SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ZAPWORLD.COM
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 24, 2000
The 2000 Annual Meeting of Stockholders of ZAPWORLD.COM, Inc. (the
"Company") will be held at 11:30 a.m. Pacific Daylight Time on Saturday, June
24, 2000 at the Sebastopol Community Center, located at 390 Morris Street,
Sebastopol, California 95472, for the following purposes:
1. To elect five Directors to serve until the next annual Meeting of
Shareholders and until their respective successors are elected and
qualified.
2. To approve an amendment to the Articles of Incorporation to increase
the authorized Common Stock of the Company to 20,000,000.
3. To approve amendments to the Company's 1999 Stock Option Plan
increasing the pool available for options to 1,500,000 shares of Common
Stock.
4. To approve an amendment to the Articles of Incorporation to authorize
10,000,000 shares of Indeterminate Preferred Stock in the manner
described in the attached Proxy Statement.
5. To ratify the appointment of Grant Thornton LLP as the independent
auditors of the Company.
The Board of Directors has fixed May 3, 2000 as the record date for
determining shareholders entitled to receive notice of, and to vote at, the
Annual Meeting or any adjournment or postponement thereof. Only shareholders of
record at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting.
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON,
BUT EVEN IF YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE REQUESTED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY FORM AS PROMPTLY AS POSSIBLE TO
ENSURE YOUR REPRESENTATION. SHAREHOLDERS ATTENDING THE ANNUAL MEETING MAY VOTE
IN PERSON EVEN IF THEY HAVE PREVIOUSLY SUBMITTED THEIR PROXY.
May __, 2000 By Order of the Board of Directors
Gary Starr
Chief Executive Officer, President
<PAGE>
ZAPWORLD.COM
117 Morris St.
Sebastopol, California 95472
PROXY STATEMENT
For the Annual Meeting of Shareholders
to be held on Saturday, June 24, 2000
This Proxy Statement and the accompanying Proxy form, attached hereto
as Appendix A, are furnished to the shareholders of ZAPWORLD.COM (the "Company"
or "ZAP") in connection with the solicitation of proxies by the Board of
Directors for use at the 2000 Special Meeting of Shareholders (the "Meeting").
The meeting will be held on Saturday, June 24, 2000, beginning at 11.30 am at
the Sebastopol Community Center, located at 390 Morris St., Sebastopol,
California 95472. Included herewith is the annual report, which consists of the
10KSB of ZAP for the year ended December 31, 1999 (the "Annual Report") and the
10QSB for the three-month period ended March 31, 2000.
The Company's principal offices are located at 117 Morris Street,
Sebastopol, California 95472. The Notice of Special Meeting, this Proxy
Statement and the enclosed form of Proxy were initially mailed to shareholders
on or about May 25, 2000.
The enclosed Proxy is solicited by the Board of Directors of ZAP.
ZAP will bear the entire cost of preparing, assembling and mailing the
Notice of Annual Meeting and this Proxy Statement to shareholders. ZAP has made
arrangements to forward copies of proxy materials to brokerage houses,
fiduciaries and custodians, nominees and fiduciaries for forwarding of proxy
soliciting material to the beneficial owners of the Common Stock of ZAP at ZAP's
expense. In addition to the solicitation of proxies by mail, some of the
officers and directors and regular employees of ZAP may without additional
compensation solicit proxies by telephone or personal interview. ZAP will bear
the costs of these solicitations.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The record date for determining the shareholders entitled to vote at
the meeting is May 3, 2000. As of that date, there were 5,226,594 shares of
Common Stock issued and outstanding and entitled to vote at the Meeting. There
were no shares of any other class of stock outstanding which were entitled to
vote as of that date. It is important that your shares be represented at the
Meeting. Please complete and sign the enclosed Proxy and return it to ZAP.
The nominees for election to the Board of Directors who receive the
greatest number of votes cast for the election of Directors by the shares
present, in person or by proxy, shall be elected Directors. To approve the
proposed amendment to the Company's Articles of Incorporation, a majority of
outstanding shares of Common Stock entitled to vote on the proposed amendment
must vote in favor of the amendment. To approve the amendments to the Company's
1999 Stock Option Plan, a majority of the shares of Common Stock present in
person or represented by proxy and entitled to vote at the meeting must vote in
favor of the amendments. To ratify the appointment of independent auditors for
the Company, a majority of outstanding
<PAGE>
shares of Common Stock entitled to vote on the proposed amendment must vote in
favor of the amendment.
PROXY VOTING
Shares for which proxy cards are properly executed and returned, or
properly voted telephonically, will be voted at the Annual Meeting in accordance
with the directions noted thereon or, in the absence of directions, will be
voted "FOR" the election of each of the nominees to the Board of Directors named
on the following page, "FOR" the proposal to amend the Employee Stock Option
pool to expand it to 1,500,000 shares, "FOR" approval of having 20,000,000
authorized shares of Common Stock, "FOR" Approval of having 10,000,000
authorized shares of Indeterminate Preferred Stock, and "FOR" ratification of
the auditors of the Company. Should any other business properly come before the
meeting, the person or persons named as the proxy shall be allowed to vote on
such a matter as that person or those persons determine in his, her or their
sole discretion.
The manner in which your shares may be voted by proxy depends on how
your shares are held. If you own shares of record, meaning that your shares of
Common Stock are represented by certificates or book entries in your name so
that you appear as a stockholder on the records of our stock transfer agent,
American Securities Transfer, a proxy form for voting those shares will be
included with this proxy statement. You may vote those shares by completing,
signing and returning the proxy card in the enclosed envelope.
If you own shares through a bank or brokerage firm account, you may
instead receive a voting instruction form with this proxy statement, which you
may use to instruct how your shares should be voted. Just as with a proxy, you
may vote those shares by completing, signing and returning the voting
instruction form in the enclosed envelope. Many banks and brokerage firms have
arranged for internet or telephonic voting of shares and provide instructions
for using those services on the voting instruction form.
ATTENDANCE AND VOTING AT THE ANNUAL MEETING
If you own shares of record, you may attend the Annual Meeting and vote
in person, regardless of whether you have previously voted on a proxy card or
telephonically. If you own shares through a bank or brokerage firm account, you
may attend the Annual Meeting, but in order to vote your shares at the meeting,
you must obtain a "legal proxy" from the bank or brokerage firm that holds your
shares. You should contact your account representative to learn how to obtain a
"legal proxy." We encourage you to vote your shares in advance of the Annual
Meeting date by one of the methods described above, even if you plan on
attending the Annual Meeting. You may change or revoke your proxy at the Annual
Meeting as described below even if you have already voted.
ABSTENTION
Abstention votes will be counted as present or represented at the
Meeting for purposes of determining whether a quorum exists. Broker non-votes
will not be counted as present or represented at the Meeting for the purpose of
determining whether a quorum exists. A majority of the outstanding shares of
Common Stock present in person or represented by proxy constitutes a quorum for
the transaction of business at the Annual Meeting. In the election of Directors,
an abstention will have no effect on the outcome. Abstention from voting will
have the same effect as voting against the proposal to amend the Company's
Articles of Incorporation, against the
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proposal to approve the amendments to the Company's 1999 Stock Option Plan, and
against the ratification of the independent auditors.
REVOCATION
Any person who completes the enclosed proxy form may revoke that proxy
at any time prior to its exercise by delivering to the Secretary of the Company
a written notice of revocation or a duly executed proxy form bearing a later
date or by attending the Annual Meeting and voting in person. Any stockholder
holding shares through a bank or brokerage firm may revoke a previously granted
proxy or change previously given voting instructions by contacting the bank or
brokerage firm, or by obtaining a "legal proxy" from the bank or brokerage firm
and voting at the Annual Meeting. A person may also revoke a proxy by attending
the Meeting and voting his or her shares personally. Proxies that have been
properly dated, signed and returned will be voted in accordance with the
instructions given by the shareholder.
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INTEREST OF CERTAIN PERSONS IN MATTER TO BE ACTED UPON
<TABLE>
The following table sets forth certain information regarding the number
of shares of the voting securities which each 5% or greater shareholder,
director, each nominee for election to the Board of Directors and the Executive
officers of ZAP owned as of March 31, 2000 as well as the percentage of shares
which the executive officers and directors owned as a group as of that date.
<CAPTION>
Amount and Percent of
Name Director Address Nature of Class
Since Beneficial Owner
<S> <C> <C> <C> <C>
Gary Starr 1994 117 Morris St. 516,005(1) 9.8%
Sebastopol, CA 95472
Robert E. Swanson 1999 947 Linwood Ave. 1,250,237(2) 23.9%
Ridgewood, NJ 07450
Douglas R. Wilson 1999 947 Linwood Ave. 1,250,237(3) 23.9%
Ridgewood, NJ 07450
Lee Sannella 1995 117 Morris St. 71,952 1.37%
Sebastopol, CA 95472
William D. Evers 1999 155 Montgomery, 12th Flr 1,723(4) .03%
San Francisco, CA 94104
All other executive officers .39%
All officers and directors as a group 35.49%
James McGreen N/A 562,900(5) 10.7%
<FN>
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(1) Gary Starr owns 9.8% of the outstanding stock of ZAP, constitutes one of the
five members of the Board of Directors, and is the Chief Executive Officer and
President of ZAP. Mr. Starr holds 486,005 shares in his name and indirectly owns
30,000 shares which are in his son's names.
(2) Robert E. Swanson is an officer of Ridgewood Power and a manager of the
shares owned by Ridgewood ZAP, LLC which owns 23.9% of ZAP. Mr. Swanson
personally does not own any shares of ZAP, he constitutes one of the five
members of the Board of Directors and is also Chairman of the Board.
(3) Douglas R. Wilson is an officer of Ridgewood Power and a manager of the
shares owned by Ridgewood ZAP, LLC which owns 23.9% of ZAP. Mr. Swanson
personally does not own any shares of ZAP, he constitutes one of the five
members of the Board of Directors.
(4) William D. Evers is a director of the Board of ZAP. His law firm Evers &
Hendrickson has provided legal services for ZAP.
(5) James McGreen, formerly President of ZAP, resigned from the Board on
December 17, 1999. He currently owns 562,900 shares of ZAP.
</FN>
</TABLE>
<PAGE>
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
The Bylaws state that the Board of Directors shall consist of between
five and seven members, and the minimum number of Board members be set at five.
The Board of directors has set the number at five, and there are currently five
members of the Board of Directors.
Persons may be nominated for election to the Board of Directors by the
shareholders upon the making of a proper motion at the Meeting.
Five directors are to be elected at the Meeting to serve until the 2001
Annual Meeting of Shareholders or until their respective successors are duly
elected and qualified. The Board of Directors will present for election by the
shareholders and recommends a vote FOR the following nominees:
Gary Starr, Robert E. Swanson, Douglas R. Wilson, Lee Sannella, and William D.
Evers. Each nominee was recommended unanimously by the Board of Directors for
presentation to the shareholders for election at the Meeting. Each nominee is
currently a member of the Board of Directors.
Persons receiving a plurality of the votes cast at the Meeting will be
elected to the Board of Directors. A "plurality" means that the individuals who
receive the largest number of votes cast are elected as directors up to the
maximum number of directors to be chosen. Votes against any candidate and any
shares not votes (such as by abstention or broker non-votes) will have no impact
on the election of directors. All proxies will be voted FOR the election of each
of these nominees unless authority to vote for the election for any nominee or
nominee is withheld by the shareholder giving the proxy. If any nominee should
unexpectedly decline or be unable to act as a director, the proxies may be voted
for a substitute nominee to be designated by the Board of Directors. The Board
of Directors does not believe that any nominee will decline to serve.
Shareholders are entitled to one vote for each share held. However, in
the election of directors, shareholders shall not be entitled to cumulate votes
unless the candidates' names have been placed in nomination before the
commencement of the voting and a shareholder has given notice at the meeting,
and before the voting has begun, of his or her intention to cumulate votes. If
any shareholder has given such notice, then all shareholders entitled to vote
may cumulate their votes by giving one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of his or her shares
or by distributing such votes on the same principle among any number of
candidates as he or she thinks fit. The number of directors to be elected, shall
be elected. Votes cast against a candidates or which are withheld shall have no
effect. Upon the demand of any shareholder made before the voting begins, the
election of directors shall be by ballot rather than by voice vote.
Background information with respect to the five nominees for election
to the Board of Directors is set forth below.
<PAGE>
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
Gary Starr has been a Director and executive officer of ZAP since its inception
in 1994. He has been the Chief Executive Officer and President of ZAP since
September 1999. He has been building, designing, and driving electric cars for
more than 25 years. In addition to overseeing the marketing of more than 35,000
electric bicycles and other electric vehicles, Mr. Starr has invented several
solar electric products and conservation devices. Mr. Starr founded U.S.
Electricar's electric vehicle operation in 1983. In 1993, Mr. Starr earned a
Private Industry Council Recognition Award for creating job opportunities in the
EV industry and was named as one of the ten most influential electric car
authorities by Automotive News. He has also received recognition awards for his
contributions toward clean air from the American Lung Association of San
Francisco, CALSTART and U.S. Senator Barbara Boxer. Mr. Starr has several
publications: Electric Cars: Your Guide to Clean Motoring, The Shocking Truth of
Electric Cars, and The True Cost of Oil. In addition, he has appeared on more
than 300 radio and television talk and news shows (including Larry King Live,
The Today Show, Inside Edition, CNN Headline News, Prime Time Live, and the CBS
Evening News and the McNeil Lehrer News Hour) as a recognized authority in the
field of electric vehicles. Mr. Starr has a Bachelor of Science Degree from the
University of California, Davis in Environmental Consulting and Advocacy.
Robert E. Swanson has been Chairman of the Board of ZAPWORLD.COM since 1999. Mr.
Swanson is Chairman of the Board, sole director and sole stockholder of
Ridgewood Capital Corporation. Mr. Swanson is also Chairman of the Board of the
Ridgewood Fund and President, registered principal and sole stockholder of
Ridgewood Securities Corporation. In addition, Mr. Swanson is President and sole
shareholder of Ridgewood Energy, Ridgewood Power and Ridgewood Power Management.
Ridgewood Power is a managing shareholder of each of the prior Programs and Mr.
Swanson is the President of each prior Program. Since 1982, Mr. Swanson, through
a number of entities, has sponsored and been a principal of more than 47
investment programs involved in gas exploration and development, which programs
have raised approximately $200 million from the sale of investment units. Mr.
Swanson was also a tax partner at the former New York and Los Angeles law firm
of Fulop & Hardee and an officer in the Investment Division of Morgan Guaranty
Trust. His specialty was in personal and financial planning, including income,
estate and gift tax. Mr. Swanson is a member of the New York State and Jersey
bars. He is a graduate of Amherst College and Fordham University Law School. Mr.
Swanson and his wife Barbara Mardinly Swanson are the authors of "Tax Shelters,
A Guide for Investors and Their Advisors." published by Jones-Irwin in 1982 and
published in revised editions in 1984 and 1985.
Douglas R. Wilson has been a Director of ZAPWORLD.COM since 1999. Mr. Wilson is
the Vice President of Acquisitions of Ridgewood Power and the Ridgewood Fund. He
was a principal of Monhegan Partners, Inc., which provided acquisition and
financial advisory for Ridgewood Power and the Prior Programs, from October 1996
until September 1998, when he joined Ridgewood Power as Vice President of
Acquisitions. He has over 14 years of capital markets experience, including
specialization in complex lease and project financings in energy-related
businesses. He has a Bachelor of Business Administration from the University of
Texas and a Masters degree in Business Administration from the Wharton School of
the University of Pennsylvania.
William D. Evers has been a Director of ZAPWORLD.COM since 1999. Mr. Evers is
one of the leading SEC attorneys in California with extensive experience in
start-up and emerging companies, specializing for a number of years in private
placements, Section 25102(n) offerings, Small Corporate Offering Registration,
Reg. A Exemptions, and Small Business Registrations.
<PAGE>
He has handled numerous mergers and acquisitions. Mr. Evers is a name partner in
the law firm of Evers & Hendrickson LLP. Mr. Evers heads the Evers and
Hendrickson Internet Law Group with its emphasis on Internet relationships. Mr.
Evers has also had extensive experience in franchising and has been the CEO or
President of various business ventures. He holds a BA from Yale University and
JD from University of California, Berkeley.
Lee Sannella, M.D. has been a Director of ZAPWORLD.COM since its inception in
1994. Dr. Sannella has been an active researcher in the fields of alternative
transportation, energy and medicine for more than 25 years. Dr. Sannella has
been a founding shareholder in many start-up high tech companies. He was a
Director of U.S. Electricar from 1983 to 1992. A graduate of Yale University, he
maintained an active medical practice for many years in ophthalmology and
psychiatry. He worked with the Sonoma Medical Society on improving radiation
standards and is a best-selling author. He has served on advisory boards of the
City of Petaluma, California, on the Board of Directors of the San Andreas
Health Council of Palo Alto, the Veritas Foundation of San Francisco, and the
AESOP Institute.
Committees, Compensation of the Board of Directors
The Board of Directors has an Audit Committee, which was established in
November of 1999 (the "Committee"). There are currently two members of the
Committee, consisting of Mr. Sannella and Mr. Wilson. The Board of Directors
intends to implement a Compensation Committee following the Annual Meeting.
The Board has not established any other committee to date. The full
Board of Directors makes recommendations concerning the submission of candidates
at shareholders' meetings for election to the Board of Directors. The Board of
Directors may establish committees if it deems it advisable to do so or if the
size of the Board of Directors expands to the extent that the Board of Directors
deems it appropriate to create additional committees.
The Board of Directors met eight times in 1999. All of the directors
have attended at least 90% of the meetings of the Board of Directors in 1999.
The Company's directors do not receive any cash compensation for their
service on the Board of Directors, but directors may be reimbursed for certain
expenses in connection with their attendance at Board meetings.
Directors of the Board, other than Gary Starr, received non-statutory
stock options having a strike price of $6.25 with immediate vesting provided to
them as awards for involvement with the affairs of the corporation. Gary Starr
received 100,000 options with thirty-six months of equal vesting. These options
must be exercised within five years of the date of grant, which was December 14,
1999. Ridgewood Power Corporation was granted options to purchase 100,000 shares
and both William D. Evers and Lee Sannella received 25,000 options each.
Transactions Concerning Board of Directors
ZAP entered into an agreement with Ridgewood Power Corporation of
Ridgewood, NJ in March of 1999. Under the terms of this agreement Ridgewood
Power purchased 678,808 shares of ZAP common stock for $2.05 million. The terms
also included the warrant provision to purchase an additional $2 million of
common stock. Ridgewood elected to exercise this warrant within three months for
571,429 shares of common stock. The shares owned by Ridgewood ZAP
<PAGE>
LLC are managed by Robert E. Swanson and Douglas R. Wilson officers of Ridgewood
Power Corporation.
William D. Evers is a member of the Board of ZAP. His firm Evers &
Hendrickson LLP provided legal services for the Company during 1999, for which
it received $299,000 in compensation. Additionally, Mr. Evers was granted
non-statutory stock options to acquire 25,000 shares at an exercise price of
$3.02 per share and 25,000 shares at an exercise price of $3.50 per share. These
options must be exercised on or before April 1, 2002. These options are in
addition to the options mentioned above.
James McGreen, formerly President and former Director of ZAP, resigned
from the Board of Directors on December 17, 1999. As President he received
compensation in the form of a salary of $34,000 and received 35,000 options. Mr.
McGreen is currently a 10% shareholder of ZAP.
Relationships between Directors and Executive Officers
There are no familial relationships between the directors and executive
officers of the company.
Indebtedness of Management
None of our executive officers are or were indebted to the Company or
any subsidiary at any time since the last Annual Meeting.
Material Proceedings
To the best of the Company's knowledge, there are no material
proceedings to which any nominee is a party, or has a material interest, adverse
to the Company. To the best of the Company's knowledge, there have been no
events under any bankruptcy act, no criminal proceedings and no judgments or
injunctions that are material to the evaluation of the ability or integrity of
any nominee during the past five years.
Reports under Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers to file reports of ownership and changes in
ownership with respect to the securities of the Company and its affiliates with
the Securities and Exchange Commission and to furnish copies of these reports to
the Company. Based on a review of these reports and written representations from
the Company's directors and officers regarding the necessity of filing a report,
the Company believes that during fiscal 1999, all filing requirements were met
on a timely basis.
<PAGE>
PROPOSAL NUMBER 2
Expand the 1999 Employee Stock PLAN to 1,500,000 shares
The Board of Directors adopted the 1999 Stock Option Plan (the "Plan") in May
1999. This Plan authorized 500,000 shares to be allocated to employees according
to Board approval. In December the Board agreed to expand the Plan to 1,500,000
shares.
The following is a summary of the key provisions of the Plan and a
general discussion of the federal income tax aspects of the Plan to the Company
and the recipients of the options. A copy of the Plan is attached as Appendix B,
and the summary contained in this Proxy Statement only summarizes certain
portions of the Plan. For a complete description of the Plan, the Plan should be
read in its entirety.
Purpose
The Board of Directors of ZAP created the Plan to provide non-cash
incentives to its key employees, directors and consultants. The Plan gives
employees, directors and consultants the ability to acquire shares of
ZAPWORLD.COM Common Stock at a predetermined price for a period of time
specified in an agreement between the person who is given the option (the
"optionee") and the Company. The Plan is designed to encourage key employees,
directors and consultants to contribute to ZAP's success by giving them a common
interest with the shareholders in increasing the value of the Common Stock. The
Board of Directors also believes that options issued under the Plan may be used
to attract additional capable employees, directors and consultants to join ZAP.
Administration
The Plan is administered by the Board of Directors. The Board makes
determinations as to the number of options each optionee will receive, the
exercise price, the duration of the vesting schedule and the other terms of the
options, subject to limitation as set forth in the Plan.
Eligible Participants
The Plan allows for the grant of incentive stock options ("ISOs"),
which are options that qualify as incentive stock options under the Internal
Revenue Code of 1986, to employees of the Company. The Plan also allows for the
grant of non-statutory stock options ("NSOs"), which do not qualify as incentive
stock options, to directors, employees and consultants of the Company.
The Board of Directors determines which of the eligible persons will
receive options. The Board may apply whatever criteria it deems appropriate in
choosing who will receive options as well as the number of shares each person
may purchase and the period over which the options vest, subject to the
limitations imposed by the Plan.
Shares subject to Plan
Currently, ZAP may grant options to purchase 1,500,000 shares of the
Company's Common Stock under the Plan. The number of share set aside for
issuance under the Plan is subject to adjustments in the event of mergers,
reorganizations, and certain other changes in the outstanding shares of the
Company.
<PAGE>
Terms of Option Grants
Stock Option Agreement. If the Board wishes to grant an option to an
eligible person, that person will be given a stock option agreement. Both the
Company and the prospective optionee must sign the stock option agreement before
any option grant will be deemed effective.
Purchase Price. Each stock option agreement will set forth the price at
which the holder of the option may purchase Common Stock, commonly referred to
as the "exercise price". Subject to the discussion set forth below, the Board
has the authority to determine what the option exercise price will be. The
Exercise Price for each share of Common Stock, which price is not less than the
fair market value per share of Common Stock on the Grant Date, as determined by
the Board; provided, however, in the event Optionee is an Employee and owns
stock representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of its Parent or Subsidiary
corporations immediately before the Grant Date, said exercise price is not less
than one hundred ten percent (110%) of the fair market value per share of Common
Stock on the Grant Date as determined by the Board
The Plan provides that options may be exercised through payment of cash
or by check or through the provisions of the Promissory Note given by the
optionee to the Company.
Vesting. Options granted under the Plan will typically be subject to
vesting. This means that initially the optionee will be able to purchase none or
only some of the shares for which he or he has been given an option. The number
of shares the optionee may purchase increase over time while the optionee is
employed by the Company until, if the holder remains with the Company for a
sufficient period, the optionee is eligible to purchase all of the shares for
which the holder was given an option. The rate by which the options vest will be
stated in the stock option agreement between the Company and the optionee. The
Plan provides that vesting shall occur at a rate of no less than 20% of the
total number of shares granted under the option agreement per year and that all
options will become fully vested by no later than 36 months after the date the
options are granted.
Term. With certain exceptions for employees who own 10% or more of the
Company's stock, whose ISOs expire after five years, the term of each option is
ten years from the date of grant unless a shorter period is specified in the
stock option agreement. The period of time during which an option may be
exercised may be reduced, however, under certain circumstances. If an optionee
ceases being employed or providing services to the Company for any reason (other
than death or disability), the optionee will have ninety days following the
effective date of termination to exercise the option before the option expires.
If the optionee suffers a disability that makes him or her substantially unable
to perform his or her duties for any 12 month period, the optionee, the
optionee's qualified representative or estate may for a period of six months
following the date of such or disability exercise the option (but in no event
later than the date of expiration of the term of this Option as set forth in the
option agreement). If the optionee dies, her option may be exercised, at any
time within twelve (12) months following the date of death (but in no event
later than the date of expiration of the term of this Option as set forth in the
option agreement). The number of shares the optionee was entitled to purchase
will equal the number of shares the optionee was entitled to purchase on the
date of termination, disability or death and all vesting will cease on that
date.
Stock options terms will also change, subject to certain types of
reorganizations of the Company. These are (i) a merger, whether or not the
Company is the surviving corporation, if the beneficial owners of the Company's
securities immediately prior to the merger as a group own
<PAGE>
less than 50% of the surviving entity's outstanding voting securities after the
merger, (ii) the sale or exchange of all or substantially all of the assets of
the Company (other than a sale or transfer to a subsidiary of the Company as
defined in section 424(f) of the Code. (A)The Company shall notify the Optionee
no less than 15 days prior to such event of the event, (B) the Optionee shall
become fully vested in all Option Shares, and (C) unless otherwise extended by
the Board, the Option Term shall terminate on the business day immediately
preceding the day of such events.
Term of Plan
The Board of Directors may amend or terminate the Plan at any time, and
the Board of Directors may discontinue granting options under the Plan at any
time. All material amendments to the Plan will require approval of the
shareholders. Amendments to the Plan or the termination of the Plan will not
adversely affect the rights of optionees under their stock option agreements,
unless the individual optionees consent to the amendment of termination of their
options.
Federal Income Tax Consequences
The material U.S. federal income tax consequences to the Company and to
any person granted a stock award or an option under the 1999 Plan who is subject
to taxation in the United States under existing applicable provisions of the
Code and underlying Treasury Regulations are substantially as follows. The
following summary does not address state, local or foreign tax consequences and
it is based on present law and regulations as in effect as of the date hereof.
NSOs. No income will be recognized by an optionee upon the grant of an
NSO.
Upon the exercise of an NSO, the optionee will recognize taxable
ordinary income in an amount equal to the excess of the fair market value at the
time of exercise of the shares acquired over the exercise price. Upon a later
sale of those shares, the optionee will have capital gain or loss equal to the
difference between the amount realized on such sale and the tax basis of the
shares sold. Furthermore, this capital gain or loss will be long-term capital
gain or loss if the shares are held for more than one year before they are sold.
If payment of the option price is made entirely in cash, the tax basis of the
shares will be equal to their fair market value on the exercise date (but not
less than the exercise price), and the shares' holding period will begin on the
day after the exercise date.
If the optionee uses already-owned shares to pay the exercise price of
an NSO in whole or in part, the transaction will not be considered to be a
taxable disposition of the already-owned shares. The optionee's tax basis and
holding period of the already-owned shares will be carried over to the
equivalent number of shares received upon exercise. The tax basis of the
additional shares received upon exercise will be the fair market value of the
shares on the exercise date (but not less than the amount of cash, if any, used
in payment), and the holding period for such additional shares will begin on the
day after the exercise date.
ISOs. No income will be recognized by an optionee upon the grant of an
ISO.
The rules for the tax treatment of an NSO also apply to an ISO that is
exercised more than three months after the optionee's termination of employment.
Upon the exercise of an ISO during employment or within three months
after the optionee's termination of employment (12 months in the case of
permanent and total disability), for regular tax purposes the optionee will
recognize no ordinary income at the time of exercise
<PAGE>
(although the optionee will have income for alternative minimum income tax
purposes at that time equal to the excess of the fair market value of the shares
over the exercise price). If the acquired shares are sold or exchanged after the
later of (i) one year from the date of exercise of the option and (ii) two years
from the date of grant of the option, the difference between the amount realized
by the optionee on that sale or exchange and the option exercise price will be
taxed to the optionee as long-term capital gain or loss. If the shares are
disposed of in an arms' length sale before such holding period requirements are
satisfied, then the optionee will recognize taxable ordinary income in the year
of disposition in an amount equal to the excess of the fair market value of the
shares received on the exercise date over the exercise price (or, if less, the
excess of the amount realized on the sale of the shares over the exercise
price), and the optionee will have short-term or long-term capital gain or loss,
as the case may be, in an amount equal to the difference between (i) the amount
realized by the optionee upon the disposition of the shares and (ii) the
exercise price paid by the optionee increased by the amount of ordinary income,
if any, so recognized by the optionee.
Company Deduction. In all the foregoing cases, the Company will be
entitled to a deduction at the same time and in the same amount as the
participant recognizes ordinary income, subject to certain limitations. Among
these limitations is Section 162(m) of the Code. As discussed above, certain
performance-based compensation is not subject to the Section 162(m) limitation
on deductibility. Stock options and restricted stock and performance share
awards can qualify for this performance-based exception if they meet the
requirements set forth in Section 162(m) and Treasury Regulations promulgated
thereunder. The 1999 Plan has been drafted to allow compliance with those
performance-based criteria.
Awards of Options to Date under 1999 Stock Option Plan
Over the last year the board approved the awards of the following
options under the Plan. The exercise price of these options varies between $3.02
and $7. All employee options are ISOs and the vesting period is 36 months. Some
NSO optionees have 36 month vesting periods while others have immediate vesting
provisions in their agreements.
Gary Starr (CEO, President) 135,000
James McGreen (former President) 35,000
Andrew Hutchins (Vice-President,Operations) 30,000
Scott Cronk (Vice-President, Business Development) 50,000
Sanford Theodore (Controller) 30,000
All employees as a group (excluding executive officers) 201,000
All employees as a group (including executive officers 506,000
All directors as a group (including Gary Starr) 345,000
<PAGE>
Requirement of Shareholder Approval
The 1999 Stock Option Plan went into effect May 16, 1999. It was
approved by the shareholders at the Annual Meeting on that date. On December 14,
1999, the Board of Directors resolved that the number of authorized shares in
the pool of this Plan be increased from 500,000 shares to 1,500,000 shares. This
action, which amends the Stock Option Plan requires that shareholder approval be
obtained no later than 12 months after the Board resolution to increase the
number of shares.
Recommendation
The Board of Directors unanimously recommends that the shareholders
vote "FOR" approval to expand the Stock Option pool to 1,500,000 shares.
<PAGE>
PROPOSAL NUMBER 3
The Articles of Incorporation currently authorize ZAP to issue a
maximum of 10,000,000 shares of Common Stock. Under California law, the Board of
Directors may not issue any share in excess of that number unless the Articles
of Incorporation are amended to allow ZAP to issue a greater number of shares.
To pay for future Company growth and possible acquisitions, ZAP will
need to raise additional funds. The form in which the financing will be obtained
has not yet been determined, but the Board of Directors believes that this
raising of new financing will likely involve the Company's issuance of
additional shares from time to time to raise financing for other purposes. By
increasing the number of shares of Common Stock the Company is authorized to
issue, the Board of Directors believes that the Company will have greater
flexibility in being able to raise the required additional financing, thereby
benefiting the Company.
Description of Amendment - Legal Effect
The text of the Proposed amendment to the Articles of is set forth in
Attachment B to this Proxy Statement. The following summarizes the material
provisions of the amendment.
If approved by the shareholders, the amendment would allow the Company
to issue a maximum of 20,000,000 shares of Common Stock. This is an increase of
10,000,000 shares over the limit currently contained in the Articles of
Incorporation.
With certain exceptions, the Company may issue additional shares of
Common Stock up to the maximum allowed under the Articles of Incorporation
without shareholder approval.
If the shareholders approve the amendment, the amendment to the
Articles of Incorporation will be submitted for filing with the California
Secretary of State. The amendment will enter into effect upon its acceptance for
filing by the California Secretary of State.
Required Vote for Approval
Approval of the amendment will require the affirmative vote of a
majority of the outstanding shares of the Company's stock entitled to vote at
the Meeting. Each shares is entitled to one vote. Proxies solicited by the Board
of Directors will be voted FOR this proposal unless the shareholders specify to
the contrary in their proxies of specifically abstain from voting on this
matter. Abstention votes and broker non-votes will have the effect of a vote
against the amendment. Because the affirmative vote of a majority of all of the
outstanding shares is required to approve the amendment, rather than only a
majority present at the Meeting, shares that are not presented at the Meeting
and do not vote will have the effect of a vote against the amendment.
Recommendation
The Board of Directors unanimously recommends that the shareholders
vote "FOR" approval of Amendment to the Articles of Incorporation to increase
the authorized shares of Common Stock to 20,000,000.
<PAGE>
PROPOSAL NUMBER 4
The Articles of Incorporation of ZAP currently do not have a provision
to authorize Preferred Stock. This proposal would authorize the Company to have
10,000,000 shares of Indeterminate Preferred Stock. Under California law, the
Board of Directors may not issue any class of shares unless specified in the
Articles of Incorporation.
To pay for future Company growth and possible acquisitions, ZAP will
need to raise additional funds. The form in which the financing will be obtained
has not yet been determined, but the Board of Directors believes that this
raising of new financing will likely involve the Company's issuance of
additional shares from time to time to raise financing for other purposes. By
providing for Preferred Stock, the Board of Directors believes that the Company
will have greater flexibility in being able to raise the required additional
financing, thereby benefiting the Company. The Preferred Stock is known as
"indeterminate" preferred. This allows the Board of Directors to set the rights,
privileges and preference of various series of Preferred Stock without having to
obtain shareholder approval. This allows for greater flexibility and less delay
when a preferred issued is required.
Required Vote for Approval
Approval of the amendment will require the affirmative vote of a
majority of the outstanding shares of the Company's stock entitled to vote at
the Meeting. Each shares is entitled to one vote. Proxies solicited by the Board
of Directors will be voted FOR this proposal unless the shareholders specify to
the contrary in their proxies of specifically abstain from voting on this
matter. Abstention votes and broker non-votes will have the effect of a vote
against the amendment. Because the affirmative vote of a majority of all of the
outstanding shares is required to approve the amendment, rather than only a
majority present at the Meeting, shares that are not presented at the Meeting
and do not vote will have the effect of a vote against the amendment.
Recommendation
The Board of Directors unanimously recommends that the shareholders
vote "FOR" approval of Amendment to the Articles of Incorporation to authorize
10,000,000 shares of Indeterminate Preferred Stock.
<PAGE>
PROPOSAL NUMBER 5
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Grant Thornton, LLP as the
independent public accountants for the Company for the fiscal year ending
December 31, 2000. A representative of Grant Thornton LLP is expected to be at
the Annual Meeting. The representative will be available to respond to
appropriate questions of shareholders.
The Board of Directors recommends that shareholders vote "FOR" the
ratification of the appointment of Grant Thornton LLP as independent accountants
of the Company.
<PAGE>
<TABLE>
Executive Compensation
(Item 402(b))
<CAPTION>
Executive Compensation Table
(rounded to hundreds, except per
share)
Long-Term Compensation
-----------------------------------------
Awards Payouts
-----------------------------------------
( a ) ( b ) ( c ) ( d ) ( e ) ( f ) ( g ) ( h )
Other Restricted Stock
Annual Stock Underlying LTIP
Salary Bonus Compensation Award Options/SAR Payouts
Position Year ( $ ) ( $ ) ( $ ) ( $ ) ( # ) ( $ )
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James McGreen 1997 38,000 2,250
Former President 1998 37,500
1999 34,000 200 35,000
Gary Starr 1997 35,000
Chief Executive Officer 1998 35,700
And President 1999 39,500 200 135,000
</TABLE>
The Company does have an employment agreement with its Chief Executive Officer
Gary Starr.
Opinion/SAR Grants in Last Fiscal Year
(Item 402(c))
(a) (b) (c) (d) (e)
# of % of Total
Securities Options/SARs Exercise
underlying Granted to or Base
Options/SARs Employees In Price Expiration
Name Granted (#) Fiscal Year (#/Sh) Date
- ---- ----------- ----------- ------ ----
GARY STARR 35,000 6.9% $7.00 7/19/04
GARY STARR 100,000 19.7% $6.25 7/19/04
<PAGE>
<TABLE>
Aggregated Opinion/SAR Exercises in Last Fiscal Year and Fiscal Year End
Option/SAR Values
(Item 402(d))
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-money Options/SARs
Options/SARs At Fiscal at Fiscal Year End ($)
Year End
Shares
Acquired on Value
Name Exercise # Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ---------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
GARY STARR 32,319(1) $189,874 18,333/31,944 $213,121/$371,349(4)
72,000(2) $354,960
15,181(3) $ 88,239
<FN>
- ----------
(1) Exercised on 11/8/99, strike price was $1.00. Market closed at $5.87 on that
day.
(2) Exercised on 4/06/99, strike price was $.40. Market closed at $4.93 on that
day.
(3) Exercised on 9/30/99, strike price was $1.00. Market closed at $5.8125 on
that day.
(4) Market closed at $11.625 on 12/31/99
</FN>
</TABLE>
<PAGE>
PROPOSALS OF SHAREHOLDERS
Proposals which shareholders wish to be considered for inclusion in the
Proxy Statement and the form of proxy with regard to the 2001 Annual Meeting
must be received by the Secretary of the Company by February 16, 2001 and must
comply with the requirements of Rule 14a-8 under the Securities Exchange Act of
1934, as amended.
OTHER BUSINESS
It is not intended that any business other than that set forth in the
Notice of Annual Meeting and more specifically described in this Proxy Statement
will be brought before this meeting. If any other business should properly come
before the Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote in accordance with their best judgment on that business or
any matters dealing with the conduct if the Meeting pursuant to the
discretionary authority granted in the Proxy.
By Order of the Board of Directors
Oonagh Duggan
Secretary
Sebastopol, California
May ___, 2000
<PAGE>
Appendix A
<PAGE>
<TABLE>
ZAPWORLD.COM, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned holder(s) of the stock of Zapworld.com, Inc. (Zapworld)
acknowledge(s) receipt of the Notice of Annual Meeting of Shareholders of
Zapworld, dated May __, 2000, and a Proxy Statement of the Board of Directors of
the same date. The undersigned hereby appoint(s) Gary Starr, President, or,
instead of said proxy, __________________ (write in name of proxy you wish to
represent you) with full power of substitution, as proxy to appear and vote all
of the shares of the stock of Zapworld registered in the name of the undersigned
which the undersigned could vote if personally present and acting at the 2000
Annual Meeting of Shareholders of Zapworld, to be held at the Community Center,
390 Morris Street, Sebastopol, California on Saturday, June 24, 2000 at 11:30am,
and at any adjournments thereof. The holder of this proxy shall vote upon the
items set forth in the Notice of Annual Meeting and the Proxy Statement in the
manner set forth below and shall vote according to his discretion on all other
matters which may be properly presented for consideration at that meeting,
including but not limited to all matters related to the conduct of the meeting.
The holder of this proxy is granted discretionary authority to cumulate votes in
the election of directors among those nominees for whom the undersigned
has(have) granted the authority to vote.
<S> <C> <C> <C> <C>
1. To elect as directors the nominees set forth below. [ ] FOR all nominees listed below (except as
marked to the contrary below).
[ ] WITHOLD AUTHORITY to vote for all of the
nominees listed below.
(INSTRUCTION) To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below:
Gary Starr, Robert E. Swanson, Lee Sannella, Douglas R. Wilson, William D. Evers
2. To increase the number of shares issuable under the Stock Option Plan to [ ] FOR [ ] AGAINST [ ] ABSTAIN
1,500,000.
3. To amend the Articles of Incorporation to increase the number of shares of [ ] FOR [ ] AGAINST [ ] ABSTAIN
Common Stock Zapworld may issue to 20,000,000.
4. To amend the Articles of Incorporation to authorize 10,000,000 shares of [ ] FOR [ ] AGAINST [ ] ABSTAIN
Indeterminate Preferred Stock in the manner described in the Proxy Statement.
5. To ratify the appointment of Grant Thornton LLP as the independent auditors [ ] FOR [ ] AGAINST [ ] ABSTAIN
of Zapworld.
</TABLE>
PLEASE COMPLETE, DATE AND SIGN PROXY ON REVERSE SIDE
<PAGE>
By executing this proxy, I(we) hereby revoke all previous proxies with regard to
any matter to be voted upon at the Annual Meeting.
Number of Shares:__________
Date: ____________, 2000
--------------------------------------------
Signature of Shareholder
--------------------------------------------
Printed Name of Shareholder
--------------------------------------------
Signature of Joint Shareholder
--------------------------------------------
Printed Name of Joint Shareholder
INSTRUCTIONS
Please date and sign exactly as your name(s) appear(s) above. When
signing as attorney, executor, administrator, trustee or guardian or as an
officer of a corporation, partnership or other business entity, please give your
full title.
The Board of Directors recommends a vote FOR each of the persons listed above
for election to the Board of Directors and FOR each of the proposals listed in
the Notice of Meeting and Proxy Statement. This proxy will be voted as directed
by the shareholder(s) duly executing this proxy. If no direction is made with
respect to any or all of the above proposals, this proxy will be voted FOR each
of the persons listed above and FOR all of the proposals listed in the Notice of
Meeting and the Proxy Statement.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE
