WWW.EXFILE.COM, INC. -- 888-775-4789 -- ZAP -- EXHIBIT 10.4 TO FORM 8-K


     

    
      Exhibit
10.4   Warrant to Purchase Common Stock dated June 9, 2009 issued
to The Banks Development Trust

    

     

    


    THIS WARRANT (THIS “WARRANT”)
AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS A REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE
WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER
OR SALE. THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF (I) MAY BE PLEDGED OR
HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN LOAN OR OTHER FINANCING
SECURED BY SUCH SECURITIES OR (II) MAY BE TRANSFERRED OR ASSIGNED TO AN
AFFILIATE OF THE HOLDER HEREOF WITHOUT THE NECESSITY OF AN OPINION OF COUNSEL OR
THE CONSENT OF THE ISSUER HEREOF.

     

    


     

    WARRANT

     

    TO
PURCHASE COMMON STOCK

    


    OF

     

    ZAP

     

    


     

    Issue
Date: June 9, 2009 Warrant No. 2

    


    THIS CERTIFIES that Ronald S. Berg,
Trustee of The Banks Development Trust or any permitted subsequent holder hereof
(the “Holder”),
has the right to purchase from ZAP, a California corporation (the “Company”),
up to Four Million (4,000,000) fully paid and nonassessable shares of the
Company’s common stock, no par value (the “Common
Stock”), subject to adjustment as provided herein, at a price per share
equal to the Exercise Price (as defined below), at any time and from time to
time beginning on the date on which this Warrant is issued (the “Issue
Date”) and ending at 5:00 p.m., Pacific Standard time, on June 1, 2014
or, if such day is not a Business Day, on the next succeeding Business Day (the
“Expiration
Date”). This Warrant is issued pursuant to a Subscription Agreement,
dated as of June 9, 2009 (the “Securities
Purchase Agreement”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Securities
Purchase Agreement.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.           EXERCISE.

    


    (a)           Right to Exercise; Exercise
Price.  The Holder shall have the right to exercise this
Warrant at any time and from time to time during the period beginning on the
Issue Date and ending at 5 p.m., Pacific Standard time, on the Expiration Date
as to all or any part of the shares of Common Stock covered hereby (the “Warrant
Shares”).  The “Exercise
Price” for each Warrant Share purchased by the Holder upon the exercise
of this Warrant shall be $0.50.

    


    (b)           Exercise
Notice.  In order to exercise this Warrant, the Holder shall
notify the Company at any time prior to 5:00 p.m., Pacific Standard time, on the
Business Day on which the Holder wishes to effect such exercise (the “Exercise
Date”), to the Company an executed copy of the notice of exercise in the
form attached hereto as Exhibit A
(the “Exercise
Notice”) and (ii) in the case of a Cash Exercise (as defined below),
deliver the Exercise Price to the Company by wire transfer of immediately
available funds.  The Holder shall promptly thereafter deliver the
original Warrant to the Company for cancellation (and replacement with a new
Warrant if exercised in part) pursuant to Section
1(d) of this Warrant.  Subject to Section
8(d), the Exercise Notice shall also state
the name or names in which the Warrant Shares issuable on such exercise shall be
issued if other than the Holder.

    


    (c)           Holder of
Record.  The Holder shall, for all purposes, be deemed to have
become the holder of record of the Warrant Shares specified in an Exercise
Notice on the Exercise Date specified therein, irrespective of the date of
delivery of such Warrant Shares. Except as specifically provided herein, nothing
in this Warrant shall be construed as conferring upon the Holder hereof any
rights as a stockholder of the Company prior to the Exercise Date.

    


    (d)           Cancellation of
Warrant.  This Warrant shall be canceled upon its exercise and,
if this Warrant is exercised in part, the Company shall, at the time that it
delivers Warrant Shares to the Holder pursuant to such exercise as provided
herein, issue a new warrant, and deliver to the Holder a certificate
representing such new warrant, with terms identical in all respects to this
Warrant (except that such new warrant shall be exercisable into the number of
shares of Common Stock with respect to which this Warrant shall remain
unexercised); provided,
however, that the Holder shall be entitled to exercise all or any portion
of such new warrant at any time following the time at which this Warrant is
exercised, regardless of whether the Company has actually issued such new
warrant or delivered to the Holder a certificate therefor.

    


    (e)           Stock Splits, Stock
Interests, Etc.  If, at any time on or after the Issue Date,
the number of outstanding shares of Common Stock is increased by a stock split,
stock dividend,  reclassification or other similar event, the Exercise
Price shall be proportionately reduced and the number of shares of Common Stock
shall be proportionately increased such that there shall have been no dilution
to Holder, or if the number of outstanding shares of Common Stock is decreased
by a reverse stock split, combination, reclassification or other similar event,
the Exercise Price shall be proportionately increased. The Company shall notify
the Holder and the Company’s transfer agent of such change.

     

    (1)                 Distributions.  If,
at any time after the Issue Date, the Company declares or makes any distribution
of cash or any other assets (or rights to acquire such assets) to holders of


     

    
      
         

      

      
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    Common
Stock, including without limitation any dividend or distribution to the
Company’s stockholders in shares (or rights to acquire shares) of capital stock
of a subsidiary) (a “Distribution”),
the Company shall deliver written notice of such Distribution (a “Distribution
Notice”) to the Holder at least fifteen (15) days prior to the earlier to
occur of (i) the record date for determining stockholders entitled to such
Distribution (the “Record
Date”) or (ii) the date on which such Distribution is made (the “Distribution
Date”) (the earlier of such dates being referred to as the “Determination
Date”).  Upon receipt of the Distribution Notice, the Holder
shall promptly (but in no event later than three (3) Business Days) notify the
Company whether it has elected (A) to receive the same amount and type of assets
(including, without limitation, cash) being distributed as though the Holder
were, on the Determination Date, a holder of a number of shares of Common Stock
into which this Warrant is exercisable as of such Determination Date (such
number of shares to be determined without giving effect to any limitations on
such exercise) or (B) upon any exercise of this Warrant on or after the
Distribution Date, to reduce the Exercise Price in effect on the Business Day
immediately preceding the Record Date by an amount equal to the fair market
value of the assets to be distributed divided by the number
of shares of Common Stock as to which such Distribution is to be made, such fair
market value to be reasonably determined in good faith by the independent
members of the Company’s Board of Directors.  Upon receipt of such
election notice from the Holder, the Company shall timely effectuate the
transaction or adjustment contemplated herein. Notwithstanding the foregoing, no
adjustment shall be made pursuant to this section if such adjustment would
result in an increase in the Exercise Price.

     

    
      
         

      

      
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    8.           MISCELLANEOUS.

     

    (a)           Failure to Exercise Rights
not Waiver.  No failure or delay on the part of the Holder in
the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude any other or further exercise thereof. All rights
and remedies of the Holder hereunder are cumulative and not exclusive of any
rights or remedies otherwise available. In the event that the Company breaches
any of its obligations hereunder to issue Warrant Shares or pay any amounts as
and when due, the Company shall bear all costs incurred by the Holder in
collecting such amount, including without limitation reasonable legal fees and
expenses.

     

    (b)           Notices. Any notice,
demand or request required or permitted to be given by the Company or the Holder
pursuant to the terms of this Warrant shall be in writing and shall be deemed
delivered (i) when delivered personally or by verifiable facsimile transmission,
unless such delivery is made on a day that is not a Business Day, in which case
such delivery will be deemed to be made on the next succeeding Business Day,
(ii) on the next Business Day after timely delivery to an overnight courier and
(iii) on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid),
addressed as follows:

    


      
        	 
      	
                If
      to the Company:

                 

                ZAP

                501
      Fourth Street

                Santa
      Rosa, California  95401

                 

                If
      to the Holder:

                 

                Ronald
      S. Berg, Esq., Berg and Berg, L.L.P.

                Post
      Office Box 8817

                Calabasas,
      CA 91372-8817

              


      

       

    

    and if to
the Holder at the above address and to such address for such party as shall
appear on the signature page of the Securities Purchase Agreement executed by
such party, or as shall be designated by such party in writing to the other
parties hereto in accordance this Section
8(b).

    


    (c)           Amendments and
Waivers.  No amendment, modification or other change to, or
waiver of any provision of, this Warrant or any other Warrant may be made unless
such amendment, modification or change, or request for waiver, is (A) set forth
in writing and is signed by the Company and Holder and (B) applied to all of the
Warrants.  Upon the satisfaction 

     

    
      
         

      

      
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    of the
conditions described in (A) and (B), this Warrant shall be deemed to incorporate
the amendment, modification, change or waiver effected thereby as of the
effective date thereof.

     

    (d)           Transfer of
Warrant.  The Holder may sell, transfer or otherwise dispose of
all or any part of this Warrant (including without limitation pursuant to a
pledge) to any person or entity as long as such sale, transfer or disposition is
the subject of an effective registration statement under the Securities Act of
1933, as amended, and applicable state securities laws, or is exempt from
registration there under, and is otherwise made in accordance with the
applicable law and applicable provisions of the Securities Purchase
Agreement.  From and after the date of any such sale, transfer or
disposition, the transferee hereof shall be deemed to be the holder of the
portion of this Warrant acquired by such transferee, and the Company shall, as
promptly as practicable, issue and deliver to such transferee a new Warrant
identical in all respects to this Warrant, in the name of such transferee. The
Company shall be entitled to treat the original Holder as the holder of this
entire Warrant unless and until it receives written notice of the sale, transfer
or disposition hereof.   Company and its officers and directors
shall take such action as may be required by law to remove the Rule 144
restrictions, if any, immediately upon six months having elapsed from the
Exercise Date.  This obligation shall apply to all, or any part, of
the Common Stock purchased by Holder pursuant to the terms of this
Warrant.  This shall include, but not be limited to, the Company
having legal counsel issue an opinion letter in form satisfactory to the
transfer agent, or such other person or entity, as may be required by law, to
have the Rule 144 restriction immediately removed from the Common Shares such
that the same are immediately freely and without restriction saleable or
transferable by Holder.

     

    (e)           Lost or Stolen
Warrant.  Upon receipt by the Company of evidence of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of indemnity or security reasonably satisfactory to the
Company, and upon surrender and cancellation of this Warrant, if mutilated, the
Company shall execute and deliver to the Holder a new Warrant identical in all
respects to this Warrant.

     

    (f)           Governing
Law.  This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts made
and to be performed entirely within the State of California.

     

    (g)           Successors and
Assigns.  The terms and conditions of this Warrant shall inure
to the benefit of and be binding upon the respective successors (whether by
merger or otherwise) and permitted assigns of the Company and the Holder. The
Company may not assign its rights or obligations under this Warrant except as
specifically required or permitted pursuant to the terms hereof.

    


    


    
      
         

      

      
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    [Signature
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    IN
WITNESS WHEREOF, the Company has duly executed and delivered this Warrant as of
the Issue Date.

    


    


    


     

    
      	 	      
              ZAP

              


              


              By    /s/Steven
      Schneider        

              Steven
      Schneider

              CEO 

            


    

     

    


    


    
 

     

     

     

    
 

    
      
         

      

      
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    EXHIBIT A to
WARRANT

    


    EXERCISE
NOTICE

    


    


    The undersigned Holder hereby
irrevocably exercises the right to purchase   of the shares
of Common Stock (“Warrant Shares”) of
ZAP evidenced by the attached Warrant (the “Warrant”).  Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.

    


    1.           Form
of Exercise Price.  The Holder intends that payment of the Exercise
Price shall be made as:

    


    ______ a Cash Exercise with
respect to _________________ Warrant Shares; and/or

    


    ______ a Cashless Exercise
with respect to _________________ Warrant Shares, as permitted by the attached
Warrant.

    


    2.           Payment
of Exercise Price.  In the event that the Holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder shall pay the sum of $________________ to the Company in
accordance with the terms of the Warrant.

    


    


    Date:
______________________

    


    


    ___________________________________

    Name of Registered Holder

    


    By:  _______________________________

           Name:

           Title:

    


    


    


    Holder Requests Delivery to
be made: (check one)

    


    
      	
              

            	
              By
      Delivery of Physical Certificates to the Above
  Address

            


    

    


    
      	
              

            	
              Through
      Depository Trust Corporation

            


    

    (Account  )

     

     

    
      
         

      

      
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