Exclusive Broker And Marketing Agreement

EXCLUSIVE BROKER AND MARKETING AGREEMENT


THIS EXCLUSIVE BROKER AND MARKETING AGREEMENT is made and entered into effective as of March 5, 1996 (the "Effective Date") by and between ZAP Power Systems Corporation, a California corporation (herein referred to either as "ZAP" or "Manufacturer") located at 117 Morris St., Sebastopol, CA 95472 and Power Biking INC., a California Corporation (herein referred to either as "PBI" or "Broker") located at 5213 El Mercado Parkway, Unit D, Wikiup, Ca. 95403 (collectively, the "Parties").


RECITALS


A. ZAP has invented, developed and manufactured certain electric vehicles and components (defined below as "Assembled Products") thereof which it desires to sell and distribute in certain territories with the assistance of Broker.


B. Broker desires to obtain distributors and/or customers for ZAP's products in certain territories on an exclusive and non-exclusive basis as more fully set forth below.


AGREEMENT


NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereto mutually agree as follows:


1. Definitions When used herein, the additional definitions set forth herein below shall have the following meanings:


A. Affiliates of a Party hereto shall mean (i) each person or entity that,
directly or indirectly, owns or controls, whether beneficially or as a
trustee, guardian or other fiduciary, five percent (5%) or more of (A) the
profits or losses of any person or (B) the securities having ordinary voting
power in the election of directors or other governing body, or (c) the voting
power of any person or entity or other ownership interests of any such Party,
(ii) each person or entity that controls, is controlled by or is under common
control with such Party or any Affiliate of such Party or (iii) each of such
Party's officers, directors, or general partners or similarly
positioned-individuals. For the purpose of this definition, "control" shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of its management or policies, whether through the ownership of
voting securities or by contract or otherwise.


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B. Aftermarket Accessories shall mean and include (i) any physical
nonstandard item that can be added to an "Assembled Product" (as defined
below) and/or (ii) any general item of merchandise for use in connection with
an Assembled Product (such as clothes, banners, etc.), sometimes distributed,
sold, or otherwise commercialized directly or indirectly by or for ZAP or any
of its Affiliates during the Term of this Agreement.


C. Aftermarket Options shall mean any and all contractual rights sold by PBI
or ZAP to protect or insure a ZAP product including, but not limited to
extended warranties, service contracts, maintenance contracts, theft
insurance, and tire puncture insurance.


D. Assembled Products shall mean the battery and/or solar powered electric
motor driven vehicle(s) described in Exhibit A hereto (which Exhibit is
incorporated herein by this reference) manufactured, distributed, sold or
otherwise commercialized directly or on behalf of ZAP or any of its
affiliates during the term of this Agreement. If and when ZAP expands its
line of vehicles (i.e. electric automobiles) then, it agrees to enter good
faith negotiations with PBI to enter into an agreement to extend this
agreement to said new vehicles.


E. Components shall mean any and all engines, controllers, transmissions
drive-trains or any other separate parts or components that are a necessary
and integrated part of an Assembled Product, and is also provided,
manufactured, distributed, sold or otherwise commercialized directly or
indirectly by Manufacturer or any of its Affiliates during the Term of this
Agreement.


F. Dollars or "$" shall mean currency of the United States of America.


G. PBI Enrolled Dealer shall mean any "New Automobile Franchised Dealership"
(i.e. a dealer for General Motors, etc.) that is enrolled by PBI that
continues to be a Party in good standing under their Dealer/Manufacturer
Sales and Service Agreement (herein called "Dealer Agreement").


H. Exclusive Territories shall mean the geographic area constituting the
following geographic regions, to wit: The 50 states of the United States of
America including all of its possessions and Territories and Canada.


I. Products shall mean and collectively refer to any one or more of the
following: Aftermarket Accessories, Assembled Products and/or Components.
(Note, AFTERMARKET OPTIONS are not PRODUCTS)


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2. Appointment/Products/Territory/Term


A. Grant of Exclusive Broker Appointment: Manufacturer hereby appoints PBI
the exclusive right and appoints PBI on an exclusive basis as its exclusive
broker within the Exclusive Territory to market, advertise, merchandise,
promote and commercialize the Products and any of them to and through PBI
Enrolled Dealers during the Term of this Agreement. PBI Enrolled Dealers
shall contract directly with ZAP pursuant to the Dealer Agreement. Once the
standard form of Dealer Agreement is completed (which must be completed at
the earliest possible date as PBI needs this document to enroll PBI Enrolled
Dealers) it will be attached hereto as Exhibit B and incorporated herein by
this reference ("Dealer Agreement"). PBI will cause its best effort
(contingent upon Zap's product availability and production capacity) to
locate and present to ZAP New Automobile Franchised Dealerships (defined in
subsection 1G hereof) for consideration and enrollment by ZAP as a PBI
Enrolled Dealer for ZAP and to exploit and fully develop the market.


B. Special Customer Agreements at ZAP's Discretion PBI is expected to
concentrate its efforts on the establishment of a distribution network
consisting primarily of New Automobile Franchise Dealers as PBI Enrolled
Dealers. However, its is contemplated that from time to time PBI may
encounter a potential candidate for a PBI Enrolled Dealer or identify a group
of customers for ZAP Products that do not qualify for inclusion in PBI's
network of PBI Enrolled Dealers. In all such circumstances, PBI is required
to disclose the opportunity to ZAP. Where appropriate, ZAP (in its sole
discretion) may engage PBI to participate in the development of a dealership
or customer relationship with the prospect. Each time PBI is engaged to
participate in a special situation, the Parties will complete a Special
Customer Contract to set forth PBI's rights, duties, compensation
arrangement, and other matters relating to the special situation. Each such
Special Customer Contract will be separate and distinct from this Agreement.


C. Non-Exclusive Purchasers (NEP) means a retail customer in the Exclusive
Territory that PBI introduces to ZAP that ZAP accepts in its sole discretion
as a NEP for PBI's benefit because the contemplated sale does not conflict
with ZAP's other dealers or distribution objectives. In such an event, ZAP
agrees to sell Assembled Products to NEP's on terms and conditions no less
favorable than those given to similar type customers under reasonably similar
circumstances. PBI's rights with respect to NEP's shall be nonexclusive.


D. Term The Term of this Agreement shall begin on the Effective Date and ends
on May 31, 1998, unless extended by written agreement of the parties or
sooner terminated pursuant to Section 13 hereof.


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3. Aftermarket Options Exclusivity: For the Term of this Agreement ZAP shall not sell any Aftermarket Option to PBI Enrolled Dealers and/or selected NEPs or selected Special Customers for whom PBI has been granted an exclusive to Aftermarket Options.


4. PBI COMPENSATION For the Term of this Agreement PBI will be compensated for Product sales made by PBI Enrolled Dealers, Special Customers and NEPs as follows:


A. For all brokered sales (i.e. all purchase orders presented to ZAP through
PBI) between the Effective Date and February 28, 1997, PBI will be paid the
lesser of: (1) 18% of the Dealer Price charged by ZAP for sales of All
Products or, (2) $.125 per Powerbike type Product; $55 per Powerkit type
Product.


B. For all brokered sales (i.e., all purchase orders presented to ZAP through
PBI) after February 28, 1997 and the termination date of this Agreement, PBI
will be paid the lesser of: (1) 15% of the Dealer Price charged by ZAP for
sales of all Products, or (2) $100 per Powerbike type Product and $50 per
Powerkit type Product.


C. For sales brokered to NEP's and Special Customers, PBI will be paid a 20%
brokerage fee if the Sales Price paid by the NEP or the Special Customer is
90% or more of Manufacturers' Suggested Retail Price for said Product. The
brokerage fee due to PBI with respect to all other sales to a NEP or a
Special Customer shall be negotiated and set forth in the appropriate
agreement pertaining to the NEP or the Special Customer.


D. Contingent Override Brokerage Fee: If but only if PBI satisfies in full
the Incremental Unit Sales Quotas set forth in subsection 5B(5) hereof
(without involving any need to cure any shortfall, and subject to only the
exception set forth in subsection 4D(4) hereof), then PBI shall have earned
the Override Brokerage Fee that shall be computed at a rate of 3% on sales in
PBI's territory as prescribed in this subsection 4(D). The Override Brokerage
Fee sales shall accrue and be paid as follows:


1. Commencing on March 1, 1997, ZAP will compute, the Override Brokerage
Fee at a rate of 3% on all of ZAP's sales revenues for Assembled Products,
Components, Aftermarket Accessories and Aftermarket Options in the
Exclusive Territory that are not generated by "PBI Brokerage Activities
Under This Agreement", which term is defined herein to mean;


"Brokered sales of all Assembled Products, Components and Aftermarket
Accessories and


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Aftermarket Options" for which PBI is being paid Brokerage Fees under
subsection 4A, B, C and D hereof."


If PBI terminates its role as Broker before June 1, 1998 or PBI's current
shareholders (i.e. Barry Biddulph and Rex Everett) spend less than a
majority of their business efforts marketing ZAP's Products then no
Override Brokerage Fees will be due.


2. The Override Brokerage Fee computed for each month (in which ZAP has
received payment) will be paid thirty (30) days after the last day of each
said month (i.e., a payment received in June by ZAP in 1997 will be paid
not later than July 31, 1997).


3. Payments made pursuant to this subsection 4D and 4D(1) shall be made
from March 1, 1997 to and until May 31, 1998 and continued as outlined in
section 13b(2).


4. PBI shall not fail to earn the Override Brokerage Fees hereunder if
PBI's inability to meet the Incremental Unit Sales Quota(s) hereunder is
caused by ZAP's failure to deliver Product to the customers of the PBI
Enrolled Dealers, NEPs, and/or Special Customers. In such an event, PBI
shall be entitled to and shall be paid the Override Brokerage Fees. ZAP's
manufacturing process time for most Products is eight (8) weeks. PBI's
orders will account for this lead time.


5. Quotas: PBI agrees to meet or exceed the "Performance Quotas" set forth below.


A. Cumulative PBI Enrolled Dealers Quota: On April 30, 1997, PBI shall have
Zap Dealer Agreements submitted for at least for thirty (30) PBI Enrolled
Dealers.


B. Incremental Unit Sales Quota: PBI shall meet the following Brokered "Unit
Sales" quotas for any combination of Assembled Products (a unit includes of
the following, a Powerbike, a Powerbike, a Zappy, or a ZAP Powerkit) as
follows:


1. 30 unit sales by March 5, '96.


2. 75 unit sales in the month of March '96.


3. 75 unit sales in the month of April '96.


4. 100 unit sales in the month of May '96.


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5. 3,000 unit sales by April 30, 1997 (includes 280 units required in
first four months, February '96 to May '96).


6. 10,000 unit sales by May 31, 1998 (includes 3.000 unit sales required
as of April 30, 1997).


C. Escrow and Payments: Manufacturer will establish and maintain an escrow
account (or equivalent) for the collection of sales proceeds immediately. All
payments for Products brokered by PBI hereunder for which Broker is entitled
to a fee shall be paid in U.S. Dollars to a ZAP escrow account in which PBI
shall have a right for disbursement by an escrow agent as outlined in the
escrow Agreement attached as Exhibit C. (to be completed immediately). The
Dealer Agreement shall provide that Purchaser shall make payments payable to
the foregoing Escrow Account (the "Escrow Account"). Amounts hereunder shall
be considered to be paid as of the day on which funds are received in the
Escrow Account. The name on this Escrow Account will be ZAP Powerbikes
Enterprise.


6. PBI Duties:


A. PBI will use its best effort to cause the establishment of a PBI Enrolled
Dealer Network for ZAP in the Exclusive Territory.


B. PBI shall promptly refer to the Manufacturer any correspondence or
inquiries of any kind that it may receive from purchasers or potential
subdistributors, dealerships or sales representatives located anywhere inside
or outside the Exclusive Territory except New Automobile Franchise Dealer(s)
and NEP's inside the Exclusive Territory.


C. PBI agrees to conduct its busine ...