<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
ZAP.COM CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number 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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(5) Total fee paid:
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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 paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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<PAGE> 2
[zap.com Logo]
100 Meridian Centre, Suite 350
Rochester, New York 14618
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Zap.Com Corporation, to be held on June 29, 2000, at 2:00 p.m., EST, time, at
the Canandaigua Inn on the Lake, 770 South Main Street, Canandaigua, New York
14424. At the meeting, we will consider those matters described in the
accompanying notice of annual meeting of stockholders, report on the progress of
the Company, comment on matters of interest and respond to your questions. A
copy of the Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1999 containing financial statements, preceded or accompanies this
mailing.
We appreciate your continued interest in Zap.Com.
Sincerely,
AVRAM A. GLAZER,
President and Chief Executive Officer
<PAGE> 3
ZAP.COM CORPORATION
100 MERIDIAN CENTRE, SUITE 350
ROCHESTER, NEW YORK 14618
(716) 242-8600
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 29, 2000
To the Stockholders of Zap.Com Corporation:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Zap.Com Corporation, a Nevada corporation ("Zap.Com" or the
"Company"), will be held at the Canandaigua Inn on the Lake, 770 South Main
Street, Canandaigua, New York 14424, on June 29, 2000, at 2:00 p.m., EST, for
the following purposes:
1. To elect a director;
2. To ratify the appointment of PricewaterhouseCoopers, LLP as the
Company's independent public accountants; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors has set the close of business on May 25, 2000 as the
record date for the Annual Meeting. Only stockholders of record at the close of
business on the record date are entitled to notice of, and to vote at the Annual
Meeting and any adjournments thereof. The stock transfer books of the Company
will not be closed following the record date. A list of such stockholders will
be available during normal business hours at the offices of the Company for
inspection at least ten days prior to the Annual Meeting. A copy of the Annual
Report of the Company's operations during the fiscal year ended December 31,
1999 and Zap.Com's Information Statement accompanies this notice.
Stockholders are cordially invited and encouraged to attend the Annual
Meeting in person.
By Order of the Board of Directors,
AVRAM A. GLAZER,
President and Chief Executive Officer
Rochester, New York
April 28, 2000
<PAGE> 4
ZAP.COM CORPORATION
100 MERIDIAN CENTRE, SUITE 350
ROCHESTER, NEW YORK 14618
(716) 242-8600
INFORMATION STATEMENT
This Information Statement and the accompanying Notice of Annual Meeting of
Stockholders are being furnished to the stockholders of Zap.Com Corporation
("Zap.Com" or the "Company") by the Board of Directors in connection with the
Annual Meeting of Stockholders to be held on June 29, 2000, at 2:00 p.m., EST,
at the Canandaigua Inn on the Lake, Canandaigua, New York 14424, and at any
adjournments thereof (the "Annual Meeting").
It is contemplated that this Information Statement will first be mailed to
Zap.Com stockholders on or about May 29, 2000. WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND A PROXY.
The principal executive offices of the Company are located at 100 Meridian
Centre, Suite 350, Rochester, New York 14618; telephone (716) 242-8600. All
references herein to a fiscal year are to the 12 month period ended on December
31st of the indicated calendar year.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Annual Meeting, including any adjournment(s) thereof, the
stockholders of Zap.Com will be asked to consider and vote upon the election of
a director, the ratification of appointment of the Company's independent public
accountant and to transact such other business as may properly come before the
Annual Meeting or any adjournments thereof. The proposals are described in more
detail in this Information Statement. The Board knows of no other matters that
are likely to be brought before the Annual Meeting.
RECORD DATE; OUTSTANDING SHARES
The Board of Directors of the Company has fixed the close of business on
May 25, 2000 (the "Record Date") as the date for the determination of
stockholders who are entitled to vote at the Annual Meeting and at any
adjournment(s) or postponement(s) thereof. As of April 17, 2000, the Company's
issued and outstanding capital stock consisted of 50,000,000 shares of common
stock, par value $.001 per share (the "Common Stock"), which was held by
approximately 1,685 holders of record. Each share of Common stock is entitled to
one vote in the election of directors and on each matter submitted for
stockholder approval. The Common Stock is the Company's only outstanding class
of stock as of the date of this Information Statement. As of the date of this
Information Statement, Zapata Corporation ("Zapata") holds 48,972,258 shares of
Zap.Com common stock, or approximately 98% of Zap.Com's outstanding common
stock. Accordingly, Zapata will be able to determine the outcome of the election
of director and each proposal to be presented at the Annual Meeting. Zapata has
informed Zap.Com that it intends to vote in accordance with the Board's
recommendations on all proposals to be presented at the Annual Meeting.
QUORUM; ABSTENTIONS AND NON-VOTES; VOTE REQUIRED
The presence at the meeting, in person or by proxy, of the holders of a
majority of the Company's outstanding shares of voting stock is necessary to
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes (which occur if a broker or other nominee does
not have discretionary authority and has not received voting instructions from
the beneficial owner with respect to the particular item) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. If there are not sufficient shares represented in person or by
proxy at the meeting to constitute a quorum, the meeting may be adjourned or
postponed in order to permit further solicitations of proxies by the Company.
With respect to the election of directors, the nominee receiving the
highest number of affirmative votes will be elected to the Board of Directors.
The affirmative vote of a majority of the shares of Common Stock present and
represented at the Annual Meeting will be necessary to ratify the Board's
appointment of PricewaterhouseCoopers, LLP as the Company's independent public
accountants. Abstentions and broker non-votes will have no effect on the outcome
of the election of directors or the approval of the independent public
accountants.
THE DATE OF THIS INFORMATION STATEMENT IS APRIL 28, 2000.
<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTOR
Pursuant to the Company's Restated Articles of Incorporation (the "Restated
Articles") and By-Laws, the size of the Board is currently set at one director.
Avram Glazer is the sole director. Mr. Glazer anticipates expanding the board to
three or more directors at some point in the future.
Directors will be elected by a plurality of the votes cast for director
nominees at the Annual Meeting.
Mr. Glazer has nominated himself to serve for a one year term or until his
successor is duly qualified or elected. Mr. Glazer, age 39, has served as the
sole director and President and Chief Executive Officer of Zap.Com since its
formation in April 1998. Mr. Glazer also serves as President and Chief Executive
Officer of Zapata Corporation (NYSE: ZAP) which as of the date of this
Information Statement holds of record and beneficially approximately 98% of the
Company's outstanding common stock. Mr. Glazer has held these positions since
1995. For more than five years prior to becoming Zapata's President and Chief
Executive Officer, Mr. Glazer was employed by, and worked on behalf of, Malcolm
I. Glazer and a number of entities owned and controlled by Malcolm I. Glazer.
Mr. Glazer also serves as a director of Zapata, Specialty Equipment Companies,
Inc. (a food equipment manufacturer) and Viskase Corporation (f/k/a Envirodyne
Corporation) (a food packaging company) and is chairman of the board and a
director of Omega Protein Corporation (a marine protein company).
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEE AS DIRECTOR.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During Fiscal 1999, the Board of Directors met or acted by written consent
two times.
Upon expansion of the size of the board to three or more directors, the
by-laws require that two standing committees of the board of directors be
activated: the audit committee and the compensation committee, each comprised of
two or more directors. The members of these committees will be appointed
following the expansion of the board to three or more directors.
The primary purpose of the audit committee will be to (1) select the firm
of independent accountants that will audit Zap.Com's financial statements, (2)
discuss the scope and the results of the audit with the accountants and (3)
review Zap.Com's financial accounting and reporting principles. The audit
committee will also examine and discuss the adequacy of Zap.Com's financial
controls with the independent accountants and with management.
The functions of the compensation committee will be to review, approve and
recommend to the board of directors the terms and conditions of incentive bonus
plans applicable to corporate officers and key management personnel, to review
and approve the annual salary of the chief executive officer, and to administer
Zap.Com's 1999 Long-Term Incentive Plan.
DIRECTOR COMPENSATION
Each director who is not an employee of Zap.Com will be compensated at a
set dollar amount to be determined for serving as a director. In addition, each
new non-employee director will, upon joining the board, be granted options under
the Zap.Com 1999 Long-Term Incentive Plan to purchase shares of Zap.Com common
stock at the fair market value for the shares. These options will vest ratably
over three years from the date of the grant. There are no family relationships,
or other arrangements or understandings between or among any of the directors,
executive officers or other persons under which that person was selected to
serve as a director or officer.
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<PAGE> 6
EXECUTIVE OFFICERS
The Company's officers serve at the pleasure of the Board of Directors. The
following table sets forth information concerning the executive officers of
Zap.Com as of the date of this Information Statement:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Avram A. Glazer...................... 39 President, Chief Executive Officer and Chairman of the
Board
Leonard DiSalvo...................... 41 Vice President -- Finance and Chief Financial Officer
Marisa M. Bowe....................... 40 Vice President -- Network Content
Gordon E. Forth...................... 38 Secretary
Gaetano M. Guglielmino............... 30 Vice President and General Manager
Philip A. Jones...................... 31 Director of Finance
</TABLE>
Leonard DiSalvo, age 41, has served as Zap.Com's Vice President -- Finance
and Chief Financial Officer since April 1999. Mr. DiSalvo also serves as
Zapata's Vice President -- Finance and Chief Financial Officer, a position he
has held since joining Zapata in September 1998. Mr. DiSalvo has 18 years of
experience in the areas of finance and accounting. For two years prior to
joining Zapata, Mr. DiSalvo served as a finance manager for Canandaigua Brands,
Inc., a national manufacturer and distributor of wine, spirits and beer. Prior
to that position, Mr. DiSalvo held various management positions in the areas of
finance and accounting in the Contact Lens Division of Bausch & Lomb
Incorporated. Mr. DiSalvo received his B.S. from St. John Fisher College and is
a Certified Public Accountant.
Marisa M. Bowe, age 40, has served as Zap.Com's Vice President -- Network
Content since April 1999. Ms. Bowe is the founding Editor-in-Chief and Publisher
of Word, which is Zapata's Web-based magazine, where she has been employed since
February 1995. Before becoming Editor of Word, Ms. Bowe was Conference Manager
of the Echo virtual community in New York City for approximately one year. Prior
to joining the Echo virtual community, Ms. Bowe was a freelance writer and
television producer for three years. Ms. Bowe is a member of the Advisory
Committee of the Web Development Fund and is listed on the Silicon Alley
Reporter's "Silicon Alley 100" list.
Gordon E. Forth, age 38, has served as Zap.Com's Corporate Secretary since
April 1999. Mr. Forth also serves as Zapata's corporate secretary. Mr. Forth is
a partner of Woods Oviatt Gilman LLP, a Rochester, New York based law firm,
which provides legal services to both Zapata and Zap.Com. Mr. Forth has
practiced law at the Woods, Oviatt firm since 1987. Mr. Forth received his B.A.
from Hope College and his law degree and M.B.A. from Vanderbilt University.
Gaetano M. Guglielmino, age 30, has served as Zap.Com's Vice President and
General Manager since January, 2000. Prior to that he served as Zap.Com's
Director of Marketing and Sales since June 1999. From January 1998 until joining
Zap.Com, Mr. Guglielmino was employed by Bausch & Lomb Incorporated, where he
was the Strategy Manager -- Disposable Contact Lenses for the Vision Care
Division. From 1994 until 1998, Mr. Guglielmino served as the Business Manager
for Bausch & Lomb's Thin Film Technology Division. Mr. Guglielmino received his
B.S. and M.B.A. from Rochester Institute of Technology.
Philip A. Jones, age 31, has served as Zap.Com's Director of Finance since
October 1999. Mr. Jones has served as Zapata's Accounting Manager since January
1999. From 1995 to 1998, Mr. Jones' engaged in public accounting, most recently
at Arthur Andersen, LLP. From 1992 to 1995, Mr. Jones was a financial analyst at
Citibank, N.A. Mr. Jones received his B.A. in Economics at SUNY Geneseo and his
MBA from Rochester Institute of Technology. He is also a Certified Public
Accountant.
3
<PAGE> 7
EXECUTIVE COMPENSATION
Zap.Com presently has no employment agreements with its officers or other
key employees. To date, the compensation of Zap.Com's executives who are also
employed by Zapata has been paid by Zapata and a portion of that cost has been
allocated to Zap.Com under a services agreement between Zapata and Zap.Com.
Zap.Com has reimbursed Zapata for those costs. The costs have been based upon an
estimate of the amount of time devoted by those employees to the operation and
affairs of each corporation. On April 30, 2000, Zapata notified Zap. Com that
effectively it was waiving its right to be reimbursed for these expenses. For at
least the next 12 months.
The following table sets forth information regarding compensation with
respect to Fiscal 1999, for services in all capacities rendered to the Company
and its subsidiaries by the Company's Chief Executive Offer ("Named Officers").
None of the Company's other executive officers received annual compensation in
excess of $100,000 during Fiscal 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------- ------------------------------
NAME AND PRINCIPAL FISCAL
POSITION YEAR SALARY($) BONUS($) SECURITIES UNDERLYING OPTIONS#
------------------ ------ --------- -------- ------------------------------
<S> <C> <C> <C> <C>
Avram A. Glazer,...................... 1999 $206,250(1) -- 365,000(2)
President and Chief Executive
Officer
</TABLE>
- ---------------
(1) Mr. Glazer serves as President and Chief Executive Officer of both Zapata
and Zap.Com. For Fiscal 1999, Zapata has allocated 69% of Mr. Glazer's
$365,000 annual salary to Zap.Com. No amount of Mr. Glazer's Zapata bonus of
$300,000 for Fiscal 1999 was allocated to Zap.Com.
(2) Non-qualified stock options were granted to Mr. Glazer under Zap.Com's 1999
Long-Term Incentive Plan. The share amounts under this column reflect only
the shares underlying the options that were granted during fiscal 1999. The
options have an exercise price of $2.00 per share and generally vest over
three years from the date of grant.
INDIVIDUAL GRANTS
The following table provides information concerning the grant of stock
options for Zap.Com's common stock made to the "Named Officers" during Fiscal
1999:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF POTENTIALLY
SECURITIES TOTAL REALIZABLE
UNDERLYING OPTIONS VALUE AT ASSUMED
OPTIONS GRANTED TO EXERCISE ANNUAL RATE OF STOCK
GRANTED EMPLOYEES IN PRICE EXPIRATION PRICE APPRECIATION
NAMED OFFICERS (#)(1) FISCAL YEAR ($/SHARE) DATE FOR OPTION TERM(1)
-------------- ---------- ------------ --------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
Avram A Glazer,.......... 365,000 63% $2.00(1) 10/20/2004 $3,090,935
President and Chief
Executive Officer
</TABLE>
- ---------------
(1) The amounts shown as potentially realizable values are based on arbitrarily
assumed rates of stock price appreciations of 10% over the April 17, 2000
closing price of Zap.Com's common stock over the full term of the options (5
years), as required by applicable regulations and are provided for
illustrative purposes only.
All of the options awarded during Fiscal 1999 were granted with an exercise
price equal to or above the fair market value of the common stock on the date of
grant. At the time of the award, all of the options were exercisable in
cumulative one-third installments, commencing one year after the date of award,
with full vesting occurring on the third anniversary of the award.
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<PAGE> 8
OPTION VALUES
The following sets forth for each of the Named Officers options exercised
and the number and value of securities underlying unexercised options that are
held by the Named Officers as of December 31, 1999.
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND 1999 FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING ($) VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- ----------- -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Avram A. Glazer........... -- -- 0/365,000 0/1,140,625
</TABLE>
- ---------------
(1) The value of the unexercised in-the-money options at the 1999 fiscal year
end has been determined on the basis of the December 31, 1999 closing price
of Zap.Com common stock which was reported on the OTC bulletin board to be
$5.125.
1999 LONG-TERM INCENTIVE PLAN
The 1999 Long-Term Incentive Plan was approved by Zap.Com's board and
Zapata as Zap.Com's sole stockholder in April 1999 and amended in October 1999.
Pursuant to the plan, awards may be made to existing and future officers, other
employees, consultants and directors of Zap.Com from time to time. The 1999
Incentive Plan is intended to promote the long-term financial interests and
growth of Zap.Com by providing employees, officers, directors and consultants of
Zap.Com with appropriate incentives and rewards to enter into and continue in
the employ of, or their relationship with, Zap.Com and to acquire a proprietary
interest in the long-term success of Zap.Com; and to reward the performance of
individual officers, other employees, consultants and directors in fulfilling
their responsibilities for long-range achievements.
Zap.Com's board, or upon formation, the compensation committee (both of
which are referred to below as the "committee"), makes awards under the 1999
Incentive Plan from among those eligible persons who hold positions of
responsibility and whose performance, in the judgment of the committee, has a
significant effect on Zap.Com's success.
Under the 1999 Incentive Plan 3,000,000 shares of common stock are
available for awards. The 1999 Incentive Plan provides for the grant of any or
all of the following types of awards: stock options, stock appreciation rights,
stock awards and cash awards. Stock options may be incentive stock options that
comply with Section 422 of the Code. Future allocation of awards under the 1999
Incentive Plan is not currently determinable as the allocation is dependent upon
future decisions to be made by the committee in its sole discretion, and the
applicable provisions of the 1999 Incentive Plan.
The exercise price of any stock option may, at the discretion of the
committee, be paid in cash or by surrendering shares or another award under the
1999 Incentive Plan, valued at fair market value on the date of exercise or any
combination of cash or stock.
Stock appreciation rights are rights to receive, without payment to
Zap.Com, cash or shares of Zap.Com common stock with a value determined by
reference to the difference between the exercise or strike price of the stock
appreciation rights and the fair market value or other specified valuation of
the shares at the time of exercise. Stock appreciation rights may be granted in
tandem with stock options or separately.
Stock awards may consist of shares of Zap.Com common stock or be
denominated in units of shares of common stock. A stock award may provide for
voting rights and dividend equivalent rights.
The committee may specify conditions for awards, including vesting service
and performance conditions. Vesting conditions may include, without limitation,
provision for acceleration in the case of a change-in-control of Zap.Com,
vesting conditions and performance conditions, including, without limitation,
performance conditions based on achievement of specific business objectives,
increases in specified indices and attaining specified growth measures or rates.
5
<PAGE> 9
An award may provide for the granting or issuance of additional,
replacement or alternative awards upon the occurrence of specified events,
including the exercise of the original award.
An award may provide for a tax gross-up payment to a participant if a
change in control of Zap.Com results in the participant owing an excise tax or
other tax above the rate ordinarily applicable, due to the parachute tax
provisions of Section 280G of the Code or otherwise. The gross-up payment would
be in an amount so that the net amount received by the participant, after paying
the increased tax and any additional taxes on the additional amount, would be
equal to that receivable by the participant if the increased tax were not
applicable.
Under the 1999 Incentive Plan, in April, 1999, Zap.Com granted options to
purchase shares at an exercise price of $5.00 per share to the following persons
for the indicated number of shares: Mr. A. Glazer -- 365,000; Mr.
DiSalvo -- 100,000; Ms. Bowe -- 60,000; Mr. Forth -- 10,000; and other key
employees to be designated -- 200,000. In June 1999, Zap.Com granted options to
Mr. Guglielmino to purchase 20,000 shares at an exercise price of $5.00 per
share. All of these grants were made contingent upon the successful completion
of a previously planned rights offering. Zap.Com abandoned the rights offering
in September 1999, thereby terminating these options. On October 20, 1999, the
Zap.Com Board approved the same amounts of options under the 1999 Incentive Plan
to the same persons, (except that options for 20,000 shares were granted to Mr.
Jones, options for 3,000 shares were granted to two other key persons and the
remaining options were not regranted), but at an exercise price of $2.00 per
share. All of these options will generally vest ratably on an annual basis over
the three year period following the grant and are for a term of five years.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission (the "Commission") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company.
Directors, officers and greater than 10% stockholders are required by the
Commission's regulations to furnish the Company with copies of all Section 16(a)
forms they file. Based solely on a review of Forms 3 and 4 and amendments
thereto furnished to the Company during its most recent fiscal year, and Forms 5
and amendments thereto furnished to the Company with respect to its most recent
fiscal year, and certain written representations, no persons who were either a
director, officer, or beneficial owner of more than 10% of the Company's common
stock failed to file on a timely basis reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year, except that: Avram A. Glazer,
Leonard DiSalvo and Gordon E. Forth failed to timely file Form 3s reporting
their initial beneficial ownership of securities; the Form 3s for these
individuals were filed on December 22, 1999; and, Marisa Bowe, Gaetano
Guglielmino, and Phil Jones failed to timely file Form 3s reporting their
initial beneficial ownership of securities; Form 3s for these individuals were
filed on March 27, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of Zap.Com has no compensation committee, or other
board committee performing equivalent functions. The Board of Directors made all
decisions concerning compensation of Zap.Com executives during the last fiscal
year, except with respect to Avram Glazer and Leonard DiSalvo. The Board of
Directors of Zap.Com is comprised of one member -- President and Chief Executive
Officer Avram Glazer. The compensation of Mr. Glazer and Mr. DiSalvo during the
last fiscal year was determined by the Compensation Committee of the Board of
Directors of Zapata Corporation.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board has designed its executive compensation policies to provide
incentives to its executives to focus on both Zap.Com's current and long-term
goals, with an overriding emphasis on the ultimate objective of enhancing
stockholder value. The Board has followed an executive compensation program,
comprised of
6
<PAGE> 10
cash and equity-based incentives, which recognizes individual achievement and
encourages executive loyalty and initiative. The Board considers equity
ownership to be an important factor in providing executives with a closer
orientation to the Company and its stockholders. Accordingly, the Board grants
options to purchase common stock pursuant to Zap.Com's 1999 Long-Term Incentive
Plan.
Zap.Com believes that providing attractive compensation opportunities is
necessary to assist Zap.Com in attracting and retaining competent executives.
Base salaries for our executives have been established on a case-by-case basis
by the Board, based upon the executive's level of responsibility, prior
experience, breadth of knowledge, and salary requirements. The Board has granted
stock options upon hiring or based upon subjective considerations as to an
excecutive's contribution or potential contribution to the Company. As the value
of a stock option is directly related to the market price of Zap.Com's common
stock, the Board believes the grant of stock options to executives encourages
executives to take a view toward the long-term performance of Zap.Com. Other
benefits offered to executives are generally the same as those offered to
Zap.Com's other employees.
Respectfully submitted,
AVRAM A. GLAZER,
Director
STOCKHOLDER RETURN PERFORMANCE GRAPH
The Commission requires a comparison of the cumulative total return of the
Company's common stock with that of (1) a broad equity market index and (2) a
published industry or line-of-business index, or index of peer companies with
similar market capitalization, over a five year period or such shorter that the
Company has been registered under Section 12 of the Securities Exchange Act of
1934 ("Exchange Act"). The Company registered pursuant to Section 12 on November
12, 1999 and its common stock has traded on the NASD OTC Electronic Bulletin
Board since November 30, 1999. The Company has selected to use the Russell 2000
Index as its broad market index. For the second required comparison the Company
has selected the Chase Hambrecht & Quist Internet 100 Index.
The stock price performance on the following graph does not necessarily
indicate of future performance. The stock performance graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Information Statement into any filing under the Securities Act of 1933 or
under the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this graph by reference, and it shall not otherwise be
deemed filed.
7
<PAGE> 11
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG ZAP.COM CORPORATION, RUSSELL 2000 INDEX,
AND THE CHASE H & Q INTERNET 100 INDEX
SINCE NOVEMBER 30, 1999(1)
<TABLE>
<CAPTION>
ZAP.COM CHASE H & Q
CORPORATION RUSSELL 2000 INTERNET 100
----------- ------------ ------------
<S> <C> <C> <C>
Nov 99 100.00 100.00 100.00
Dec 99 255.56 103.07 138.91
</TABLE>
- ---------------
(1) Assumes that the value of the investment in Company Common Stock and in each
index was $100 on November 30, 1999 and the reinvestment of all dividends.
Fiscal year ending December 31, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ZAPATA CORPORATION
Until November 12, 1999, Zap.Com was a wholly-owned subsidiary of Zapata
Corporation. On November 12, 1999, Zapata distributed to its stockholders
477,742 shares of Zap.Com common stock or 1% of Zap Com's outstanding common
stock. Since Zap.Com's inception Zapata has provided Zap.Com with administrative
and management services, including payroll, consulting and legal. Zapata billed
Zap.Com for these services on a cost basis. These services totaled approximately
$369,000 from inception through December 31, 1999. The costs of these services
were directly charged and/or allocated using methods that Zap.Com's management
believes were reasonable.
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On October 20, 1999, Zapata and Zap.Com entered into a number of agreements
for the purpose of defining their continuing relationship. These agreements are
summarized below:
Investment and Distribution Agreement. Under the investment and
distribution agreement, Zapata contributed $9,000,000 to Zap.Com in connection
with the 49,450-for-one stock split of Zap.Com's common stock consummated
immediately prior to Zapata's distribution of Zap.Com common stock to its
stockholders. The contribution consisted of $8,000,000 in cash and the
forgiveness of $1,000,000 in inter-company debt. The entire contribution was
allocated to Zapata's common stock investment.
The investment and distribution agreement provides that Zapata and Zap.Com
will indemnify each other with respect to any future losses that might arise
from Zapata's distribution, as a result of any untrue statement or alleged
untrue statement in the registration statement under which Zap.Com registered
the distribution or the omission or alleged omission to state a material fact in
the registration statement (1) in Zap.Com's case except to the extent the
statement was based on information provided by Zapata and (2) in Zapata's case,
only to the extent the loss relates to information supplied by Zapata.
Services Agreement. The services agreement provides that Zapata will
provide to Zap.Com management and administrative services, as well as the use of
designated office space and facilities. The administrative services to be
provided by Zapata, through its employees, include financial reporting,
accounting, auditing, tax, office services, payroll and human resources as well
as the management consulting services. Zap.Com will pay Zapata for these
services at the estimated cost to Zapata of providing those services. The
services agreement shall continue until terminated by either party upon 120
days' notice.
Tax Sharing and Indemnity Agreement. The tax sharing and indemnity
agreement defines the parties' rights and obligations with respect to the filing
of returns, payments, deficiencies and refunds of federal, state and other
income, franchise or other taxes relating to Zap.Com's business for periods
prior to and including the date on which Zap.Com ceases to be a member of
Zapata's consolidated tax group and with respect to tax attributes of Zap.Com
after it is no longer a member of Zapata's consolidated tax group. For periods
ending on or before the last day of the taxable year in which Zap.Com ceases to
be a part of Zapata's consolidated tax group, Zapata is responsible for;
- filing both consolidated federal tax returns for the Zapata affiliated
group and combined or consolidated state tax returns for any group that
includes a member of the Zapata affiliated group, including, in each
case, Zap.Com for the relevant periods of time that Zap.Com was a member
of the applicable group, and
- paying the taxes relating to those returns (including any subsequent
adjustments resulting from the redetermination of those tax liabilities
by the applicable taxing authorities).
Zap.Com is responsible for reimbursing Zapata for its share of those taxes,
if any. Zap.Com is also responsible for filing returns and paying taxes relating
to it for periods that begin before and end after Zap.Com ceases to be a part of
Zapata's consolidated tax group. This agreement is intended to allocate the tax
liability between Zapata and Zap.Com as if they were separate taxable entities.
Zapata and Zap.Com have also agreed to cooperate with each other and to share
information in preparing those tax returns and in dealing with other tax
matters.
Registration Rights Agreement. Under the registration rights agreement
between Zap.Com and Zapata, Zap.Com granted certain rights to Zapata with
respect to the registration under the Securities Act of the shares of Zap.Com
common stock owned by Zapata as of November 12, 1999. The registration rights
agreement entitles Zapata to demand Zap.Com, not more than once in any 365 day
period and on not more than three occasions after Zapata no longer owns a
majority of the voting power of the outstanding capital stock of Zap.Com, to
file a registration statement under the Securities Act covering the registration
of Zap.Com common stock held by Zapata, including in connection with an offering
by Zapata of its securities that are exchangeable for its common stock. Zapata's
demand registration rights contain various limitations, including that the
registration cover a number of shares of Zap.Com common stock held by Zapata
having a fair market value of at least $5.0 million at the time of the request
for registration and that Zap.Com may be able to temporarily defer a demand
registration to the extent it conflicts with another public offering of
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securities by Zap.Com or would require Zap.Com to disclose material non-public
information. Zapata may also require Zap.Com to include Zap.Com common stock
held by Zapata in a registration by Zap.Com of its securities so long as
specified conditions are satisfied. The underwriters for the offering, however,
may limit or exclude Zap.Com common stock held by Zapata from the offering.
Zap.Com and Zapata will share equally the out-of-pocket fees and expenses
of a demand registration and Zapata will pay its pro rata share of underwriting
discounts, commissions and related selling expenses. Zap.Com will pay all
expenses associated with a piggyback registration, except that Zapata will pay
its pro rata share of the selling expenses. The registration agreement contains
indemnification and contribution provisions:
- by Zapata for the benefit of Zap.Com and related persons, as well as any
potential underwriter, and
- by Zap.Com for the benefit of Zapata and related persons, as well as any
potential underwriter.
Zapata's demand registration rights will terminate on the date that Zapata
owns, on a fully converted or exercised basis with respect to the securities
held by Zapata, common stock representing less than 10% of the then issued and
outstanding voting stock of Zap.Com. Zapata's piggyback registration rights will
terminate when it is able to sell all of its Zap.Com common stock, including all
common stock available upon exercise of all conversion and subscription
privileges, under Rule 144 within a three month period. Zapata may transfer its
registration rights to any transferee from it of common stock that represents,
on a fully converted or exercised basis, at least 20% of the then issued and
outstanding voting stock of Zap.Com at the time of transfer; provided, however,
that the transferee will be limited to
- two demand registrations if the transfer conveys less than a majority but
more than 30%, and
- one demand registration if the transfer conveys 30% or less of the then
issued and outstanding voting stock of Zap.Com.
GLAZER INVESTMENT
In November 1999, Malcolm Glazer and Avram Glazer contributed to Zap.Com
$1,100,000 in cash in exchange for 550,000 shares of Zap.Com common stock.
AMERICAN INTERNETWORK SPORTS COMPANY, LLC
On October 20, 1999 American Internetwork Sports Company, LLC and Zap.Com
entered into a consulting agreement which requires American Internetwork Sports
to provide Zap.Com during a three year term with corporate, business and
marketing advice on sports related aspects of Zap.Com's business, including
sports related content, e-commerce opportunities, strategic alliances and Web
sites who are candidates for the ZapNetwork. American Internetwork Sports is
owned and controlled by Avram Glazer's siblings Kevin Glazer, Bryan Glazer, Joel
Glazer, Darcie Glazer and Edward Glazer. Bryan Glazer, Joel Glazer and Edward
Glazer all serve as Executive Vice Presidents of the Tampa Bay Buccaneers, which
is a member of the NFL.
In exchange for these services, Zap.Com and American Internetwork Sports
entered into a warrant agreement which provides for the issuance of warrants to
purchase up to 2,000,000 shares of Zap.Com common stock at an exercise price of
$2.00 per share. These warrants will become exercisable on a cumulative basis in
equal one-third amounts on each of the first three anniversary dates of Zapata's
November 12, 1999 distribution by Zapata of Zap.Com's shares and have a term of
five years. The warrants will accelerate and become fully exercisable in the
event of a change of control or if the consulting agreement is terminated by
Zap.Com without cause. The warrant agreement requires Zap.Com to register the
shares covered by the warrants on a registration statement on Form S-8 before
the first anniversary following the issuance of the warrants and to keep the
registration in effect until all of the shares issuable under the warrants can
be sold under Rule 144 of the Securities Act within a three month period.
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OTHER
Gordon E. Forth, who serves as corporate secretary of Zap.Com, is a partner
at Woods Oviatt Gilman LLP which has acted as counsel to Zap.Com and Zapata. Mr.
Forth also serves as corporate secretary to Zapata.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth information known to Zap.Com regarding
beneficial ownership of Zap.Com common stock as of March 24, 2000 for (1) each
executive officer and director of Zap.Com who beneficially owns shares; (2) each
stockholder known to Zap.Com to beneficially own 5% or more of Zap.Com's
outstanding securities; and (3) all executive officers and directors as a group.
SHARES BENEFICIALLY OWNED
<TABLE>
<CAPTION>
NO. OF PERCENTAGE OF
NAME OF BENEFICIAL OWNER SHARES OWNERSHIP
- ------------------------ ---------- -------------
<S> <C> <C>
Zapata Corporation(1)(2).................................... 48,972,258 97.9%
Avram Glazer(3)............................................. 50,020 0.1%
All executive officers and directors as a group............. 50,020 0.1%
</TABLE>
- ---------------
(1) Zapata's address is 100 Meridian Centre, Suite 350, Rochester, New York
14618. As a result of this ownership, Zapata controls Zap.Com. Malcolm
Glazer, through an entity he owns and controls, owns beneficially and of
record approximately 44% of Zapata's outstanding common stock and, by virtue
of that ownership, Malcolm Glazer may be deemed to control Zapata and,
therefore, to beneficially own the Zap.Com securities held by Zapata. Mr.
Glazer disclaims any beneficial ownership of Zap.Com's common stock
beneficially owned by Zapata.
(2) Zap.Com has registered 1,000,000 shares of Zap.Com common stock held by
Zapata for resale on a shelf basis under a separate registration statement.
These figures are subject to change if Zapata sells any of these shares.
(3) Avram Glazer's address is 100 Meridian Centre, Suite 350, Rochester, New
York 14618.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of PricewaterhouseCoopers, LLP
to act as the Company's independent public accountants and to conduct an audit,
in accordance with generally accepted auditing standards, of the Company's
financial statements for the fiscal year ending December 31, 1999.
The Board of Directors considers PricewaterhouseCoopers, LLP to be well
qualified. A representative of that firm is expected to be present at the Annual
Meeting to respond to appropriate questions and will be given an opportunity to
make a statement if he so desires. Neither the firm nor any of its partners has
any direct financial interest or any indirect financial interest in the Company
other than as independent auditors. This selection is being submitted for
ratification at the meeting.
The affirmative vote of the holders of a majority of the shares of common
stock present at the meeting and entitled to vote is required for such
ratification. If not ratified, the selection will be reconsidered by the Board,
although the Board of Directors will not be required to select different
independent auditors for the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
BOARD'S APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS.
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OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other matter to be presented at the Annual Meeting.
STOCKHOLER PROPOSALS FOR 2001 ANNUAL MEETING OF STOCKHOLDERS
Under applicable securities laws, stockholder proposals must be received by
the Company no later than 120 days prior to April 28, 2000 (the date of this
Information Statement) to be considered for inclusion in the Company's
Information Statement relating to the 2001 Annual Stockholders Meeting. If the
Company changes the date of the 2001 Annual Meeting by more than 30 days from
the date of the 2000 Annual Meeting, then stockholder proposals must be received
by the Company a reasonable time before the Company begins to print and mail its
proxy statement for the 2001 Annual Meeting.
By Order of the Board of Directors,
AVRAM A. GLAZER,
President and Chief Executive Officer
Rochester, New York
April 28, 2000
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