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    EXHIBIT
10.1

    
 

    SETTLEMENT  AGREEMENT
FOR SENIOR CONVERTIBLE NOTE

     

    This
SETTLEMENT (this "Settlement Agreement"), dated December 5, 2008, is entered
into by and between ZAP, Inc., a California corporation (the
"Company")  and AL YOUSUF LLC (hereafter, jointly and individually
referred to as "Releasing Party"). The Company and Releasing Party are sometimes
referred to hereafter as a "Party" or collectively as the
"Parties".

     

    WITNESSETH:

     

    WHEREAS,
the Company and Releasing Party entered into a Securities Purchase Agreement
dated May 8, 2008 (the "Note Purchase Agreement"), whereby Releasing Party
purchased a 8% Senior Convertible Note (the "8% Senior Convertible Note"). The
note has a principle amount of $475,000 plus interest due on November 8,
2008.

     

    WHEREAS,
Releasing Party and the Company mutually wish to terminate and cancel, the 8%
Senior Convertible Note.

     

    WHEREAS,
the parties hereto have agreed to provide for the terms of the cancellation of
the Agreements by entering into this Settlement Agreement.

     

    NOW,
THEREFORE, in consideration of the premises set forth above, and the mutual
covenants set forth in this Settlement Agreement, and intending to be legally
bound hereby, the parties do hereby agree as follows:

     

    


     

    ARTICLE
I

     

    SETTLEMENT;
REPRESENTATIONS AND WARRANTIES

     

    1.1           Settlement
Amount. In consideration of the release by Releasing Party of the Company
from any and all known liabilities concerning and/or arising from the Agreements
and all the transactions, obligations or commitments made in the Agreements, the
Company hereby agrees to issue to Releasing Party 2,140,974  shares of
common stock in connection with the conversion of outstanding debt and interest
due, pursuant to the 8% Convertible Note payable within 5 business days from the
date hereof (the consideration described herein this paragraph 1.1 shall be
referred to herein as, the "Settlement Amount"). It is expressly acknowledged
and agreed that the Company's obligation to make the payment is due and payable
to Releasing Party by the stated deadline. It is expressly acknowledged and
agreed between the parties that the Company shall have no other obligations
(including to make any other monetary payments or provide any other type of
consideration or compensation) in connection with this Settlement Agreement. The
Releasing Party hereby confirms that such Purchaser has not transferred to any
other person, entity, association, affiliate or the like any of the Agreements,
or underlying securities acquired by such Releasing Party pursuant to the
Agreements, and shall return to the Company original copy of the 8% Senior
Convertible Note within 5 business days from the date hereof.

     

     

     

    
 

     

    [Signature
page to follows]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF,
the Parties have executed this Settlement Agreement on the date first
above written.

     

     

    
      
        	 	ZAP	 
	 	a
      California corporation	 
	 	 	 
	 	 	 	 
	
              	
                By:
      

              	/s/ Steven
      Schneider	 
	 	 	Name: Steven
      Schneider	 
	 	 	Title:  
      Chief Executive Officer	 
	 	 	 	 


      

    

     

     

     

     

    
      
        	AL YOUSUF LLC	 
	 	 
	 	 	 
	
                By:
      

              	/s/ Eqbal Al Yousuf	 
	 	Name:
      Eqbal Al Yousuf, President