Document:

EXHIBIT 10.1
                                                                    ------------

                               SUTRON CORPORATION
                             STOCK OPTION AGREEMENT
                          (NON-QUALIFIED STOCK OPTION)

     THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into as
of the 6th day of March 2008 by and between Sutron Corporation, a Virginia
corporation (the "Company"), and Leland R. Phipps. (the "Optionee").

     WHEREAS, the Board of Directors of the Company (the "Board") has adopted
and approved that certain Amended and Restated Sutron Corporation 2002 Stock
Option Plan (the "Plan"), a copy of which has been provided to the Optionee and
which is incorporated by reference herein; and

     WHEREAS, pursuant to and in accordance with the provisions of the Plan, the
Board has determined that the Optionee is eligible to be granted an option (the
"Option") to acquire shares of the Company's Common Stock, $0.01 par value per
share (the "Stock"); and

     WHEREAS, Options granted under the Plan are not intended or designed to
qualify for Federal income tax treatment as incentive stock options under
Section 422 of the Internal Revenue Code of 1986 (the "Code"); and

     WHEREAS, the Optionee desires to be granted Options under the Plan; and

     WHEREAS, the Corporation and the Optionee desire to set forth herein the
terms of such Options.

     NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants
set forth herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     1. Grant of Option. The Company hereby grants to the Optionee the right and
option to purchase One thousand (1,000) shares of Stock, subject to and in
accordance with the terms and conditions set forth in the Plan and in this
Agreement.

     2. Exercise Price. The Exercise Price to be paid for each share of Stock to
be acquired upon exercise of the Option granted hereunder is $6.00. Such
Exercise Price is equal to the Fair Market Value (as defined in the Plan) of the
Stock as of the date of grant of the Option.

     3. Transferability. The Option granted hereunder shall be exercisable
during the Optionee's lifetime only by the Optionee and shall not be assignable
or transferable other than by will or by the laws of descent and distribution
following the Optionee's death.

<PAGE>

     4. Exercise Terms; Vesting; Procedure.

          (a) Except as provided in Section 6 hereof, the Option may be
exercised in whole or in part in accordance with the vesting schedule set forth
in Section 5 hereof, provided, however, that the Option shall not be exercisable
after the expiration of ten (10) years from the date of grant of the Option.

          (b) In order to exercise the Option granted hereunder, the Optionee
shall deliver to the Secretary of the Company written notice stating the
Optionee's intent to exercise the Option, which notice shall specify:

               (i) the name of the Optionee;

               (ii) the Option to be exercised;

               (iii) the number of shares of Stock to be purchased pursuant to
                     such exercise; and

               (iv) the address to which certificates representing the shares of
                    Stock issuable upon exercise of the Option are to be mailed.

          (c) The Optionee's written notice shall be accompanied by a certified
check payable to the Company in the amount of the product of the Exercise Price
times the number of shares with respect to which the Option is being exercised.
The notice and payment shall be delivered in person or sent by registered mail,
return receipt requested, to the Secretary of the Company. The Option shall be
considered exercised on the date the notice and payment are delivered to the
Secretary or deposited in the mail, as the case may be. As promptly as
practicable after the Secretary's receipt of the notice of exercise and payment,
and the receipt of any certificates from the Optionee required by the Company
pursuant to Sections 8 and 9 hereof, the Company shall deliver to the Optionee a
certificate or certificates for the number of shares of Stock with respect to
which the Option has been exercised.

     5. Vesting. The Option shall vest ratably over the period beginning March
6, 2008 and ending May 14, 2008.

     6. Effect of Termination of Employment, Disability or Death. The following
provisions shall govern the exercise of any Options held by an Optionee at the
time the Optionee ceases to be an employee of the Company, suffers a Disability,
or dies.

          6.1 Termination of Employment. In the event that the Optionee ceases
to be an employee of the Company for any reason other than Disability or death,
then the period during which each outstanding Option held by such Optionee is to
remain exercisable shall be limited to the ninety (90) day period following the
date of termination of employment. Under no circumstances, however, shall any
such Option be exercisable after the specified expiration date

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<PAGE>

of the Option term. Any outstanding Option may not be exercised in the aggregate
for more than the number of vested shares for which the Option is exercisable on
the date of the termination of employment, and such Option shall terminate and
cease to be outstanding with respect to any Option shares for which the Option
is not at that time exercisable or in which the Optionee is not otherwise at
that time vested.

          6.2 Disability. In the event that the Optionee ceases to be an
employee of the Company by reason of a Disability, then the period during which
each outstanding Option held by such Optionee is to remain exercisable shall be
limited to a period of one (1) year following the date of termination of
employment due to Disability. Under no circumstances, however, shall any such
Option be exercisable after the specified expiration date of the Option term as
set forth in the Option Agreement. Any outstanding Option may not be exercised
in the aggregate for more than the number of vested shares for which the Option
is exercisable on the date of the termination of employment due to Disability,
and such Option shall terminate and cease to be outstanding with respect to any
Option shares for which the Option is not at that time exercisable or in which
the Optionee is not otherwise at that time vested.

          6.3 Death. In the event that the Optionee dies while holding one or
more outstanding Options, then the period during which each outstanding Option
held by such Optionee is to remain exercisable shall be limited to a period of
one (1) year following the date of the Optionee's death. During such limited
period, the Option may be exercised by the personal representative of the
Optionee's estate or by the person or persons to whom the option is transferred
pursuant to the Optionee's will or in accordance with the laws of descent and
distribution. Under no circumstances, however, shall any such Option be
exercisable after the specified expiration date of the Option term. Any
outstanding Option may not be exercised in the aggregate for more than the
number of vested shares for which the Option is exercisable on the date of the
death of the Optionee, and such Option shall terminate and cease to be
outstanding with respect to any Option shares for which the Option is not at
that time exercisable or in which the Optionee is not otherwise at that time
vested.

     7. Adjustments to Upon Certain Events. In the event that any change is made
to the Stock issuable under the Plan and the Option granted hereunder by reason
of stock split, stock dividend, recapitalization, combination of shares,
exchange of shares, repurchase, merger, consolidation, spin-off or other change
affecting the outstanding Stock as a class, the Board shall make appropriate
adjustments to the maximum number of shares and/or class of shares, and the
number of shares and/or class of shares and the exercise price per share in
effect under the Option, in order to prevent the dilution or enlargement of
benefits thereunder. Any adjustments made by the Board pursuant to this Section
7 shall be final, binding and conclusive. Neither the existence nor the terms of
the Plan or this Agreement, nor the grant of any Option hereunder, shall affect
the right or power of the Company to make any adjustments, reorganizations,
reclassifications or other changes to its capital structure or to merge,
consolidate, dissolve, liquidate, sell or transfer any or all of its assets or
otherwise change its business structure.

     Except as expressly provided above, the issuance by the Company of shares
of stock of

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<PAGE>

any class, for cash or property, or for labor or services, either upon direct
sale or upon the exercise of rights, warrants or options to subscribe therefor,
or upon conversions of shares or obligations of the Company convertible into
such shares or other securities, shall not affect the number, class or exercise
price of shares of Stock then subject to the Option, and no adjustment shall be
made by reason thereof.

     8. Requirements of Law. The Company shall not be required to sell or issue
shares of its Stock under the Option if the sale or issuance would constitute a
violation by the Optionee or the Company of any provisions of any state or
federal law, rule or regulation. In addition, in connection with the Securities
Act of 1933, as amended, upon exercise of the Option, the Company shall not be
required to issue such shares of Stock unless the Company has received evidence
satisfactory to it to the effect that the Optionee will not transfer such shares
except pursuant to a registration statement in effect under the Securities Act
of 1933, as amended, or unless an opinion of counsel to the Company has been
received to the effect that such registration is not required. Any determination
in this regard by the Company shall be final, binding and conclusive.
Certificates representing shares of Stock issued pursuant to the exercise of the
Option will be subject to such stop-transfer orders and other restrictions as
may be applicable under federal and state laws, regulations and rules, or the
requirements of any securities exchange or automated quotation system. In the
event the shares issuable on exercise of the Option are not registered under the
Securities Act, the Company may imprint the following legend or any other legend
which counsel to the Company considers necessary or advisable:

     "The shares of Stock represented by this certificate have not been
     registered under the Securities Act of 1933 or under the securities laws of
     any state and may not be sold or transferred except upon such registration
     or upon receipt by the Company of an opinion of counsel satisfactory to the
     Company that registration is not required for such sale or transfer."

     The Corporation may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act of 1933; and in the
event any shares are so registered, the Company may, in its discretion, remove
any legend on certificates representing such shares. The Company shall not be
obligated to take any other affirmative action in order to cause the exercise of
the Option or the issuance of shares pursuant thereto to comply with any state
or federal law or regulation.

     9. Investment Purpose. The Optionee agrees that any shares of Stock subject
to the Option granted hereunder will be acquired for investment and not with any
present intention to resell the same, and the Optionee further agrees to confirm
such intention by an appropriate written assurances and certificates at the time
of exercising an Option or any portion thereof.

     10. Withholding. The Company's obligation to deliver shares of Stock upon
exercise of the Option shall be subject to any and all applicable federal, state
and local tax withholding and reporting requirements.

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<PAGE>

     11. No Rights as Shareholder. The Optionee shall have no right as a
shareholder with respect to the Stock covered by the Option until the date of
issuance of Stock Certificates for such Stock to the Optionee.

     12. No Employment Obligation. The granting of any Option shall not impose
upon the Company any obligation to employ the Optionee. The right of the Company
to terminate the employment of the Optionee shall not be diminished or affected
by reason of the fact that an Option has been granted hereunder to the Optionee.

     13. General Provisions.

          (a) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and assigns.

          (b) This Agreement shall be construed in accordance with, and shall be
governed by, the laws of the Commonwealth of Virginia.

          (c) No waiver by any party hereto of any breach of any covenant,
condition or agreement hereof shall be considered to constitute a waiver of any
such covenant, condition or provision, or of any subsequent breach thereof.

          (d) In the event any court of competent jurisdiction shall declare any
portion of this Agreement to be invalid, the remainder of this Agreement shall
not be invalidated thereby, but shall remain in full force and effect.

          (e) Unless otherwise provided in this Agreement, no notice or other
communication which may be or is required or permitted to be given under this
Agreement shall be effective unless the same is in writing and is either hand
delivered or sent by registered or certified mail, return receipt requested,
first-class postage prepaid, (1) if to the Optionee, to 22854 Bryant Court #101,
Dulles, Virginia 20166, and (2) if to the Company, to Sutron Corporation., Attn:
Secretary, 21300 Ridgetop Circle, Sterling, VA 20166, or at any other address
that may be given by one party to the other party by notice pursuant to this
paragraph 6(e), with a copy to the law firm of Shulman, Rogers, Gandal, Pordy &
Ecker, P.A., 11921 Rockville Pike, Third Floor, Rockville, Maryland 20852.
Unless otherwise provided in this Agreement, such notices, or other
communications, if sent by registered or certified mail in accordance with this
paragraph 6(e), shall be deemed to have been given at the time of mailing.

          (f) Where the text requires, words in the singular shall be deemed to
include the plural and vice-versa, and words in one gender shall be deemed to
include all genders.

          (g) Any headings preceding the text of the sections or sub-sections in
this Agreement are inserted solely for convenience of reference and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.

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<PAGE>

          (h) The Option granted pursuant hereto is not intended or designed to
qualify for federal income tax treatment as an incentive stock option under
Section 422 of the Code.

          (i) The Options are subject to all terms, conditions, limitations and
restrictions contained in the Plan, which shall be controlling in the event of
any conflicting or inconsistent provisions between this Agreement and the Plan.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and sealed by its duly authorized officers, and the Optionee has executed and
sealed this Agreement, all as of the day and year first above written.

ATTEST:                                      THE COMPANY:
                                             SUTRON CORPORATION

/s/ Sidney C. Hooper                         By: /s/ Raul S. McQuivey
-------------------------                        --------------------------
Name:  Sidney C. Hooper                      Name:  Raul S. McQuivey
Title: Chief Financial Officer               Title: President

WITNESS:                                     THE OPTIONEE:

/s/ Sidney C. Hooper                         /s/ Leland R. Phipps
-------------------------                    ------------------------------
Name: Sidney C. Hooper                       Name: Leland R. Phipps

                                        6WWW.EXFILE.COM, INC. -- 888-775-4789 -- ZAP -- EXHIBIT 10.51 TO FORM 10-Q

       EXHIBIT 10.51

    NOTE
PURCHASE AGREEMENT

    

    THIS NOTE PURCHASE AGREEMENT
(“Agreement”), dated as
of May 8, 2008, is entered into by and between ZAP, a California corporation
(the “Company”), and Al Yousuf, LLC, a limited
liability company organized under the laws of the United Arab Emirates (“AYG” or the “Purchaser”).

     

    In
consideration of the mutual promises and covenants contained in this Agreement,
the parties hereto agree as follows:

     

    ARTICLE
I

     

    AUTHORIZATION
AND SALE OF CONVERTIBLE NOTE

     

    1.1    Purchase and Sale of
Convertible Note.

     

    (a) Subject
to the terms and conditions hereof, the Company has authorized the issuance and
sale of the Note (as defined below) to the Purchaser as of the date first
written above.

     

    (b) Subject
to the terms and conditions of this Agreement, the Purchaser agrees to purchase,
and the Company agrees to issue and sell to the Purchaser a senior convertible
promissory note in the form attached to this Agreement as Exhibit A (the “Note” and together
with this Agreement, the "Transaction
Documents") made payable to AYG in the principal amount of Four Hundred
Seventy-Five Thousand U.S. Dollars (U.S. $475,000) which amount shall be
referred to herein as the "Principal."  The Note shall bear interest
at a rate equal to the greater of (i) 6 month LIBOR plus two hundred and fifty
(250) basis points per annum, and (ii) 6% per annum, shall mature on the
Maturity Date (as such term is defined in the Note), and shall be convertible
into securities of the Company in accordance with the terms of the
Note.

     

    (c) The Note
and the equity securities issuable upon conversion of the Note (and the
securities issuable upon conversion of such equity securities) are collectively
referred to herein as the “Securities.”

     

    (d) The
Purchaser is entering this Agreement and purchasing the Note from the Company in
order for the Company to pay-off the outstanding convertible notes issued by the
Company and held by Gemini Master Fund, LTD, including, without limitation, all
principal, interest and any amounts in the nature of penalties pursuant to the
outstanding convertible notes.  References in this Agreement to the
Company shall be deemed to include any permitted assignee or transferee of this
Agreement or the Note, or any permitted successor to the Company’s
business.

     

    (e) The
closing of the transactions contemplated hereby (the “Closing”) shall take
place at the offices of Dewey & LeBoeuf LLP, 333 South Grand Avenue, Suite
2600, Los Angeles, California 90071, on the date hereof or at such other date as
is mutually agreed upon by the Company and the Purchaser.  The date of
the Closing is referred to herein as the “Closing
Date.”  Subject to the terms and conditions of this Agreement,
at the Closing, the Company shall borrow from the Purchaser and the Purchaser
shall extend to the Company, a loan amount equal to the Principal in the form of
cash, and the Company shall 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    issue to
the Purchaser a duly executed Note evidencing the indebtedness relating to the
Purchaser’s loan.  The Purchaser shall advance the loan in full to the
Company by delivery of a wire transfer to the Company’s bank account as listed
below:

     

    
    

     

    
      	      
              Richardson
      & Patel LLP

              Client
      Trust Account

              Bank
      Name: 

            	
               

               

              Comerica
      Bank of California 

              Westwood
      Office

              10900
      Wilshire Boulevard

              Los
      Angeles, California 90024

            
	
              Telephone:

              ABA Number: 

              ACCT. Number:

              Beneficiary:

               

                    
                Re:

              

            	800-888-3595
      
              121137522

              1891937581

              Richardson
      & Patel LLP

              Client
      Trust Account                                

              Client
      Name: ZAP 

            

    

     

    ARTICLE
II

     

    REPRESENTATIONS
AND WARRANTIES OF THE COMPANY

     

    As a
material inducement to the Purchaser to enter into this Agreement and purchase
the Note hereunder, the Company hereby represents and warrants to the Purchaser
that the following representations are true and complete as of the date hereof
and as of the Closing Date.

     

    2.1    Organization, Good Standing
and Qualification.

     

    The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of California and has all requisite corporate power
and authority to carry on its business as presently conducted or proposed to be
conducted.  The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the failure so to qualify would
have a Material Adverse Effect.  As used by the Company herein,
“Material Adverse Effect” means any change (or effect) in the business,
financial condition or operations of the Company which change or effect,
individually or in the aggregate, is or could reasonably be expected to be
materially adverse to the business, assets (including intangible assets),
liabilities, financial condition, property, prospects or results of operations
of the Company.

     

    2.2    Authorization.

     

    The
Company has all requisite corporate power and authority to execute, deliver and
perform, as applicable, this Agreement and the other Transaction Documents. All
corporate action on the part of the Company, its officers, directors and
shareholders necessary for the authorization, execution and delivery of this
Agreement and the other Transaction Documents and the performance of all
obligations of the Company under this Agreement and the other Transaction
Documents 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    has been
taken prior to the date hereof.  Each Transaction Document, when
executed and delivered by the Company, shall constitute a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies.

     

    2.3    Consents and
Filings.

     

    Assuming
the accuracy of the representations made by the Purchaser in Article III of this
Agreement, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority or any other person or entity is required on the
part of the Company in connection with the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents, except for
filings pursuant to Section 25102(f) of the California Corporate Securities Law
of 1968, as amended, and the rules thereunder, and Regulation D of the
Securities Act of 1933, as amended (the “Securities Act”),
which filings will have occurred within the appropriate time periods
therefor.

     

    2.4    Compliance with Other
Instruments.

     

    The
Company is not in violation or default of: i) any provisions of its articles of
incorporation or bylaws, or ii) any material provision of any instrument,
judgment, order, writ, or decree, or under any note, indenture, mortgage, lease,
agreement, contract or purchase order to which it is a party or by which it is
bound.  The Company is not in material violation of any provision of
federal or state statute, rule, order or regulation of any domestic or foreign
government or any instrumentality or agency thereof.  The execution,
delivery and performance of the Transaction Documents and the consummation of
the transactions contemplated hereby or thereby will not, with or without the
passage of time or giving of notice, (a) conflict with, or result in any
violation of or default or loss of any benefit under, any provision of the
Company’s articles of incorporation or bylaws; (b) conflict with, or result in
any violation of or default or loss of any benefit under, any permit,
concession, grant, franchise, law, rule or regulation, or any judgment, decree
or order of any court or other governmental agency or instrumentality to which
the Company is a party or to which any of its property is subject; (c) conflict
with, or result in a breach or violation of or default or loss of any benefit
under, or accelerate the performance required by, the terms of any agreement,
contract, indenture or other instrument to which the Company is a party or to
which any of its property is subject, or constitute a default or loss of any
right thereunder or an event that, with the lapse of time or notice or both,
might result in a default or loss of any right thereunder or the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the assets or
properties of the Company; or (d) result in the suspension, revocation,
impairment, forfeiture or nonrenewal of any material permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.5    Offering
Exemption.  

     

    Based in
part on the representations of the Purchaser set forth in Article III below,
the offer, sale and issuance of the Note, and the securities issuable upon
conversion of the Note, are exempt from the registration requirements of the
Securities Act and are exempt from the qualification or registration
requirements of applicable state securities laws.

     

    2.     Disclosure.

     

    No
representation, warranty or statement by the Company in this Agreement
(including all exhibits hereto) or the other Transaction Documents, or in any
written statement or certificate furnished to the Purchaser pursuant to such
agreements, or the transactions contemplated hereby or thereby, contains any
untrue statement of a material fact or, when taken together, omits to state a
material fact necessary to make the statements made herein or therein, in light
of the circumstances under which they were made, not misleading.

     

     

    ARTICLE
III

     

    REPRESENTATIONS
OF THE PURCHASER

     

    The
Purchaser hereby represents and warrants to the Company that:

     

    3.1    Authorization.

     

    The
Purchaser is a limited liability company duly organized, validly existing and in
good standing under the laws of the Purchaser’s jurisdiction and has all
requisite corporate power and authority to enter into the Transaction
Documents.  The Transaction Documents, when executed and delivered by
the Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any laws of general application affecting enforcement of
creditors’ rights generally, and as limited by laws relating to the availability
of specific performance, injunctive relief, or other equitable
remedies.

     

    3.2    Purchase Entirely for Own
Account.

     

    This
Agreement is made with the Purchaser in reliance upon the Purchaser’s
representation to the Company, which by the Purchaser’s execution of this
Agreement, the Purchaser hereby confirms, that the Securities to be acquired by
the Purchaser will be acquired for investment for the Purchaser’s own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same.  By
executing this Agreement, the Purchaser further represents that the Purchaser
does not presently have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Securities. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.3    Disclosure of
Information.

     

    The
Purchaser has had an opportunity to discuss the Company’s business, management,
financial affairs and the terms and conditions of the offering of the Securities
with the Company’s management and has had an opportunity to review the Company’s
facilities.  

     

    3.4    Investment
Experience.

     

    The
Purchaser is an investor in securities of companies in the development stage and
acknowledges that it is able to fend for itself, can bear the economic risk of
its investment, and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Securities.  The Purchaser has not been formed for the specific
purpose of acquiring the Securities.

     

    3.5    Restricted
Securities.

     

    The
Purchaser understands that the Securities have not been, and will not be,
registered under the Securities Act, by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Purchaser’s representations as expressed herein.  The Purchaser
understands that the Securities are “restricted securities” under applicable
U.S. federal and state securities laws and that, pursuant to these laws, the
Purchaser must hold the Securities indefinitely unless they
are registered with the Securities and Exchange Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available.  The Purchaser acknowledges that if an
exemption from registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and manner of
sale, the holding period for the Securities, and on requirements relating to the
Company which are outside of the Purchaser’s control.

     

    3.6    Further Limitations on
Disposition.

     

    (a)    Without
in any way limiting the representations set forth above, the Purchaser further
agrees not to make any disposition of all or any portion of the Securities
unless and until: 

     

                                    (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)           The
Purchaser shall have furnished to the Company an opinion of counsel, to the
extent reasonably required by the Company, which opinion and counsel shall be
reasonably satisfactory to the Company, to the effect that no such registration
is required because of the availability of an exemption from registration under
the Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.

     

                                    (iii)           Notwithstanding
the provisions of Paragraphs (i) and (ii) above, no such registration statement
or opinion of counsel shall be necessary for a transfer by the 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Purchaser
that is a partnership to a partner of such partnership or a retired partner of
such partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate succession
of any partner to his or her spouse or to the siblings, lineal descendants or
ancestors of such partner or his or her spouse, if the transferee agrees in
writing to be subject to the terms hereof to the same extent as if he or she
were an original Purchaser hereunder.

     

    (b)    No Public
Market.  The Purchaser understands that no public market now
exists for the Securities, and that the Company has made no assurances that a
public market will ever exist for the Securities.

     

    (c)    Legends.  The
Purchaser understands that the Securities and any securities issued in respect
of or exchange for the Securities, may bear one or all of the following
legends:

     

    (i) “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.”

     

    (ii) “THE
SHARES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES
ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED
UNDER THE SECURITIES ACT.”

     

    (iii) “THE
SHARES REPRESENTED HEREBY HAVE BEEN ISSUED TO INVESTORS WHO ARE NOT U.S. PERSONS
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE
SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S
PROMULGATED UNDER THE SECURITIES ACT.”

     

    (iv) “TRANSFER
OF THESE SHARES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S, PURSUANT TO REGISTRATION UNDER THE SUCURITIES ACT, OR PURSUANT TO
AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT
BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

     

    (v) Any
legend set forth in or required by the other Transaction Documents.

     

    (vi) Any
legend required by the securities laws of any state to the extent such laws are
applicable to the shares represented by the certificate so
legended.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.7    Accredited
Investor.

     

    The
Purchaser is an “accredited investor” within the meaning of Securities and
Exchange Commission Rule 501 of Regulation D, as presently in effect.

     

    3.8    Foreign
Investors.

     

    If the
Purchaser is not a United States person (as defined by Section 7701(a)(30)
of the Code), such Purchaser hereby represents that it has satisfied itself as
to the full observance of the laws of its jurisdiction in connection with any
invitation to purchase the Securities or any use of this Agreement, including
(i) the legal requirements within its jurisdiction for the purchase the
Securities, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if any, that
may be relevant to the purchase, holding, redemption, sale, or transfer of the
Securities.  Such Purchaser’s subscription and payment for and
continued beneficial ownership of the Securities, will not violate any
applicable securities or other laws of the Purchaser’s
jurisdiction.

     

    3.9    No General
Solicitation.

     

    Neither
the Purchaser, nor any of its officers, employees, agents, directors, holders of
capital stock or partners has engaged the services of a broker, investment
banker or finder to contact any potential investor nor has the Purchaser or any
of the Purchaser’s officers, employees, agents, directors, holders of capital
stock or partners, agreed to pay any commission, fee or other remuneration to
any third party to solicit or contact any potential investor.  Neither
the Purchaser, nor any of its officers, directors, employees, agents, holders of
capital stock or partners has (a) engaged in any general solicitation, or
(b) published any advertisement in connection with the offer and sale of
the Securities.

     

    ARTICLE
IV

     

    COVENANTS
OF THE COMPANY AND STOCKHOLDERS

     

    4.1    Use of
Proceeds.  

     

    The
Company shall use the proceeds of the Note solely for the purposes set forth on
the Sources and Uses attached to this Agreement as Exhibit
B.

     

    4.2    Sufficiency of Shares for
Conversion.

     

    So long
as there are outstanding any obligations in connection with the payment or
conversion of the principal and interest on the Note, the Company shall at all
times reserve and keep available out of its authorized but unissued shares of
capital stock, for the purpose of effecting the conversion of the Note and
otherwise complying with the terms of this Agreement and the other Transaction
Documents, such number of its duly authorized shares of capital stock as shall
be sufficient to effect such conversion or otherwise comply with the terms of
this Agreement and the other Transaction Documents.  If at any time
the number of authorized but unissued shares of capital stock shall not be
sufficient to comply with the terms of this 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Agreement,
the Company and each stockholder shall promptly forthwith take such corporate
action as may be necessary to increase its authorized but unissued shares of the
applicable capital stock to such number of shares as shall be sufficient for
such purposes.  Upon delivery, all such shares shall be duly and
validly issued and fully paid and nonassessable.

     

    4.3    Restrictions and
Limitations.

     

    Until
such time as the Note has been (a) paid in full, or (b) converted in accordance
with its terms, the Company shall not without the prior written consent of the
Purchaser:

     

    (a)           Amend,
alter, repeal, or waive any provision of, or add any provision to the articles
or certificate of incorporation, as applicable, or bylaws of the Company,
whether by means of an amendment to the articles or certificate of
incorporation, as applicable, or bylaws of the Company or by merger,
consolidation, or otherwise;

     

    (b)           Effect
any liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or involuntary, or seek, consent to or acquiesce in the
appointment of any trustee, receiver, conservator or liquidator for any assets
of the Company;

     

    (c)           Effect
any Sale Transaction (i) with an affiliate of the Company or (ii) if the amount
of cash and immediately liquid and marketable securities payable immediately in
respect of each share of the Company's common stock in connection with such Sale
Transaction is less than two hundred percent (200%) of the fair market value of
such common stock of the Company on the date hereof;  “Sale Transaction” means
(i) an acquisition of the Company by another person or entity by means of any
transaction or series of related transactions (including without limitation, any
consolidation or merger of the Company with or into any other entity) in which
(x) the holders of the Company’s outstanding capital stock immediately before
such transaction do not, immediately after such transaction, retain stock or
other equity interests representing at least fifty percent (50%) of the voting
power of the surviving entity of such transaction or (y) a holder of less than
fifty percent (50%) of the Company’s outstanding capital stock immediately
before such transaction acquires more than fifty percent (50%) of the Company’s
outstanding capital stock in such transaction; or (ii) a sale of all or
substantially all of the assets of the Company.

     

    (d)           Repurchase,
redeem or otherwise acquire any of the outstanding securities of the Company,
except for the repurchase of unvested shares from employees, directors or
consultants at cost upon termination of their relationship with the Company,
pursuant to the terms of agreements providing for the original issuance of such
capital stock (or options to purchase capital stock);

     

    (e)           Declare
or pay dividends or make any distributions of cash, property or securities of
the Company with respect to any shares of its common stock or any other capital
stock of the Company;

     

    (f)           Authorize,
issue or grant any payment or other consideration to any person or entity in
connection with a Sale Transaction other than (i) as required by applicable law,
(ii) in respect of any outstanding equity interest in the Company or (iii) in
respect of any debt obligation of the Company;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g)           Make
any asset or equity interest acquisition outside of the ordinary course of
business;

     

    (h)           Make
any loan or advance to any person (including, the Company's employees and
directors) or entity, other than advances and similar expenditures in the
ordinary course of business;

     

    (i)           Pledge
assets or incur or guarantee, directly or indirectly, any indebtedness in excess
of Twenty Five Thousand U.S. Dollars ($25,000) per debt instrument, or One
Hundred Thousand U.S. Dollars ($100,000) in the aggregate, except for trade
accounts of any subsidiary arising in the ordinary course of
business;

     

    (j)           Enter
into any agreement or contract with any affiliate of the Company or their
respective officers or directors other than agreements relating to employment,
nondisclosure of confidential information or noncompetition that do not create
obligations for the Company equal to or greater than Fifty Thousand U.S. Dollars
($50,000) per year;

     

    (k)           Change
the nature of its business operations as in effect on the date
hereof;

     

    (l)           Grant
to any employee, officer, director, consultant or advisor any stock option,
stock appreciation right, phantom stock right or other right to acquire any
equity security, other than in accordance with agreements as existing on or
before the date hereof, as listed on Exhibit C, attached
hereto;

     

    (m)           Create
a subsidiary unless such subsidiary is wholly-owned by the Company;

     

    (n)           Issue
any security of a subsidiary to any person or entity other than the Company or
an entity wholly-owned and controlled by the Company;

     

    (o)           Incur
or refinance any indebtedness or encumbrance of any assets in excess of Fifty
Thousand U.S. Dollars ($50,000); or

     

    (p)           Enter
into any merger, consolidation or reorganization transaction in which the
Company is not the surviving entity.

     

    4.4    No
Impairment.

     

    The
Company shall not by amendment of its articles or certificate of incorporation,
as applicable, or bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under the Transaction
Documents.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
V

     

    MISCELLANEOUS

     

    5.1    Assignments; Parties in
Interest.

     

    This
Agreement shall bind and inure to the benefit of the parties and each of their
respective successors and permitted assigns.  The Company may not
assign either this Agreement or any of its rights, interests, or obligations
hereunder.  The Purchaser may assign any of its rights hereunder;
provided, however, that the
transferee agrees to be bound by, and entitled to the benefits of, this
Agreement as an original party hereto.

     

    5.2    Disclosure.

     

    Except as
otherwise required by law, the Purchaser and the Company agree that they shall
make no written or other public disclosures regarding this transaction or
regarding the parties hereto to any individual or organization without the prior
written consent of the other parties hereto, which consent shall not be
unreasonably withheld, or as required by applicable law.

     

    5.3    Counterparts.

     

    This
Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

     

    5.4    Titles and
Subtitles.

     

    The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.

     

    5.5    Notices.

     

    Any
notice required or permitted by this Agreement shall be in writing and shall be
deemed effectively given (A) (i) upon personal delivery to the party to be
notified, (ii) three (3) business days after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt, (iii) when sent by confirmed telegram or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day; or (iv) five (5) business days after being sent by registered
or certified mail, return receipt requested, postage prepaid; and (B) addressed
to the party to be notified at such party’s address or fax number as follows:
(a) if to the Company, ZAP, 501 Fourth Street, Santa Rosa California 95401,
facsimile (310) 208-1154; with a copy to Mark Abdou, Richardson & Patel,
Murdock Plaza, 10900 Wilshire Blvd., Suite 500, Los Angeles, California 90024 or
(b) if to the Purchaser, Al Yousuf LLC, Attention: Iqbal al Yousuf,
Mezzanine Floor, Yamaha Showroom, Sheikh Zayed Road, Dubai, United Arab
Emirates, telephone number (+971.4.339.0000), facsimile +971.4.339.5544; with a
copy to John Podgore, Dewey & LeBoeuf LLP, Suites 102-104, Level 1, The Gate
Village Building 4, Dubai International Financial Centre, PO Box 506675, Dubai,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    UAE,
facsimile 971 4 425 6301 (or at such other address as such party may designate
by ten (10) days advance written notice to the other parties
hereto).

     

    5.6    Fees and
Expenses.

     

    The
Company shall pay the reasonable fees and expenses of Dewey & LeBoeuf LLP,
the counsel for AYG, provided such fees and expenses do not exceed, in the
aggregate, $25,000.

     

    5.7    Amendments and
Waivers.

     

    Any term
of this Agreement may be amended or waived only with the written consent of the
Company and the Purchaser.  Any amendment or waiver effected in
accordance with this Section 5.7
shall be binding upon the Company, the Purchaser and any future holder of the
Note.  No waiver of any provision of the Transaction Documents or
consent to any action shall constitute a waiver of any other provision or
consent to any other action, whether or not similar.  No waiver or
consent shall constitute a continuing waiver or consent or commit a party to
provide a waiver in the future except to the extent specifically set forth in
writing.  Any waiver given by a party shall be null and void if the
party requesting such waiver has not provided a full and complete disclosure of
all material facts relevant to the waiver requested.

     

    5.8    Severability.

     

    If one or
more provisions of this Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good
faith.  In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and
(c) the balance of the Agreement shall be enforceable in accordance with
its terms.

     

    5.9    Delays or
Omissions.

     

    No delay
or omission to exercise any right, power or remedy accruing to any party under
this Agreement, upon any breach or default of any other party under this
Agreement, shall impair any such right, power or remedy of such non-breaching or
non-defaulting party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.  Any waiver, permit, consent or approval of any
kind or character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing.  All remedies,
either under this Agreement or by law or otherwise afforded to any party, shall
be cumulative and not alternative.

     

    5.10   Entire
Agreement.

     

    This
Agreement, and the documents referred to herein constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof, and
supersedes all 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    prior
agreements and understandings relating to such subject matter and all other
written or oral agreements relating to the subject matter hereof existing
between the parties hereto are expressly canceled.

     

    5.11   Governing
Law.

     

    This
Agreement and all acts and transactions pursuant hereto and the rights and
obligations of the parties hereto shall be governed, construed and interpreted
in accordance with the laws of the State of California, without giving effect to
principles of conflicts of law.

     

    5.12   Dispute
Resolution.

     

    Any
unresolved controversy or claim arising out of or relating to this Agreement or
the other Transaction Documents, except for any such controversies or claims
arising out of either party’s intellectual property rights for which a
provisional remedy or equitable relief is sought, then such controversy or claim
shall be submitted to arbitration under the auspices of JAMS in Los Angeles in
accordance with its rules then in effect, and judgment upon any award rendered
in such arbitration will be binding and may be entered in any court having
jurisdiction thereof.  Each party will bear its own costs in respect
of any disputes arising under this Agreement or the other Transaction Documents.

     

    5.13   Survival.

     

    All
representations and warranties made by any party in this Agreement or pursuant
hereto shall survive any investigation made at any time by or on behalf of any
other party and shall survive the Closing.  The covenants and
agreements set forth in this Agreement shall survive the Closing and shall
continue until all obligations set forth therein shall have been performed or
satisfied or they shall have terminated in accordance with their
terms.

     

    5.14   Remedies
Cumulative.

     

    No remedy
or election hereunder shall be deemed exclusive but shall, wherever possible, be
cumulative with all other remedies at law or in equity.

     

    5.15   Specific
Performance.

     

    In
addition to any and all other remedies that may be available at law, in the
event of any breach of this Agreement, the Purchaser shall be entitled to
specific performance of the agreements and obligations of the Company hereunder
and to such other injunctive or other equitable relief as may be granted by a
court of competent jurisdiction.

     

    

    [Signature
Page to Follow]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Note Purchase Agreement to
be executed as of the date first above written.

     

    

    

     

    
      	 	      
              COMPANY:

              

              ZAP

              

              By:  
      /s/ SteveSchneider

                    
                
      Name:
      Steven Schneider

              Title:  Chief
      Executive Officer

              

              

              PURCHASER:

              

              AL
      YOUSUF LLC

              

              

              By: 
      Eqbal Al  Yousuf 

                    
                
      Name: Eqbal
      Al Yousuf

              Title:   President 

            

    

     

    

    

    

    

    [Signature Page to Note
Purchase Agreement]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A

    

    Form
of Note

    

    

    

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
B

    

    Sources
and Uses

    

    The
Company shall solely use the funds obtained from the sale of the Note to the
Purchaser to pay-off the outstanding convertible notes issued by the Company and
held by Gemini Master Fund, LTD, including, without limitation, all principal,
interest and any amounts in the nature of penalties pursuant to the outstanding
convertible notes.  This shall be the exclusive use of the funds
obtained from the sale of Note and the Company may not use the funds for any
other purpose.

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