California Firm Signs Electric Bicycle Agreement With China.

SACRAMENTO, Calif.--(BUSINESS WIRE)--Feb. 12, 1997--ZAP Power Systems of Sebastopol, Calif. announced today that through its entity ZAP China it has entered into an agreement with the Shanghai Forever Company Ltd. to cooperate on the production and marketing of electric bicycles in China.

The 50 year old governmental/publicly owned Forever Company will distribute the ZAP Forever Bicycles through its 1,400 sales outlets in China. The bicycle factory, which has produced over 90 million bicycles and currently manufactures over 3 million bicycles a year, will also cooperate with ZAP in the manufacture of the ZAP electric bicycle.

Under the terms of the agreement, ZAP will provide Forever with up to 5,000 ZAP motors for a 6 month sales test program. After the test program, the parties will form a joint venture to develop, manufacture, and distribute the electric bicycle and other electric vehicle products including electric tricycles, electric scooters, electric motorcycles and electric wheel chairs.

"This order is not only a large order for ZAP, it is probably the single largest order for any kind of electric vehicle used for daily street use," said Margaret Wong, President of McWong International.

"Forever looked at many electric bicycle companies around the world before they decided to go with ZAP. They went with ZAP because of their adaptability to the Chinese market, their low cost, and their experience in all kinds of electric vehicles. They intend to start with bicycles, then move on to other electric vehicles, such as electric scooters, motorcycles and other types of vehicles."

"Governor Wilson's recent mission to Asia demonstrated outstanding potential for the introduction of California's world-leading environmental technologies to China. We intend for today's agreement to be the first of many joint efforts with our Asian partners," said James M. Strock, California Secretary for Environmental Protection.

"Exporting emerging technologies and fostering new partnerships in Asia is driving California exports," said Julie Meier Wright, Secretary of the California Trade and Commerce Agency, who accompanied Wilson on the Asia trade mission. "California is showing itself to be at the forefront of entrepreneurial energy in the global market."

ZAP Managing Director Gary Starr said, "This contract is the result of over 10 years of work in developing the correct relationships. Our partner in this venture, Sacramento based McWong International, is a leader in China/U.S. business trade and joint ventures."

Mr. Fan Da Zheng, President of the Shanghai Light Industry Holding Company Group who oversees 790 companies including Forever, welcomed the cooperation between Forever and ZAP. "If the relationship is based on mutual trust and mutual benefits the venture will be a great success. The project has my support and will have good potential. Since Forever is one of the largest manufacturers in China, it is the right partner," he said.

"Shanghai has recently banned the license of new gas mopeds and bicycles and intends to replace 80 percent of existing gas powered bicycles. Today there are over 470,000 such vehicles in just the city of Shanghai, and the government plans to encourage electric vehicles to take their place."

Starr said, "This contract is not only a milestone for ZAP, it is an historic moment in transportation. With this relationship, ZAP can be one of the leaders in low cost electric vehicles. Additionally, as its economy prospers, China is in the unique position to skip the polluting gas moped and scooter phase altogether and leapfrog directly from its millions of human powered bikes to clean electric vehicles. The pollution savings and growth possibilities are staggering."

ZAP intends to finance the increase in manufacturing and marketing of its electric bicycles through a recently cleared public offering of stock. All the shares offered are being sold directly by the Company. A prospectus is available in selected states by calling ZAP at its Sebastopol office at 800/251-4555, or by downloading it from ZAP's web site at http://zapbikes.com .

CONTACT: ZAP Power Systems

Alex Campbell, 707/824-4150