warrant (or of any portion of this Warrant) may
change its address as shown on the Warrant Register by written notice to the
Company requesting a change.
 
(b) Warrant Agent. The Company may appoint an agent for the purpose of
maintaining the Warrant Register referred to in Section 4(a), issuing the Shares
or other securities then issuable upon the exercise of the rights under this
Warrant, exchanging this Warrant, replacing this Warrant or conducting related
activities.
 
(c) Transferability of the Warrant. Subject to the provisions of this Warrant
with respect to compliance with the Securities Act of 1933, as amended (the
“Securities Act”) and limitations on assignments and transfers, including
without limitation compliance with the restrictions on transfer set forth in
Section 5, title to this Warrant may be transferred by endorsement (by the
transferor and the transferee executing the assignment form attached as
Exhibit B (the “Assignment Form”)) and delivery in the same manner as a
negotiable instrument transferable by endorsement and delivery.
 
(d) Exchange of the Warrant upon a Transfer. On surrender of this Warrant (and a
properly endorsed Assignment Form) for exchange, subject to the provisions of
this Warrant with respect to compliance with the Securities Act and limitations
on assignments and transfers, the Company shall issue to or on the order of the
Holder a new warrant or warrants of like tenor, in the name of the Holder or as
the Holder (on payment by the Holder of any applicable transfer taxes) may
direct, for the number of shares issuable upon exercise hereof, and the Company
shall register any such transfer upon the Warrant Register. This Warrant (and
the securities issuable upon exercise of the rights under this Warrant) must be
surrendered to the Company or its warrant or transfer agent, as applicable, as a
condition precedent to the sale, pledge, hypothecation or other transfer of any
interest in any of the securities represented hereby.
 
(e) Taxes. In no event shall the Company be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of any
certificate in a name other than that of the Holder, and the Company shall not
be required to issue or deliver any such certificate unless and until the person
or persons requesting the issue thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid or is not payable.
 
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5. Restrictions on Transfer of the Warrant and Shares; Compliance with
Securities Laws. By acceptance of this Warrant, the Holder agrees to comply with
the following:
 
(a) Restrictions on Transfers. Subject to Section 5(b), this Warrant may not be
transferred or assigned in whole or in part without the Company’s prior written
consent (which shall not be unreasonably withheld), and any attempt by Holder to
transfer or assign any rights, duties or obligations that arise under this
Warrant without such permission shall be void. Any transfer of this Warrant or
the Shares (the “Securities”) must be in compliance with all applicable federal
and state securities laws. The Holder agrees not to make any sale, assignment,
transfer, pledge or other disposition of all or any portion of the Securities,
or any beneficial interest therein, unless and until the transferee thereof has
agreed in writing for the benefit of the Company to take and hold such
Securities subject to, and to be bound by, the terms and conditions set forth in
this Warrant to the same extent as if the transferee were the original Holder
hereunder, and
 
(i) there is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement, or
 
(ii) (A) the Holder shall have given prior written notice to the Company of the
Holder’s intention to make such disposition and shall have furnished the Company
with a detailed description of the manner and circumstances of the proposed
disposition and, with respect to any transfer of this Warrant, except for those
dispositions set forth in Section 5(b) below, the Company shall have provided
the Holder with prior written approval of such disposition (which approval shall
not be unreasonably withheld, conditioned or delayed) and (B) if requested by
the Company, other than as set forth in Section 5(b) below, the Holder shall
have furnished the Company, at the Holder’s expense, with evidence reasonably
satisfactory to the Company (including, if requested by the Company, an opinion
of counsel to the Holder) that such disposition will not require registration of
such Securities under the Securities Act.  It is agreed that the Company will
not require opinions of counsel for transactions made pursuant to Rule 144 under
the Securities Act, except in unusual circumstances.
 
(b) Permitted Transfers. Permitted transfers include (i) a transfer not
involving a change in beneficial ownership, or (ii) transactions involving the
distribution without consideration of Securities by any Holder to (x) a parent,
subsidiary or other affiliate of a Holder that is a corporation, (y) any of the
Holder’s partners, members or other equity owners, or retired partners or
members, or to the estate of any of its partners, members or other equity owners
or retired partners or members, or (z) a venture capital fund that is controlled
by or under common control with one or more general partners or managing members
of, or shares the same management company with, the Holder; provided, in each
case, that the Holder shall give written notice to the Company of the Holder’s
intention to effect such disposition and shall have furnished the Company with a
detailed description of the manner and circumstances of the proposed
disposition.
 
(c) Securities Law Legend. The Securities shall (unless otherwise permitted by
the provisions of this Warrant) be stamped or imprinted with a legend
substantially similar to the following (in addition to any legend required by
state securities laws):
 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN
EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. THIS CERTIFICATE MUST BE SURRENDERED TO THE COMPANY OR ITS
TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, TRANSFER, PLEDGE OR
HYPOTHECATION OF ANY INTEREST IN ANY OF THE SECURITIES REPRESENTED HEREBY.
 
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(d) Instructions Regarding Transfer Restrictions. The Holder consents to the
Company making a notation on its records and giving instructions to any transfer
agent in order to implement the restrictions on transfer established in this
Section 5.
 
(e) Removal of Legend. The legend referring to federal and state securities laws
identified in Section 5(c) stamped on a certificate evidencing the Shares and
the stock transfer instructions and record notations with respect to such
securities shall be removed and the Company shall issue a certificate without
such legend to the holder of such securities if (i) such securities are
registered under the Securities Act, or (ii) such holder provides the Company
with an opinion of counsel reasonably acceptable to the Company to the effect
that a sale or transfer of such securities may be made without registration or
qualification.
 
6. Adjustments. Subject to the expiration of this Warrant pursuant to Section 8,
the number and kind of shares purchasable hereunder and the Exercise Price
therefor are subject to adjustment from time to time, as follows:
 
(a) Merger or Reorganization. If at any time there shall be any reorganization,
recapitalization, merger or consolidation (a “Reorganization”) involving the
Company (other than as otherwise provided for herein or as would cause the
expiration of this Warrant under Section 8) in which shares of the Company’s
stock are converted into or exchanged for securities, cash or other property,
then, as a part of such Reorganization, lawful provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, the kind and amount of securities, cash or other property of the
successor corporation resulting from such Reorganization, equivalent in value to
that which a holder of the Shares deliverable upon exercise of this Warrant
would have been entitled in such Reorganization if the right to purchase the
Shares hereunder had been exercised immediately prior to such Reorganization. In
any such case, appropriate adjustment (as determined in good faith by the Board
of Directors of the successor corporation) shall be made in the application of
the provisions of this Warrant with respect to the rights and interests of the
Holder after such Reorganization to the end that the provisions of this Warrant
shall be applicable after the event, as near as reasonably may be, in relation
to any shares or other securities deliverable after that event upon the exercise
of this Warrant.
 
(b) Reclassification of Shares. If the securities issuable upon exercise of this
Warrant are changed into the same or a different number of securities of any
other class or classes by reclassification, capital reorganization or otherwise
(other than as otherwise provided for herein) (a “Reclassification”), then, in
any such event, in lieu of the number of Shares which the Holder would otherwise
have been entitled to receive, the Holder shall have the right thereafter to
exercise this Warrant for a number of shares of such other class or classes of
stock that a holder of the number of securities deliverable upon exercise of
this Warrant immediately before that change would have been entitled to receive
in such Reclassification, all subject to further adjustment as provided herein
with respect to such other shares.
 
(c) Subdivisions and Combinations. In the event that the outstanding shares of
common stock are subdivided (by stock split, by payment of a stock dividend or
otherwise) into a greater number of shares of such securities, the number of
Shares issuable upon exercise of the rights under this Warrant immediately prior
to such subdivision shall, concurrently with the effectiveness of such
subdivision, be proportionately increased, and the Exercise Price shall be
proportionately decreased, and in the event that the outstanding shares of
common stock are combined (by reclassification or otherwise) into a lesser
number of shares of such securities, the number of Shares issuable upon exercise
of the rights under this Warrant immediately prior to such combination shall,
concurrently with the effectiveness of such combination, be proportionately
decreased, and the Exercise Price shall be proportionately increased.
 
(d) Dilutive Issuances.  (i) If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the issue or
sale of the Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
 
 
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(ii) In the event that an event would result in an adjustment to the Exercise
Price under Sections 6(a), 6(b) or 6(c) and also under this Section 6(d) an
adjustment shall be made under only such applicable paragraph that results in
the lowest Exercise Price.
 
(e) Notice of Adjustments. Upon any adjustment in accordance with this
Section 6, the Company shall give notice thereof to the Holder, which notice
shall state the event giving rise to the adjustment, the Exercise Price as
adjusted and the number of securities or other property purchasable upon the
exercise of the rights under this Warrant, setting forth in reasonable detail
the method of calculation of each. The Company shall, upon the written request
of any Holder, furnish or cause to be furnished to such Holder a certificate
setting forth (i) such adjustments, (ii) the Exercise Price at the time in
effect and (iii) the number of securities and the amount, if any, of other
property that at the time would be received upon exercise of this Warrant.
 
7. Notification of Certain Events. Prior to the expiration of this Warrant
pursuant to Section 8, in the event that the Company shall authorize:
 
(a) the issuance of any dividend or other distribution on the capital stock of
the Company (other than (i) dividends or distributions otherwise provided for in
Section 6, (ii) repurchases of common stock issued to or held by employees,
officers, directors or consultants of the Company or its subsidiaries upon
termination of their employment or services pursuant to agreements providing for
the right of said repurchase; (iii) repurchases of common stock issued to or
held by employees, officers, directors or consultants of the Company or its
subsidiaries pursuant to rights of first refusal or first offer contained in
agreements providing for such rights; or (iv) repurchases of capital stock of
the Company in connection with the settlement of disputes with any stockholder),
whether in cash, property, stock or other securities; or
 
(b) the voluntary liquidation, dissolution or winding up of the Company.
 
the Company shall send to the Holder of this Warrant at least ten (10) days
prior written notice of the date on which a record shall be taken for any such
dividend or distribution specified in clause (a) or the expected effective date
of any such other event specified in clause (b). The notice provisions set forth
in this section may be shortened or waived prospectively or retrospectively by
the consent of the Holder of this Warrant.
 
8. Expiration of the Warrant. This Warrant shall expire and shall no longer be
exercisable as of 5:00 p.m., Pacific time, on the two year anniversary of the
date of issuance of this Warrant.
 
9. No Rights as a Stockholder. Nothing contained herein shall entitle the Holder
to any rights as a stockholder of the Company or to be deemed the holder of any
securities that may at any time be issuable on the exercise of the rights
hereunder for any purpose nor shall anything contained herein be construed to
confer upon the Holder, as such, any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, merger, conveyance or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or
any other rights of a stockholder of the Company until the rights under the
Warrant shall have been exercised and the Shares purchasable upon exercise of
the rights hereunder shall have become deliverable as provided herein.
 
10. Definitions.  Capitalized terms used in this Warrant and not otherwise
defined have the meanings given to them in the Purchase Agreement.  Unless
otherwise defined in this Warrant, the following capitalized terms shall have
the following respective meanings when used herein:
 
“Approved Stock Plan” means the Company’s 2008 Equity Compensation Plan, 2007
Equity Compensation Plan, 2006 Incentive Stock Plan, 2002 Incentive Stock Plan,
1999 Incentive Stock Plan, each as may be amended from time to time, or any
employee benefit plan, stock grant, stock option or purchase plan, or stock
option exchange plan or other employee stock incentive or similar agreement
approved by the Board of Directors of the Company and the Holder in writing
pursuant to which the Company's securities may be issued to any officers,
directors, or employees of, or consultants to, the Company for services provided
thereto.
 
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“Common Stock” means the Common Stock, no par value per share, of the Company
authorized at the date of this Warrant as originally executed.
 
“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
Common Stock.
 
“Excluded Securities” means any Common Stock issued or issuable: (i) in
connection with any Approved Stock Plan or to vendors or service providers that
have a relationship with the Company as of the date hereof, provided that the
aggregate number of shares issued or issuable in connection with any Approved
Stock Plan and issued or issuable to such vendors and service providers shall
not exceed 30 million shares; (ii) to Steven Schneider in accordance with
Section 4.25 of the Securities Purchase Agreement; (iii) upon conversion of the
Note or the exercise of the warrants issued to Holder pursuant to the Purchase
Agreement; (iv) upon conversion of any Options or Convertible Securities (other
than any Options issued pursuant to an Approved Stock Plan) which are
outstanding on the day immediately preceding the date hereof, provided that the
terms of such Options or Convertible Securities are not amended, modified or
changed on or after the date of issuance of this Warrant; or (v) in other
transactions so long as the consideration payable in any such transaction does
not exceed $500,000 and the aggregate consideration payable in all such
transactions does not exceed $1,500,000 during any twelve (12) month
period.  For purposes of this definition, the consideration payable in a
transaction shall be determined pursuant to Section 6(d)(iv).
 
“Options” means any rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.
 
“Trading Day” means (i) if the Common Stock is admitted to trading on the Nasdaq
Stock Market or any other system of automated dissemination of quotations of
securities prices, a day on which trades may be effected through such system;
(ii) if the Common Stock is listed or admitted for trading on the New York Stock
Exchange or any other national securities exchange, a day on which such exchange
is open for business; or (iii) if the Common Stock is not admitted to trading on
the Nasdaq Stock Market or listed or admitted for trading on any national
securities exchange or any other system of automated dissemination of quotation
of securities prices, a day on which the Common Stock is traded regular way in
the over-the-counter market and for which a closing bid and a closing asked
price for the Common Stock are available.
 
11. Miscellaneous.
 
(a) Amendments. Except as expressly provided herein, neither this Warrant nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument referencing this Warrant and signed by the Company and the
Holder.
 
(b) Waivers. No waiver of any single breach or default shall be deemed a waiver
of any other breach or default theretofore or thereafter occurring.
 
(c) Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, sent by facsimile or electronic mail (if to the Holder)
or otherwise delivered by hand, messenger or courier service addressed:
 
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(i) if to the Holder, to the Holder at the Holder’s address, facsimile number or
electronic mail address as shown in the Company’s records, as may be updated in
accordance with the provisions hereof, or until any such Holder so furnishes an
address, facsimile number or electronic mail address to the Company, then to and
at the address, facsimile number or electronic mail address of the last holder
of this Warrant for which the Company has contact information in its records; or
 
(ii) if to the Company, to the attention of the Chief Financial Officer of the
Company at 501 4th Street, Santa Rosa, California 95401, or at such other
address as the Company shall have furnished to the Holder.
 
Each such notice or other communication shall for all purposes of this Warrant
be treated as effective or having been given (i) if delivered by hand, messenger
or courier service, when delivered, or (ii) if sent by mail, at the earlier of
its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid, or (iii) if sent by facsimile, upon confirmation of
facsimile transfer or, if sent by electronic mail, upon confirmation of delivery
when directed to the relevant electronic mail address. In the event of any
conflict between the Company’s books and records and this Warrant or any notice
delivered hereunder, the Company’s books and records will control absent fraud
or error.
 
(d) Governing Law. This Warrant and all actions arising out of or in connection
with this Warrant shall be governed by and construed in accordance with the laws
of the State of California, without regard to the conflicts of law provisions of
the State of California, or of any other state.
 
(e) Titles and Subtitles. The titles and subtitles used in this Warrant are used
for convenience only and are not to be considered in construing or interpreting
this Warrant. All references in this Warrant to sections, paragraphs and
exhibits shall, unless otherwise provided, refer to sections and paragraphs
hereof and exhibits attached hereto.
 
(f) Severability. If any provision of this Warrant becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, portions
of such provision, or such provision in its entirety, to the extent necessary,
shall be severed from this Warrant, and such illegal, unenforceable or void
provision shall be replaced with a valid and enforceable provision that will
achieve, to the extent possible, the same economic, business and other purposes
of the illegal, unenforceable or void provision. The balance of this Warrant
shall be enforceable in accordance with its terms.
 
(g) Saturdays, Sundays and Holidays. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall be
a Saturday, Sunday or U.S. federal holiday, then such action may be taken or
such right may be exercised on the next succeeding day that is not a Saturday,
Sunday or U.S. federal holiday.
 
(h) Entire Agreement. Except as expressly set forth herein, this Warrant
(including the exhibits attached hereto) along with the other Transaction
Documents (as defined in the Purchase Agreement) constitute the entire agreement
and understanding of the Company and the Holder with respect to the subject
matter hereof and supersede all prior agreements and understandings relating to
the subject matter hereof.
 
(signature page follows)
 
 
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The Company signs this Warrant as of the date stated on the first page.
 
 
ZAP

 
a California corporation
 
 
By: /s/ Steven Schneider
 
Name: Steven Schneider
 
Title: Chief Executive Officer
 

                                                               

                                                               

                                                                          

 
(Signature Page to Warrant to Purchase Shares of Common Stock of ZAP)

 
 
 

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EXHIBIT A
 
NOTICE OF EXERCISE
 

To: ZAP (the “Company”)
 
Attention: Chief Executive Officer
 
Holder: _______________________                     
 
Date: _________________________

 
(1)  
Exercise. The undersigned elects to purchase the following pursuant to the terms
of the attached warrant:

 
Number of shares: ___________________
 
Type of security: ____________________
 
(2)  
Method of Exercise. The undersigned elects to exercise the attached warrant
pursuant to:

 
 

A cash payment or cancellation of indebtedness, and tenders herewith payment of
the purchase price for such shares in full, together with all applicable
transfer taxes, if any.

 

(3)  
Conditional Exercise. Is this a conditional exercise pursuant to Section 2(e):

 
 

Yes

No

 
 
If “Yes,” indicate the applicable condition:

 
 
____________________________________________________________________________]

 
(4)  
Stock Certificate. Please issue a certificate or certificates representing the
shares in the name of:

 
 

The undersigned

 
 

Other—Name: ________________________________________________
   

 

 
Address: ______________________________________________
 

 
 
A-1
 

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(5)  
Unexercised Portion of the Warrant. Please issue a new warrant for the
unexercised portion of the attached warrant in the name of:

 
 

The undersigned

 
 

Other—Name: ________________________________________________
   

 

 
Address: ______________________________________________
 

 
 

Not applicable

 
 

 
HOLDER

 

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(Print name of the warrant holder)
 
 

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(Signature)
 

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(Name and title of signatory, if applicable)
 

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(Date)
 

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(Fax number)
 

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(Email address)
 

 
 
A-2
 

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EXHIBIT B
 
ASSIGNMENT FORM
 
ASSIGNOR:
______________________________________   

 
COMPANY:
ZAP (THE “COMPANY”)

 
WARRANT:
THE WARRANT TO PURCHASE SHARES OF COMMON STOCK ISSUED ON JANUARY 12, 2011 (THE
“WARRANT”)

DATE:
______________________________________

 
(1)  
Assignment. The undersigned registered holder of the Warrant (“Assignor”)
assigns and transfers to the assignee named below (“Assignee”) all of the rights
of Assignor under the Warrant, with respect to the number of shares set forth
below:

 
Name of Assignee: _____________________________________________________
 
Address of Assignee: ___________________________________________________
 
Number of Shares Assigned: _____________________________________________
 
and does irrevocably constitute and appoint ______________________ as attorney
to make such transfer on the books of the Company, maintained for the purpose,
with full power of substitution in the premises.
 
(2)  
Obligations of Assignee. Assignee agrees to take and hold the Warrant and any
shares of stock to be issued upon exercise of the rights thereunder (the
“Securities”) subject to, and to be bound by, the terms and conditions set forth
in the Warrant to the same extent as if Assignee were the original holder
thereof.

 
 
B-1
 

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Assignor and Assignee are signing this Assignment Form on the date first set
forth above.
 

ASSIGNOR
 
 

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(Print name of Assignor)
 
 

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(Signature of Assignor)
 
 

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(Print name of signatory, if applicable)
 
 

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        (Print title of signatory, if applicable)
 
 
 
Address:
 

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ASSIGNEE
 
 

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(Print name of Assignee)
 
 

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(Signature of Assignee)
 
 

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(Print name of signatory, if applicable)
 
 

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(Print title of signatory, if applicable)
 
 
 
Address:
 

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B-2
 

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