Shareholders wishing to make such a submission may do so by providing all information regarding the nominee that would be required under applicable SEC proxy rules, including (in addition to the information required in the bylaws or by applicable law): (i) the full name and resident address of the nominee; (ii) the age of the nominee; (iii) the principal occupation of the nominee for the past five years; (iv) any current directorship held on public company boards; (v) the number of shares of the Company’s common stockZAP’s Common Stock held by the nominee, if any; and (vi) a signed statement of the nominee consenting to serve if elected. In addition, the stockholdershareholder making the nomination and the beneficial owner, if any, on whose behalf the nomination is being made must provide (i) the name and address, as they appear on the ZAP’s books, of such shareholder and such beneficial owner, (ii) the class and number of shares of ZAP that are owned beneficially and of record by such shareholder and such beneficial owner, and (iii) any material interest of the shareholder and/or such beneficial owner in the nominee or the nominee’s election as a director. Such information should be sent to the Corporate Governance and Nominating Committee, c/o Corporate Secretary, ZAP, 501 Fourth Street, Santa Rosa, CA 95401.
In addition to potential director nominees submitted by shareholders, the Governance Committee considers candidates submitted by directors, as well as self-nominations by directors and, from time to time in its sole discretion, it may consider candidates submitted by a third-party search firm hired for the purpose of identifying director candidates. The committee has not retained a third-party search firm to assist in the identification or evaluation of Board member candidates for election to the Board at the Annual Meeting, although it may do so in the future. The Governance Committee investigates potential candidates and their individual qualifications, and evaluates all such candidates, including those submitted by stockholders, using the Board membership criteria set forth in the Committee’s Charter.
No candidates for director nominations were submitted to the Governance Committee by any shareholder in connection with the Annual Meeting.annual meeting. Any shareholder desiring to present a nomination for consideration by the Governance Committee prior to the 2008 Annual Meeting2011 annual meeting must do so in accordance with the Company’sZAP’s notice procedures, policies and bylaws.
COMMUNICATIONS WITH MEMBERS OF THE BOARD OF DIRECTORSDirector Compensation
The BoardThis section provides information regarding the compensation policies for directors and amounts paid and securities awarded to directors in fiscal 2010.
Directors who are employees of Directors hasZAP do not established a formal processreceive compensation from us for shareholdersthe services they provide as directors. ZAP entered into an agreement with each of the independent directors, Peter Scholl and Mark Abdou pursuant to send communicationswhich they were entitled to its members. Any Shareholder may send a communicationreceive $30,000 per annum as compensation for services and $4,000 per annum for each committee served. In addition to any memberthe aforementioned, in 2010, according to the agreements, the independent directors also were entitled to receive $25,000 in shares of Common Stock, an option to purchase up to $60,000 in shares of Common Stock, and an option to purchase up to $18,000 in shares of Common Stock for each committee of the Board of Directors in care of our address. If a communication is sent to Attn: ZAP Corporate Secretary,501 Fourth Street Santa Rosa, California 95401, we will forward any such communication to the Board member. If the shareholder would like the communication to be confidential, it should be so marked.
EXECUTIVE OFFICERS
Set forth below is certain information regarding our executive officers, including age, principal occupation and the date each first became an executive officer.
Name (Age) | | Present Executive Officers | | Executive
Officer
Since
|
| | | | |
Steven Schneider (48) | | Mr. Schneider has served as Chief Executive Officer since October 2002. More detailed information regarding Mr. Schneider’s business experience is set forth under “Directors.” | | 2002 |
| | | | |
William Hartman (61) | | Mr. Hartman was appointed Chief Financial Officer in March 2001. He was engaged with the Company as a financial consultant starting in January 2001. Prior to his engagement at ZAP, Mr. Hartman provided financial and accounting consulting services to various Internet start up companies in the San Francisco Bay Area from 1999 to 2001. Mr. Hartman is a Certified Public Accountant in the State of California with a Masters in Accounting Degree from the State University of New York. He also had previous public accounting experience as an audit manager with Price Waterhouse Coopers in San Francisco. | | 2001 |
| | | | |
Amos Kazzaz (53) | | Mr. Kazzaz was appointed Chief Operating Officer on March 26, 2007. Prior to joining ZAP, Mr. Kazzaz served as Vice President of Cost Management at United Airlines, Inc. where he oversaw United Airline’s operations, process improvement, and cost management. From 2003 to 2006, Mr. Kazzaz served as United Airline’s Vice President of Financial Planning and Analysis during which time he accounted for United Airline’s planning and analysis function and capital budget. From 2002 to 2004, Mr. Kazzaz served as United Airline’s Vice President of the Business Transformation Office, the company’s first enterprise project management office, during which time he was responsible for identifying areas of revenue and cost improvements; concurrently, Mr. Kazzaz served as the Chief Operating Officer at Avolar, a subsidiary of United Airlines. He currently sits on the Boards of Directors of Alliant Credit Union, SkyTech Solutions in India, and Integres. Mr. Kazzaz holds a bachelors degree in International Affairs from the University of Colorado and a Masters in Business Administration from the University of Denver. | | 2007 |
Name (Age) | | Present Executive Officers | | Executive
Officer
Since
|
| | | | |
Gary Starr (53) | | Mr. Starr is currently the Head of Research and Development for the Company. He also co-founded ZAP in 1994, has been a director since the Company’s inception and served as Chief Executive Officer from 2000 to 2002. More detailed information regarding Mr. Starr’s business experience is set forth under “Directors.”
| | 1994 |
Family Relationships
There are no family relationships among any of our officers or directors.
Legal Proceedings
To the best of our knowledge none of our officers, directors or nominees for director are (i) parties to any material proceedings adverse to the Company; nor (ii) have any of them during the past five years:
· | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); |
· | had any bankruptcy petition filed by or against him or any business of which he was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time; |
· | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; or |
· | been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
EXECUTIVE COMPENSATION
Executive Compensation
The following executive compensation disclosure reflects all compensation awarded to, earned by or paid to the executive officers below for the fiscal year ended December 31, 2007. The following table summarizes all compensation for fiscal year 2007 received by our Chief Executive Officer, and the Company’s other most highly compensated executive officers who earned more than $100,000 in fiscal year 2007.
SUMMARY COMPENSATION TABLE
Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) (2) | Total ($) |
| | | | | | | | | |
Steven Schneider, CEO | 2007 | 125,000 | — | 23,500 | 810,000 | — | — | 6,895,000 | 7,853,500 |
Gary Starr Head of R&D | 2007 | 125,000 | — | 23,500 | 810,000 | — | — | 2,985,000 | 3,943,500 |
William Hartman,CFO | 2007 | 120,000 | — | 23,500 | 590,500 | | | 475,800 | 1,209,800 |
Amos Kazzaz,COO | 2007 | 120,000 | — | 138,500 | 857,000 | | | — | 1,115,500 |
Renay Cude, Secretary (3) | 2007 | 78,000 | — | 136,400 | 810,000 | — | — | 875,800 | 1,900,200 |
(1) Stock awards are based on the stock price on the date of issue. Options/warrant awards were calculated using the following assumptions: dividend of 0, rate of 5.12% for warrants and 4.91% for options, expected life of 5 months for warrants and 6.75 years for options, strike price of $1.00 for warrants and $0.91 for options, stock price of $0.91 and volatility of 149.75%. All option and warrant issuances were fully vested at time of issue.
(2) In January of 2007, the Board of Directors extended by five years through July 1, 2012, Series B through K warrants. These warrants were initially issued within the Plan of reorganization in July of 2002, to officers, directors, ZAP employees and shareholders. These modified warrants will also provide compensation incentives to the key employees and shareholders of ZAP that possess specialized knowledge of the electrical and alternate energy vehicle industry. Their retention is essential to our business. The exercise prices of the warrants were also revised from prices ranging from $1.00 to $8.00 to prices ranging from $1.00 to $1.08. These modified warrants were valued by using the Black Scholes pricing model.
(3) Ms. Cude resigned as the Corporate Secretary and Director of the Company in April of 2008.
Employment Agreements
We currently have employment agreements with all four of our Named Executive Officers as described below.
Steve Schneider, Chief Executive Officer
We entered into an employment agreement with Steve Schneider on October 1, 2003. The agreement provides that Mr. Schneider will serve as our Chief Executive Officer through October 1, 2008 and receive a salary, benefits and options equal to the highest paid employee of ZAP, but in no event less than $75,000 per year. Mr. Schneider’s current salary is set at $125,000. In addition, the agreement provides that should ZAP become profitable, Mr. Schneider’s salary will automatically be increased by 10% for every $100,000 in profits calculated on a quarterly basis. Mr. Schneider annually receives a grant of stock options or warrants equal to 1% of the outstanding common stock of ZAP at an exercise price equal to 110% of the market price on the date of grant. Mr. Schneider also receives all other benefits as are afforded to our employees and a Company car, or a car allowance of $5,000 per year in lieu of a Company car. In the event ZAP terminates his employment without cause, Mr. Schneider is entitled to his full salary for the remainder of the term of the agreement. Should ZAP elect to terminate Mr. Schneider’s employment in the case of a merger or reclassify Mr. Schneider without cause prior to the expiration of the employment agreement, the Company must retain Mr. Schneider as an employee or consultant for a period of five years for an aggregate salary of $500,000, payable bi-monthly, or make a lump sum payment of $300,000. The agreement automatically renews for successive five year periods unless terminated by either party upon proper notice. On March 30, 2007, The Board of Directors of ZAP did approve the extension of the employment agreement with Mr. Schneider through October 1, 2013.
William Hartman, Chief Financial Officer
We entered into an employment agreement with Bill Hartman on August 1, 2007. The agreement provides that Mr. Hartman will serve as Chief Financial Officer of ZAP through August 1, 2008, with a yearly renewal clause and receive a salary at $120,000 Mr. Hartman also receives all other benefits as are afforded to our employees and a Company car, or a car allowance of $5,000 per year in lieu of a Company car. The employment agreement with Mr. Hartman was renewed and he will serve through August 1, 2009.
In the event ZAP terminates his employment without cause, Mr. Hartman is entitled to his full salary for the remainder of the term of the agreement.
Amos Kazzaz, Chief Operating Officer
We entered into an employment agreement with Amos Kazzaz on August 28, 2007. The agreement provides that Mr. Kazzaz will serve as Chief Operating Officer of ZAP through August 28, 2010, and receive a salary at $120,000, with annual reviews. Mr. Kazzaz also receives all other benefits as are afforded to our employees and a Company car, or a car allowance of $5,000 per year in lieu of a Company car. In the event ZAP terminates his employment without cause, Mr. Kazzaz is entitled to his full salary for the remainder of the term of the agreement.
Gary Starr, Head of Research and Development
We entered into an employment agreement with Gary Starr on October 1, 2003. The agreement provides that Mr. Starr will receive a salary, benefits and options equal to the highest paid employee of ZAP, but in no event less than $75,000 per year. Mr. Starr’s current salary is set at $125,000. In addition, the agreement provides that should ZAP become profitable, Mr. Starr’s salary will automatically be increased by 1% for every $100,000 in profits, calculated on a quarterly basis. Mr. Starr annually receives a grant of stock options or warrants equal to 1% of the outstanding common stock of ZAP at an exercise price equal to 110% of the market price on the date of grant. Mr. Starr also receives all other benefits as are afforded to our employees and a Company car, or a car allowance of $5,000 per year in lieu of a Company car. In the event ZAP terminates his employment without cause, Mr. Starr is entitled to his full salary for the remainder of the term of the agreement. Should ZAP elect to terminate Mr. Starr’s employment in the case of a merger or reclassify Mr. Starr without cause prior to the expiration of the employment agreement, the Company must retain Mr. Starr as an employee or consultant for a period of five years for an aggregate salary of $500,000, payable bi-monthly, or make a lump sum payment of $300,000. The agreement automatically renews for successive five year periods unless terminated by either party upon proper notice. On March 30, 2007, The Board of Directors of ZAP did approve the extension of the employment agreement with Mr. Starr through October 1, 2013.
The following table sets forth certain information concerning unexercised stock options for each named executive officer at the end of fiscal year 2007. There were no stock awards outstanding as of end of fiscal year 2007.
OPTION AWARDS | | STOCK AWARDS |
| | | | | | | | | | | | | | | | | | |
Name | | Number of securities underlying unexercised options (#) Exercisable | | Number of securities underlying unexercised options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities underlying unexercised unearned options (#) | | Option exercise price ($) | | Option expiration date | | Number of shares or units of stock that have not vested (#) | | Market value of shares or units of stock that have not vested ($) | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) |
| | | | | | | | | | | | | | | | | | |
Steve Schneider (3) | | 220,000 | | — | | — | | 0.23 | | 7/5/12 | | | | | | | | |
Steve Schneider (3) | | 550,000 | | | | — | | 1.15 | | 6/23/14 | | | | | | | | |
Steve Schneider (2) | | 566,117 | | | | — | | 1.20 | | 11/16/14 | | | | | | | | |
Steve Schneider (2) | | 348,588 | | | | — | | 0.85 | | 6/7/15 | | | | | | | | |
Steve Schneider (2) | | 572,686 | | | | | | 0.94 | | 11/9/17 | | | | | | | | |
Steve Schneider (4) | | 1,063,480 | | | | | | 1.08 | | 7/1/12 | | | | | | | | |
Steve Schneider (4) | | 2,690,000 | | | | | | 1.08 | | 7/1/12 | | | | | | | | |
Steve Schneider (4) | | 3,190,000 | | | | | | 1.08 | | 7/1/12 | | | | | | | | |
Steve Schneider (4) | | 3,025,000 | | | | | | 0.91 | | 7/1/12 | | | | | | | | |
Steve Schneider (4) | | 1,690,786 | | | | | | 0.91 | | 7/1/12 | | | | | | | | |
Steve Schneider (1) | | 572,686 | | | | | | 1.00 | | 7/1/12 | | | | | | | | |
Steve Schneider (3) | | 390,966 | | | | | | 0.83 | | 8/11/16 | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Gary Starr (4) | | 1,155,930 | | | | | | 1.08 | | 7/1/12 | | | | | | | | |
Gary Starr (4) | | 1,144,930 | | | | | | 1.08 | | 7/1/12 | | | | | | | | |
Gary Starr (4) | | 734,630 | | | | | | 1.08 | | 7/1/12 | | | | | | | | |
Gary Starr (2) | | 128,334 | | — | | — | | 1.09 | | 12/19/11 | | | | | | | | |
Gary Starr (2) | | 130,000 | | — | | — | | 0.23 | | 7/5/12 | | | | | | | | |
Gary Starr (2) | | 550,000 | | | | — | | 1.15 | | 6/23/14 | | | | | | | | |
Gary Starr (2) | | 566,117 | | | | — | | 1.20 | | 11/16/14 | | | | | | | | |
Gary Starr (2) | | 348,588 | | | | — | | 0.85 | | 6/7/15 | | | | | | | | |
Gary Starr (2) | | 390,966 | | — | | — | | 0.83 | | 8/11/16 | | | | | | | | |
Gary Starr (2) | | 572,686 | | — | | — | | 0.94 | | 11/9/17 | | | | | | | | |
Gary Starr (1) | | 572,686 | | — | | — | | 1.00 | | 7/2/12 | | | | | | | | |
Gary Starr (4) | | 1,470,671 | | | | | | 0.91 | | 7/1/12 | | | | | | | | |
Gary Starr (4) | | 935,000 | | | | | | 0.91 | | 7/1/12 | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Renay Cude (4) | | 1,225,786 | | — | | — | | 1.00 | | 7/1/12 | | | | | | | | |
Renay Cude (3) | | 135,370 | | — | | — | | 0.45 | | 12/2/13 | | | | | | | | |
Renay Cude (3) | | 55,000 | | | | — | | 1.15 | | 6/23/14 | | | | | | | | |
Renay Cude (2) | | 566,117 | | | | — | | 1.20 | | 11/16/14 | | | | | | | | |
Renay Cude (2) | | 348,588 | | | | — | | 0.85 | | 6/7/15 | | | | | | | | |
Renay Cude (2) | | 390,966 | | — | | — | | 0.83 | | 8/11/16 | | | | | | | | |
Renay Cude (2) | | 572,686 | | — | | — | | 0.94 | | 11/9/17 | | | | | | | | |
Renay Cude (1) | | 572,686 | | — | | — | | 1.00 | | 7/2/12 | | | | | | | | |
OPTION AWARDS | | STOCK AWARDS |
| | | | | | | | | | | | | | | | | | |
Name | | Number of securities underlying unexercised options (#) Exercisable | | Number of securities underlying unexercised options (#)
Unexercisable
| | Equity Incentive Plan Awards: Number of Securities underlying unexercised unearned options (#) | | Option exercise price ($) | | Option expiration date | | Number of shares or units of stock that have not vested (#) | | Market value of shares or units of stock that have not vested ($) | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) |
| | | | | | | | | | | | | | | | | | |
William Hartman (4) | | 807,369 | | — | | — | | 0.91 | | 7/1/12 | | | | | | | | |
William Hartman (4) | | 22,000 | | | | | | 1.08 | | 7/1/2012 | | | | | | | | |
William Hartman (3) | | 55,000 | | | | — | | 1.20 | | 11/16/14 | | | | | | | | |
William Hartman (3) | | 27,500 | | — | | — | | 1.09 | | 12/19/11 | | | | | | | | |
William Hartman (3) | | 82,500 | | | | — | | 1.15 | | 6/23/14 | | | | | | | | |
William Hartman (3) | | 110,000 | | | | — | | 0.94 | | 9/18/16 | | | | | | | | |
William Hartman (3) | | 119,869 | | — | | — | | 1.15 | | 03/30/17 | | | | | | | | |
William Hartman (5) | | 500,000 | | — | | — | | 1.07 | | 07/30/17 | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Amos Kazzaz (3) | | 439,737 | | | | | | 1.15 | | 03/30/17 | | | | | | | | |
Amos Kazzaz (5) | | 500,000 | | | | | | 0.98 | | 08/28/17 | | | | | | | | |
Note: All options and warrants issued before February 28, 2007 were adjusted for the 10% stock dividend authorized by the Board of Directors effective on this date.
(1) The award represents warrants which are exercisable at the time of issuance per employment agreement
(2) The award vest at the date of grant. The option has a ten year life. Issued per the employment agreements
(3 ) The award vests equally over 36 months from date of grant. The option has a ten year life.
(4) The award is warrants to purchase ZAP Common stock, these five year warrants were initially issued on June 1, 2002 at the time of the reorganization. In January, 2007 they were extended another five years until June 1, 2012 with their original exercise prices also adjusted.
(5) The award vests equally over 36 months from date of grant. The option has a ten year life. Issued per the employment agreement
Director Compensation
The following director compensation disclosure reflects all compensation awarded to, earned by or paid to the outside directors below for the fiscal year ended December 31, 2007.
serve.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) |
Albert Lam (5) | — | 194,000 (2) | — | — | — | 785,000 (2) | 979,000 |
Peter H. Scholl | 6,000 | 23,500 (4) | — | — | — | 419,000 (3) | 448,500 |
Eqbal AL Yousulf | — | — | — | — | — | — | — |
Steven M Schneider (1) | | | | | | | |
Gary Starr (1) | | | | | | | |
1) This Director’s compensation as a director is reflected in the table titled “Summary Compensation Table” above
(2) On September 1, 2007, the Company and Mr. Albert Lam, who became a director of the Company, in October 2007 entered into an Independent Consulting Agreement (“Consulting Agreement”). Pursuant to the Consulting Agreement, Mr. Lam was to consult and advise the Company in the areas of Chinese manufacturing, facilities, tooling, financing, and contract negotiations on an independent consultant basis. Mr. Lam’s compensation under the Consulting Agreement was: 200,000 shares of the Company’s common stock valued at $194,000, issued under the Company’s 2007 Consultant Stock Plan (the “Plan”); a warrant to purchase 200,000 shares of the Company’s common stock valued at $131,000, expiring five years after grant, with an exercise price of $1.00 per share, issued under the Plan; and a warrant to purchase 1,000,000 shares of the Company’s common stock valued at $654,000, expiring five years after grant, with an exercise price of $1.00 per share and a net exercise provision.
(3) In January of 2007, the Board of Directors extended by five years through July 1, 2012, Series B through K warrants. These warrants were initially issued within the Plan of reorganization in July of 2002, to officers, directors, ZAP employees and shareholders. These modified warrants will also provide compensation incentives to the key employees and shareholders of ZAP that possess specialized knowledge of the electrical and alternate energy vehicle industry. Their retention is essential to our business.The exercise prices of the warrants were also revised from prices ranging from $1.00 to $8.00 to prices ranging from $1.00 to $1.08. These modified warrants were valued by using the Black Scholes pricing model.
(4) Stock awards are based on the stock price on the date of issue.
(5) Mr. Lam Resigned as a Director in 2008.
Compensation of Outside Directors
The outside directors receive $500 and a grant of $500 of common stock for attendance at each Board meeting and each committee meeting. Directors are also reimbursed for out-of-pocket travel and other expenses incurred in attending Board of Directors and/or committee meetings. Peter Scholl
The Compensation Committee establishes all components of compensation for directors and recommends changes to the Board of Directors.
The following table provides information as to compensation for services of the directors during fiscal 2010.
Director Compensation
Name | Fees Earned or Paid in Cash ($) __________ | Stock Awards ($) (1) _________ | Option Awards ($) (2) _________ | All Other Compensation ($) _______ | Total ($) ____ |
Steven Schneider | — | — | — | — | — |
Alex Wang (3) | — | — | — | — | — |
Gary Dodd | — | — | — | — | — |
Mark Abdou | 12,000 | 32,000 | 41,040 | — | 85,040 |
Priscilla Lu | — | — | — | — | — |
Peter Scholl | 9,500 | 36,500 | 41,040 | — | 88,040 |
Eqbal Al Yousuf (4) | — | — | — | — | — |
(1) The amounts in the Stock Awards column represent the aggregate grant date fair values, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, of restricted stock unit awards issued pursuant to the 2008 Equity Compensation Plan. The grant date fair value of these awards is calculated using the closing price of ZAP’s Common Stock on the grant date as if these awards were vested and issued on the grant date. There can be no assurance that these grant date fair values will ever be realized by the non-employee directors. For information regarding the number of unvested restricted stock units held by each non-employee director as of December 31, 2010, see the column “Unvested Restricted Stock Units Outstanding” in the table below.
(2) Options to purchase 228,000 shares of ZAP Common Stock were awarded to non-employee directors in fiscal 2010. For information regarding the number of outstanding stock options held by each non-employee director as of December 31, 2010, see the column “Stock Options Outstanding” in the table below.
(3) | Appointed on October 25, 2010. |
(4) | Resigned on December 30, 2010. |
Shareholder Communications with the Board of Directors
Shareholders may communicate with ZAP’s Board of Directors through ZAP’s Secretary by sending an email to investor@zapworld.com, or by writing to the following address: Board of Directors, c/o Secretary, ZAP, 501 Fourth Street, Santa Rosa, CA 95401. Shareholders also may communicate with ZAP’s Compensation Committee through ZAP’s Secretary by writing to the following address: Compensation Committee, c/o Secretary, ZAP, 501 Fourth Street, Santa Rosa, CA 95401. ZAP’s Secretary will forward all correspondence to the Board of Directors or the Compensation Committee, except for spam, junk mail, mass mailings, product complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material. ZAP’s Secretary may forward certain correspondence, such as product-related inquiries, elsewhere within ZAP for review and possible response.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the election of each of the nominees listed herein.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General Description
ZAP is asking the shareholders to ratify the Audit Committee’s appointment of Friedman LLP as ZAP’s independent registered public accounting firm for the fiscal year ending December 31, 2011. In the event the shareholders fail to ratify the appointment, the Audit Committee will reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in ZAP’s and its shareholders’ best interests.
ZAP was notified in January 2010 that the audit practice of Bagell, Josephs, Levine & Company, LLC, ZAP’s independent registered public accounting firm, or BJL, was combined with Friedman LLP, or Friedman, on January 1, 2010. As of the same date, BJL resigned as the independent registered public accounting firm of ZAP and, with the approval of the Audit Committee of ZAP’s Board of Directors, Friedman was engaged as ZAP’s independent registered public accounting firm. ZAP was notified in January 2010 that the audit practice of Bagell, Josephs, Levine & Company, LLC, ZAP’s independent registered public accounting firm at that time, or BJL, had been combined with Friedman LLP, on January 1, 2010. As of the same date, BJL resigned as the independent registered public accounting firm of ZAP and, with the approval of the Audit Committee of ZAP’s Board of Directors, Friedman was engaged as ZAP’s independent registered public accounting firm and has audited ZAP’s consolidated financial statements annually since then.
Principal Accountant Fees and Services
The following is a summary of the fees billed to ZAP by Friedman LLP for professional services rendered for the fiscal years ended December 31, 2010 and December 31, 2009:
Fee Category _______________________ | Fiscal 2010 Fees __________ | Fiscal 2009 Fees __________ |
Audit Fees | $185,000 | $152,500 |
Audit-Related Fees | — | — |
Tax Fees | — | — |
All Other Fees | — __________ | — __________ |
Total Fees | $185,000 ========== | $152,500 |
Audit Fees. Consists of fees billed for professional services rendered for the integrated audit of ZAP’s consolidated financial statements and of its internal control over financial reporting, for review of the interim consolidated financial statements included in quarterly reports and for services that are normally provided by Friedman LLP in connection with statutory and regulatory filings or engagements.
Audit-Related Fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of ZAP’s consolidated financial statements and are not reported under “Audit Fees.” These services include employee benefit plan audits, accounting consultations in connection with transactions, merger and acquisition due diligence, attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.
Tax Fees. Consists of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance, assistance with tax reporting requirements and audit compliance, assistance with customs and duties compliance, value-added tax compliance, mergers and acquisitions tax compliance, and tax advice on international, federal and state tax matters. None of these services were provided under contingent fee arrangements.
All Other Fees. Consists of fees for products and services other than the services reported above. These services included translation of filings and other miscellaneous services. No management consulting services were provided.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services to be provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to report periodically to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.
Vote Required
The affirmative vote of a majority of the shares of ZAP Common Stock present or represented by proxy and voting at the annual meeting, together with the affirmative vote of a majority of the required quorum, is required for approval of this proposal.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the ratification of the appointment of Friedman LLP to serve as ZAP’s independent registered public accounting firm for the fiscal year ending December 31, 2011.
PROPOSAL NO. 3
AMENDMENT TO AMENDED AND RESTATED
ARTICLES OF INCORPORATION TO EFFECT A REVERSE SPLIT OF COMMON STOCK
Overview
Our Board of Directors has unanimously approved an amendment to our Charter to effect a reverse stock split of all outstanding shares of our Common Stock at an exchange ratio ranging from one-for-four (1:4) to one-for-eight (1:8). You are now being asked to vote upon this amendment to our Charter. Should we receive the required shareholder approval, the Board of Directors will have the sole authority to elect, at any time prior to the first anniversary of this annual meeting: (1) whether or not to effect a reverse stock split, and (2) if so, the number of shares of our Common Stock between and including four (4) and eight (8) which will be combined into one share of our Common Stock. The Board of Directors believes that providing the flexibility for the Board of Directors to choose an exact split ratio based on then-current market conditions is in the best interests of ZAP and its shareholders. The Board of Directors is considering listing ZAP on The NASDAQ Stock Market, the American Stock Exchange, or another exchange in the U.S. or internationally. In the event that our Common Stock fails to satisfy the minimum bid price listing requirement of such exchange or for other reasons determined by the Board of Directors, the Board of Directors would like to effect a reverse stock split within a range from a minimum ratio of 4-for-1 shares to a maximum of 8-for-1 shares.
The text of the form of proposed amendment to our Charter is attached to this proxy statement as Appendix A. Such form provides that any number of outstanding shares between and including four and eight would be combined into one share of our Common Stock. If approved by the shareholders, and following such approval, the Board of Directors determines that a reverse stock split is in the best interests of ZAP and its shareholders, the reverse stock split will become effective upon filing the amendment with the Secretary of State of the State of California. The amendment will contain the number of shares selected by the Board of Directors within the limits set forth in this proposal to be combined into one share of our Common Stock. Upon filing of the amendment, the number of our issued and outstanding shares of Common Stock would be reduced in accordance with the split ratio determined by the Board of Directors.
Except for adjustments that may result from the treatment of fractional shares as described below, each shareholder will hold the same percentage of our outstanding Common Stock immediately following the reverse stock split as such shareholder held immediately prior to the reverse stock split.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the amendment to ZAP’s Articles of Incorporation to permit the proposed reverse stock split.
Reasons for the Reverse Stock Split
In order for ZAP to be quoted on a national or international exchange, we must satisfy various listing standards established by the listing exchange. The stock split is intended to enable the Common Stock to be at a per-share price high enough that ZAP will be able satisfy the price-bid requirement for listing on a national or international exchange.
The Board of Directors believes that a reverse stock split is desirable and should be approved by shareholders for a number of other reasons, including:
· | Increase in Eligible Investors. A reverse stock split would allow a broader range of institutions to invest in our stock (namely, funds that are prohibited from buying stocks whose price is below a certain threshold), potentially increasing trading volume and liquidity. |
· | Increased Analyst and Broker Interest. A reverse stock split would help increase analyst and broker interest in our stock as their policies can discourage them from following or recommending companies with lower stock prices. Because of the trading volatility often associated with lower-priced stocks, many brokerage houses and institutional investors have adopted internal policies and practices that either prohibit or discourage them from investing in such stocks or recommending them to their customers. Some of those policies and practices may also function to make the processing of trades in lower-priced stocks economically unattractive to brokers. Additionally, because brokers' commissions on transactions in lower-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of our Common Stock can result in individual shareholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. |
· | Decrease in Number of Outstanding Shares. As of April 14, 2011, ZAP had approximately 218,104,955 shares outstanding. A reverse stock split would reduce the number of our outstanding shares to a level more appropriate for a company with our market capitalization. |
· | Decreased Stock Price Volatility. By potentially increasing our stock price proportionately to the reduction in the number of outstanding shares, a reverse split could decrease price volatility, as small price movements now cause relatively large percentage changes in our stock price. |
Effects of the Reverse Stock Split
Reduction of Shares Held by Individual Shareholders. After the effective date of the proposed reverse stock split, each shareholder will own fewer shares of our Common Stock. However, the proposed reverse stock split will affect all of our shareholders uniformly and will not affect any shareholder's percentage ownership interests in us, except to the extent that the reverse split results in any of our shareholders owning a fractional share as described below. Proportionate voting rights and other rights and preferences of the holders of our Common Stock will not be affected by the proposed reverse stock split (other than as a result of the payment of cash in lieu of fractional shares). For example, a holder of 2% of the voting power of the outstanding shares of Common Stock immediately prior to a reverse stock split would continue to hold 2% of the voting power of the outstanding shares of Common Stock immediately after the reverse stock split. The number of shareholders of record will not be affected by the proposed reverse stock split (except to the extent that any shareholder holds only a fractional share interest and receives cash for such interest after the proposed reverse stock split). However, if the proposed reverse stock split is implemented, it will increase the number of shareholders of ZAP who own "odd lots" of less than 100 shares of our Common Stock. Brokerage commissions and other costs of transactions in odd lots may be higher than the costs of transactions of more than 100 shares of Common Stock.
Increase the proportion of our authorized unissued shares to issued and outstanding shares. The proposed reverse stock split will reduce the number of issued and outstanding shares of ZAP, while the authorized share number will remain the same, effectively resulting in ZAP being able to sell a greater proportion of ZAP and these sales could have a dilutive effect on your percentage ownership of ZAP.
Change in Number and Exercise Price of Employee and Director Equity Awards. The proposed reverse stock split will reduce the number of shares of Common Stock available for issuance under our employee and director equity plans in proportion to the exchange ratio selected by the Board within the limits set forth in this proposal. Under the terms of our outstanding equity awards, the proposed reverse stock split will cause a reduction in the number of shares of Common Stock issuable upon exercise or vesting of such awards in proportion to the exchange ratio of the reverse stock split and will cause a proportionate increase in the exercise price of such awards to the extent they are stock options. The number of shares authorized for future issuance under our equity plans will also be proportionately reduced. The number of shares of Common Stock issuable upon exercise or vesting of outstanding equity awards will be rounded to the nearest whole share and no cash payment will be made in respect of such rounding.
Regulatory Effects. Our Common Stock is currently registered under Section 12(b) of the Exchange Act, and we are subject to the periodic reporting and other requirements of the Exchange Act. The proposed reverse stock split will not affect the registration of the Common Stock under the Exchange Act or our obligation to publicly file financial and other information with the SEC.
No Going Private Transaction. The Board of Directors does not intend for this transaction to be the first step in a series of plans or proposals of a "going private transaction" within the meaning of Rule 13e-3 of the Exchange Act.
Risks of Proposed Reverse Split
The proposed reverse stock split may not increase our stock price, which would prevent ZAP from realizing some of the anticipated benefits of the reverse stock split.
The Board expects that the reverse split will increase the price per share of our Common Stock, which in turn would, among other things, broaden the class of investors who invest in our stock, help increase analyst and broker interest in our stock and allow us to list on a national or international stock exchange. While the Board expects that a reverse stock split of our Common Stock will increase the market price of our Common Stock, the effect of a reverse split upon the market price of our Common Stock cannot be predicted with any certainty. The market price of our Common Stock is primarily driven by other factors unrelated to the number of shares outstanding, including our current and expected future performance, conditions in the automotive industry and stock market conditions generally. Therefore, it is possible that the per share price of our Common Stock after the reverse split will not rise in proportion to the reduction in the number of shares of our Common Stock outstanding resulting from the reverse stock split, which could cause ZAP to fail to realize the anticipated benefits of the reverse stock split.
The proposed reverse stock split may decrease the liquidity of our stock.
The liquidity of our Common Stock may be harmed by the proposed reverse split given the reduced number of shares that would be outstanding after the reverse stock split, particularly if the stock price does not increase as a result of the reverse stock split.
Board Discretion to Implement the Reverse Stock Split
If the reverse stock split is approved by our shareholders, it will be effected, if at all, only upon a determination by the Board that a reverse stock split is in the best interests of ZAP and our shareholders. Such determination shall be based upon certain factors, including our then current stock price, the existing and expected marketability and liquidity of our Common Stock, prevailing market conditions, the likely effect on the market price of our Common Stock and desire to meet the listing requirements for a national or international stock exchange. Notwithstanding approval of the reverse stock split by the shareholders, the Board may, in its sole discretion, abandon the proposed amendment to our Charter and determine not to effect the reverse stock split as permitted under the California Corporations Code. If the Board fails to implement the reverse stock split prior to the one year anniversary of this annual meeting of shareholders, shareholder approval again would be required prior to implementing any reverse stock split.
Effective Date
The proposed reverse stock split would become effective on the date of filing of a certificate of amendment to our Charter with the office of the Secretary of State of the State of California. Except as explained below with respect to fractional shares, on the effective date, shares of Common Stock issued and outstanding immediately prior thereto will be combined and converted, automatically and without any action on the part of the shareholders, into new shares of Common Stock in accordance with the reverse stock split ratio determined by the Board within the limits set forth in this proposal and the authorized number of shares of Common Stock will be reduced on a proportional basis to the exchange ratio implemented.
Payment for Fractional Shares
No fractional shares of Common Stock will be issued as a result of the proposed reverse stock split. Instead, shareholders who otherwise would be entitled to receive fractional shares, upon surrender to the exchange agent of such certificates representing such fractional shares, will be entitled to receive cash in an amount equal to the product obtained by multiplying (a) the closing sales price of our Common Stock on the effective date as reported on OTC Bulletin Board by (b) the number of shares of our Common Stock held by such shareholder that would otherwise have been exchanged for such fractional share interest. As of April 25, 2011, 218,668,760 shares of our Common Stock were issued and held of record by approximately 3,637 shareholders. As a result of the reverse stock split, we estimate that cashing out fractional shareholders could reduce the number of shareholders of record to approximately 2,296 (assuming a split ratio of one for six, the mid-point of the range of possible split ratios).
Exchange of Stock Certificates As soon as practicable after the effective date, shareholders will be notified that the reverse split has been effected. Our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates for record holders (i.e. shareholders who hold their shares directly in their own name and not through a broker). Record holders of pre-reverse split shares will be asked to surrender to the exchange agent certificates representing pre-reverse split shares in exchange for a book entry with the transfer agent or certificates representing post-reverse split shares in accordance with the procedures to be set forth in a letter of transmittal to be sent by us. No new certificates will be issued to a shareholder until such shareholder has surrendered such shareholder's outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent. RECORD SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
For beneficial holders of pre-reverse split shares (i.e., shareholders who hold their shares through a broker), your broker will make the appropriate adjustment to the number of shares held in your account following the effective date of the reverse split.
Accounting Consequences
Per share net income or loss will be increased because there will be fewer shares of our Common Stock outstanding. We do not anticipate that any other accounting consequences, including changes to the amount of stock-based compensation expense to be recognized in any period, will arise as a result of the reverse stock split.
No Appraisal or Dissenter’s Rights
No appraisal or dissenters’ rights are available to shareholders who vote against the reverse stock split under California law or under ZAP’s Articles of Incorporation or Bylaws for his or her fractional share that will be cashed out in the reverse stock split. Other rights or actions may be available under California law or federal and state securities laws for shareholders who can demonstrate that they have been damaged by the reverse stock split.
Material Federal U.S. Income Tax Consequences of the Reverse Stock Split
The following is a summary of certain material United States federal income tax consequences of the proposed reverse stock split. It addresses only shareholders who hold the pre-reverse split shares and post-reverse split shares as capital assets. It does not purport to be complete and does not address shareholders subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, mutual funds, foreign shareholders, shareholders who hold the pre-reverse split shares as part of a straddle, hedge, or conversion transaction, shareholders who hold the pre-reverse split shares as qualified small business stock within the meaning of Section 1202 of the Internal Revenue Code of 1986, as amended (the "Code"), shareholders who are subject to the alternative minimum tax provisions of the Code, and shareholders who acquired their pre-reverse split shares pursuant to the exercise of employee stock options or otherwise as compensation. This summary is based upon current law, which may change, possibly even retroactively. It does not address tax considerations under state, local, foreign, and other laws. Furthermore, we have not obtained a ruling from the Internal Revenue Service or an opinion of legal or tax counsel with respect to the consequences of the reverse stock split. Each shareholder is advised to consult his or her tax advisor as to his or her own situation.
The reverse stock split is intended to constitute a reorganization within the meaning of Section 368 of the Code. Assuming the reverse split qualifies as a reorganization, a shareholder generally will not recognize gain or loss on the reverse stock split, except to the extent of cash, if any, received 25,000in lieu of a fractional share interest in the post-reverse split shares. The aggregate tax basis of the post-reverse split shares received will be equal to the aggregate tax basis of the pre-reverse split shares exchanged therefor (excluding any portion of the holder's basis allocated to fractional shares). A shareholder’s holding period of the post-reverse split shares received will include the holding period of the pre-reverse split shares exchanged pursuant to the reverse stock split.
A holder of the pre-reverse split shares who receives cash in lieu of a fractional share of post-reverse split stock will generally recognize gain or loss equal to the difference between the portion of the tax basis of the pre-reverse split shares allocated to the fractional share interest and the cash received. Such gain or loss will be a capital gain or loss and will be short term capital gain or loss if the pre-reverse split shares were held for one year or less and long term capital gain or loss if held more than one year. No gain or loss will be recognized by ZAP as a result of the reverse stock split.
Vote Required
The affirmative vote of a majority of the shares of ZAP Common Stock present or represented by proxy and voting at the annual meeting, together with the affirmative vote of a majority of the required quorum, is required for approval of this proposal.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the authorization of the Board to effect a reverse stock split.
PROPOSAL NO. 4
AMENDMENT TO AMENDED AND RESTATED
ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK
General Description
The following table sets forth a general description of the shares of our Common Stock that are issued or authorized for issuance as of April 14, 2011. Currently, there are 400,000,000 shares of Common Stock authorized. We do not currently have sufficient shares of Common Stock authorized to cover shares of Common Stock outstanding and shares of Common Stock issuable pursuant to the exercise of outstanding stock options, convertible securities and warrants that are currently exercisable.
| Shares of Common Stock Related Thereto |
Shares of Common Stock outstanding | 218,104,955 |
Shares of Common Stock issuable pursuant to the exercise of outstanding stock options, convertible securities, and warrants that are currently exercisable | 186,671,919 |
Shares of Common Stock remaining for issuance pursuant to options issuable under the 2008 Equity Compensation Plan, 2007 Consultant Stock Plan, 2006 Equity Incentive Plan, 2004 Consultant Stock Plan and 2002 Equity Incentive Plan | 12,583,946 |
Common Stock. Because ZAP needs to authorize enough shares to outstanding convertible equity and shares reserved for issuance under stockholder-approved equity compensation plans and foresees the need for additional capital raises, the Board of Directors has approved and recommends that the shareholders approve an increase in the number of shares of Common Stock we are authorized to issue.
Unless the shareholders approve an increase in authorized Common Stock, we may not be able to meet all of our contractual obligations with respect to the issuance of Common Stock or accomplish further equity-based financing or acquisitions using our Common Stock. We believe that seeking shareholder approval of an increase in our authorized capitalization to 800,000,000 shares is in the best interests of our shareholders because:
· | it allows us to meet our contractual obligations for issuances under outstanding convertible equity and shares reserved for issuance under stockholder-approved equity compensation plans; |
· | it provides us with significant flexibility for future financing transactions by making a sufficient number of shares of authorized capital available; and |
· | it provides us with significant flexibility for future business acquisition activity, if required. |
Rights of the Common Stock
Each holder of Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of shareholders. Cumulative voting for the election of directors is specifically authorized by California law and the Bylaws. Under cumulative voting for the election of directors, upon a proper and timely request by a shareholder, each shareholder is entitled to cast a number of votes equal to the number of shares held multiplied by the number of directors to be elected. The votes may be cast for one or more candidates. Thus, under cumulative voting, a majority of the outstanding shares will not necessarily be able to elect all of the directors, and minority shareholders may be entitled to greater voting power with respect to election of directors than if cumulative voting did not apply.
The Common Stock is not entitled to preemptive rights and is not subject to conversion or redemption. Upon ZAP’s liquidation, dissolution or winding up, the assets legally available for distribution to shareholders, after payment of claims of creditors are distributable ratably among the holders of the Common Stock. Each outstanding share of Common Stock is fully paid and nonassessable.
For the financial information required to be disclosed herein, see the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” found in Item 7 of, and our financial statements also found in, our annual report on Form 10-K for the year ended December 31, 2010, as amended, included in our annual report to shareholders which accompanies this proxy statement and which is available at www.sec.gov.
Proposed Amendment to Charter
The Board of Directors has adopted resolutions authorizing amendments to our Charter, subject to shareholder approval, increasing the number of shares of our authorized Common Stock, which we may issue to 800,000,000, an increase of 400,000,000 shares, as set forth in Appendix B. At the meeting, we will ask our shareholders to consider and approve a motion to amend our Charter in the form set forth in Appendix B.
If this Proposal is approved, we expect to have sufficient Common Stock capitalization to accomplish our corporate goals as expressed below.
Reasons for the Increase in Authorized Common Stock Described in this Proposal
In the recent past, we have used our authorized but unissued Common Stock for numerous different purposes, including:
· | financing activities in private placements of our securities, including the issuance of convertible securities; and |
· | for the issuance of stock upon exercise of options, warrants and/or conversion of convertible debentures. |
The Board of Directors believes that we need a significant amount of authorized capital for ZAP to accomplish its future growth objectives. The Board of Directors from time-to-time considers various financing opportunities and a lack of authorized Common Stock would make equity financing opportunities difficult, if not impossible, to accomplish.
Effect of the Increase in Authorized Common Stock Described in this Proposal
The increase in authorized Common Stock described in this proposal will result in ZAP being able to issue a large number of additional shares of its Common Stock. (The exact number of shares that ZAP will be entitled to issue will depend on whether, and at what ratio, the reverse stock split is accomplished in accordance with Proposal No. 3, if approved.) Subject to fiduciary requirements under the business judgment rule, the Board of Directors may authorize the issuance of additional shares of Common Stock without the need to obtain further shareholder approval. If issued, these shares would greatly affect the percentage interest of our present shareholders by reducing the proportionate voting power of the outstanding shares of Common Stock. As a summary for illustrative purposes only, the following table shows approximately the effect on our Common Stock of the increase in authorized capitalization, based on the number of shares outstanding on April 14, 2011 without assuming approval of Proposal No. 5 increasing the shares authorized under the Plan to 40 million and assuming the completion of the reverse stock split of our outstanding Common Stock in one of the example ratios set forth below:
| Common Stock Prior to Increase in Authorized Capitalization ____________ | Common Stock After Increase in Authorized Capitalization ____________ | Reverse Stock Split Ratio ____________ | Common Stock After Completion of Possible Reverse Stock Split ____________ |
Authorized | 400,000,000 | 800,000,000 | 4 5 6 7 8 | 800,000,000 800,000,000 800,000,000 800,000,000 800,000,000 |
Issued and Outstanding | 218,104,955 | 218,104,955 | 4 5 6 7 8 | 54,526,238 43,620,991 36,350,825 31,157,850 27,263,119 |
Reserved for issuance | 199,255,865 | 199,255,865 | 4 5 6 7 8 | 49,813,966 39,851,173 33,209,310 28,465,123 24,906,983 |
Available for future issuance | 0 | 382,639,180 | 4 5 6 7 8 | 695,659,796 716,527,836 730,439,865 740,377,027 747,829,898 |
Other than the proposed increase to shares available for issuance under our 2008 Equity Compensation Plan described in Proposal No. 5 and the reservation of shares for issuance upon conversion of outstanding convertible securities, we currently have no plans, agreements or arrangements in place requiring the utilization of these additional shares for financing, corporate mergers, acquisitions of property, establishment of strategic relationships with corporate partners or other general corporate purposes. Having such additional authorized Common Stock available for issuance in the future would allow our Board of Directors to issue shares of Common Stock without the delay and expense associated with seeking shareholder approval. Elimination of such delays and expense occasioned by the necessity of obtaining shareholder approval will better enable ZAP, among other things, to engage in financing transactions and acquisitions as well as to take advantage of changing market and financial conditions on a more competitive basis as determined by our Board of Directors.
The power to issue a substantial number of shares of Common Stock following the proposed increase in authorized shares could be used by incumbent management to make any change in control of ZAP more difficult. Under certain circumstances, such shares could be used to create voting impediments or to frustrate persons seeking to affect a takeover or otherwise gain control of ZAP. For example, additional shares of Common Stock could be privately placed with purchasers who might side with the Board of Directors in opposing a hostile takeover bid or to dilute the stock ownership of a person or entity seeking to obtain control of ZAP.
Despite such anti-takeover implications, the increase in authorized shares is not the result of our knowledge of any specific effort to accumulate our securities or to obtain control of ZAP by means of a merger, tender offer, proxy solicitation in opposition to management, or otherwise. We are not submitting the proposed amendment for the increase in authorized Common Stock to enable us to frustrate any known efforts by another party to acquire a controlling interest in ZAP or to seek Board of Directors representation.
The proposed increase in authorized shares is not a part of any plan by our management to adopt a series of amendments to render the takeover of ZAP more difficult. Management does not presently intend to propose any anti-takeover measures in future proxy solicitations. Except as indicated below, management is not aware of the existence of any other provisions currently in the Charter or Bylaws having any anti-takeover effects which would impose any burden in excess of requirements imposed by the California Corporations Code or federal law upon potential tender offerors or others seeking a takeover of ZAP.
· | Our Charter provides that the liability of corporate directors for monetary damages has been eliminated to the maximum extent provided by California law. |
· | Our Charter provides that ZAP may indemnify its agents to the fullest extent permissible under California law. California law allows indemnification of directors, officers, employees, and agents against liabilities incurred in any proceeding in which an individual is made a party because he was a director, officer, employee, or agent of ZAP if such person conducted himself in accordance with the applicable standard of care (requiring, among other things, actions taken in good faith in a manner reasonably believed to be in, or at least not opposed to, the best interests of the corporation). The availability of indemnification to directors for liability based upon their actions in choosing to issue shares in an attempt to resist a takeover could influence a director in choosing whether to approve the issuance of Common Stock or preferred stock or in taking other actions to resist a takeover. |
Federal Income Tax Consequences
Existing holders of our Common Stock will not be required to recognize any gain or loss for federal income tax purposes resulting from the approval and the completion of the increase in our outstanding Common Stock as described in this proposal.
Vote Required
The affirmative vote of a majority of the shares of ZAP Common Stock presented or represented by proxy and voting at the annual meeting, together with the affirmative vote of a majority of the required quorum, is required for approval of this proposal.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the authorization of the Board to effect an increase in authorized Common Stock.
PROPOSAL NO. 5
INCREASE TO SHARES ISSUABLE UNDER THE 2008 EQUITY COMPENSATION PLAN
General Description
In 2009, with the approval of our stockholders, we adopted the 2008 Equity Compensation Plan, or (the “Plan,”) to promote our long-term growth and profitability by providing our employees, directors and consultants with incentives to improve stockholder value and to contribute to our growth and financial success. In 2009, with the approval of our stockholders, we adopted the 2008 Equity Compensation Plan, or (the “Plan,”) to promote our long-term growth and profitability by providing our employees, directors and consultants with incentives to improve stockholder value and to contribute to our growth and financial success. In April 2011, the Board approved an amendment to the Plan to: (i) increase the number of shares available for awards under the Plan to a total of 40,000,000, (ii) modify the Plan such that it will be in line with 162(m) of the U.S. Internal Revenue Code, (iii) modify the Plan to allow grants to non-U.S. residents and (iv) make other changes to the Plan to reflect best practices (the “Amended Plan”), subject to shareholder approval. Previously, the Board had approved an amendment to the Plan to increase the number of shares available for awards under the Plan by 10,000,000, to an aggregate of 20,000,000 (the “Prior Amendment”). The Board determined that the Amended Plan and the Prior Amendment are in the best interests of ZAP and recommends approval by the shareholders.
As of April 14, 2011, awards covering 19,294,054 shares were issued under the Plan, with a weighted average exercise price of approximately $0.39 and a weighted average remaining term of approximately 9 years, and no shares of restricted stock. The Board believes that the Amended Plan is necessary to provide us with enough shares to continue our program of equity-based incentive compensation. In order to continue our program of equity-based incentive compensation to attract and retain the personnel necessary for our success and to provide more flexibility to the Compensation Committee, the Board has approved the Amended Plan and recommends approval by our shareholders.
The purpose of the Plan is to encourage certain officers, employees, directors, and consultants of ZAP to acquire and hold stock in ZAP as an added incentive to remain with ZAP and to increase their efforts in promoting the interests of ZAP to enable ZAP to attract and retain capable individuals.
The terms of the Plan provide for the granting of stock-based incentives, including incentive stock options, non-qualified stock options, restricted stock and unrestricted stock. Currently, the total number of shares of our Common Stock that may be awarded under the Plan and issued on the exercise of awards is equal to 10,000,000 shares, subject to adjustments in certain circumstances. If this proposal is approved, the total number of shares of our Common Stock that may be awarded under the Plan and issued on the exercise of awards would be 40,000,000 shares, subject to adjustments in certain circumstances. As of April 14, 2011, the approximate number of employees who were eligible to participate in the Plan is 35, the approximate number of non-employee board members who will be eligible to participate in the Plan is 4 and the approximate number of consultants who were eligible to participate in the Plan is 3.
The material features of the Plan, as proposed to be amended, are summarized below. The following summary does not purport to be complete, and is subject to and qualified in its entirety by reference to the complete text of the Amended Plan, which are included hereto as Appendix C.
General
The total number of shares reserved for issuance under the Plan is 40,000,000. The maximum number of shares that may be issued as stock awards (restricted stock or unrestricted stock) or stock options is 40,000,000.
Shares of common stock issued under the Plan may be authorized but unissued shares, reacquired shares or both. The number of shares considered issued under the Plan equals the number of shares issued upon exercise or settlement of an award.
As of April 14, 2011 the closing price of ZAP’s common stock was $0.75 as reported on the OTC Bulletin Board. Because participation and $419,000the types of awards under the Plan are discretionary, the benefits or amounts that will be received by any grantee or groups of grantees if the amendment of the Plan is approved are not currently determinable.
The Plan may be terminated by action of the Board of Directors.
Administration. The Compensation Committee will administer the Plan.
Eligibility. Any employee, officer, director or consultant of ZAP or any of its subsidiaries, including non-U.S. residents, is eligible to receive an award under the Plan.
Options. Stock options grants may be either incentive stock options (within the meaning of the Section 422 of the Code) or non-qualified stock options (options that do not qualify as incentive stock options for federal income tax purposes). The exercise price of an option cannot be less than the fair market value of a share as of the grant date. The duration of incentive stock options cannot exceed ten years, or five years if granted to a ten percent Shareholder. If an incentive stock option is granted to an individual ten percent shareholder, the exercise price must be at least 110% of the fair market value on the grant date.
Grantees may exercise their options in warrants December 2007whole or in part. The exercise of an option may be paid in cash, in stock, or in a combination of cash and stock.
Other Awards. The Committee may grant stock subject to vesting restrictions (restricted stock) and not subject to vesting restrictions (unrestricted stock).
Adjustments. In the event of a change in capital structure, including but not limited to, any stock dividends, stock split-ups, or consolidations of stock, the Board has the discretion to adjust the maximum number of shares that may be granted under the Plan and the terms of any outstanding award to prevent the dilution or enlargement of benefits intended under the Plan.
Amendment and Termination. The Board of Directors of ZAP may at any time and for any reason amend or terminate the Plan, except that no amendment to increase the maximum number of shares under the Plan in the aggregate, materially increase the benefits accruing to the grantees under the Plan, change the class of employees eligible to receive options under the Plan, or modify the eligibility requirements under the Plan will be effective without shareholder approval. Additionally, no termination or amendment may adversely alter or affect the terms of any outstanding awards without the consent of the affected grantee.
Tax Consequences of the Plan
The following discussion of the federal income tax consequences of the Plan is intended to be a summary of applicable federal law as currently in effect. Foreign, state and local tax consequences may differ and laws may be amended or interpreted differently during the term of the Plan or of awards granted thereunder. Because the federal income tax rules governing awards and related payments are complex and subject to frequent change, award holders are advised to consult their individual tax advisors.
Stock Options: Incentive stock options and nonqualified stock options are treated differently for federal income tax purposes. Incentive stock options are intended to comply with the requirements of Section 422 of the Code. Nonqualified stock options do not comply with such requirements.
Only employees can be granted incentive stock options. An optionee is not taxed on the grant or exercise of an additionalincentive stock option. The difference between the exercise price and the fair market value of the shares on the exercise date will, however, be a preference item for purposes of the alternative minimum tax. If an optionee holds the shares acquired upon exercise of an incentive stock option for at least two years following the option grant date
and at least one year following exercise, the optionee’s gain, if any, upon a subsequent disposition of such shares is long-term capital gain. The measure of the gain is the difference between the proceeds received on disposition and the optionee’s basis in the shares (which generally equals the exercise price). If an optionee disposes of stock acquired pursuant to exercise of an incentive stock option before satisfying the one and two-year holding periods described above, the optionee generally will recognize both ordinary income and capital gain in the year of disposition. The amount of the ordinary income will be the lesser of (i) the amount realized on disposition less the optionee’s adjusted basis in the stock (usually the exercise price) or (ii) the difference between the fair market value of the stock on the exercise date and the option price. The balance of the consideration received on such a disposition will be long-term capital gain if the stock had been held for at least one year following exercise of the incentive stock option and otherwise will be short-term capital gain. ZAP is not entitled to an income tax deduction on the grant or exercise of an incentive stock option or on the optionee’s disposition of the shares after satisfying the holding period requirement described above. If the holding periods are not satisfied, ZAP will be entitled to a deduction in the year the optionee disposes of the shares in an amount equal to the ordinary income recognized by the optionee.
In order for an option to qualify for incentive stock option tax treatment, the grant of the options must satisfy various conditions (e.g., the limitation of $100,000 of stock underlying incentive stock options that may vest in one year) and the option holder must satisfy certain conditions, including exercising the option while an employee or within a short period of time after ceasing to be an employee, and holding the shares acquired upon exercise of the option for a specified period of time. In the event an option intended to be an incentive stock option fails to so qualify, it will be taxed as a nonqualified stock option as described in the next paragraph.
An optionee is not taxed on the grant of a nonqualified stock option. On exercise, however, the optionee recognizes ordinary income equal to the difference between the option price and the fair market value of the shares acquired on the date of exercise. ZAP is entitled to an income tax deduction in the year of exercise in the amount recognized by the optionee as ordinary income. Any gain (or loss) on subsequent disposition of the shares is long-term capital gain (or loss) if the shares are held for at least one year following exercise. ZAP does not receive a deduction for this gain.
Restricted Stock: Grantees of restricted stock do not recognize income at the time of the grant of such restricted stock. However, when the restricted stock vests, grantees generally recognize ordinary income in an amount equal to the fair market value of the stock at such time, and ZAP will receive a corresponding deduction.
Unrestricted Stock: Grantees who are awarded unrestricted common stock will be required to recognize ordinary income in an amount equal to the fair market value of the shares of the common stock on the date of the award, reduced by the amount, if any, paid for such shares. ZAP will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income
Tax Withholding: To the extent required by applicable law, a grantee shall be required to satisfy, in a manner satisfactory to ZAP, any withholding tax obligations that arise by reason of an award.
Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal Revenue Code limits publicly-held companies such as ZAP to an annual deduction for federal income tax purposes of $1 million for compensation incentive paid to their covered employees. However, performance-based compensation is excluded from this limitation. The Amended Plan is designed to permit the Committee to grant awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m).
To qualify as performance-based:
(i)the compensation must be paid solely on account of the attainment of one or more pre-established, objective performance goals;
(ii)the performance goal under which compensation is paid must be established by a compensation committee comprised solely of two or more directors who qualify as outside directors for purposes of the exception;
(iii)the material terms under which the compensation is to be paid must be disclosed to and subsequently approved by stockholders of the corporation in a separate vote before payment is made; and
(iv)the compensation committee must certify in writing before payment of the compensation that the performance goals and any other material terms were in fact satisfied.
In the case of compensation attributable to stock options, the performance goal requirement (summarized in (i) above) is deemed satisfied, and the certification requirement (summarized in (iv) above) is inapplicable, if the grant or award is made by the compensation committee; the plan under which the option is granted states the maximum number of shares with respect to which options may be granted during a specified period to an employee; and under the terms of the option, the amount of compensation is based solely on an increase in the value of the common stock after the date of grant.
Under the Amended Plan, one or more of the following business criteria, on a consolidated basis, and/or with respect to specified subsidiaries or business units, where appropriate, are used exclusively by the Committee in establishing performance goals: (i) earnings per share; (ii) revenues or margins; (iii) cash flow; (iv) operating margin; (v) return on net assets, investment, capital, or equity; (vi) economic value added; (vii) direct contribution; (viii) net income; (ix) pretax earnings; (x) earnings before interest and taxes; (xi) earnings before interest, taxes, depreciation and amortization; (xii) earnings after interest expense and before extraordinary or special items; (xiii) operating income; (xiv) income before interest income or expense, unusual items and income taxes, local, state or federal and excluding budgeted and actual bonuses that might be paid under any ongoing bonus plans of the Corporation; (xv) working capital; (xvi) management of fixed costs or variable costs; (xvii) identification or consummation of investment opportunities or completion of specified projects in accordance with corporate business plans, including strategic mergers, acquisitions or divestitures; (xviii) total stockholder return; and (xix) debt reduction.
Business criteria may be measured on an absolute or relative basis and on a GAAP or non-GAAP basis.
Under the Internal Revenue Code, a director is an “outside director” of ZAP if he or she is not a current employee of ZAP; is not a former employee who receives compensation for prior services (other than under a tax-qualified retirement plan); has not been an officer of ZAP; and does not receive, directly or indirectly (including amounts paid to an entity that employs the director or in which the director has at least a five percent ownership interest), remuneration from ZAP in any capacity other than as a director.
The maximum number of shares of Common Stock subject to options or stock appreciation rights that can be granted under the Amended Plan in a calendar year to any person is 10,000,000. The maximum number of shares of Common Stock that can be granted under the Amended Plan to any person, other than pursuant to an option or stock appreciation right, is 10,000,000 per year. The maximum amount that may be paid as a cash-settled Performance-Based Award for a 12 month performance period by any one person is $10,000,000 and the maximum amount that may be paid as a cash-settled Performance-Based Award in respect of a performance period greater than 12 months by any one person is $20,000,000.
Equity Compensation Plan Information
We have adopted stock incentive plans to provide incentives to attractThe following table summarizes the options granted under our 2008 Equity Compensation Plan, 2007 Consultant Stock Plan, Amended and retain officers, directors, key employeesRestated 2006 Incentive Stock Plan, 2004 Consultant Stock Plan, and consultants.2002 Incentive Stock Plan as of December 31, 2010. We currently have reserved a total of 30,000,00045 million shares of our common stockCommon Stock for granting awards, including 1,500,000 shares under our 1999 Incentive Stock Option Plan, 10,000,00010 million shares under our 2002 Incentive Stock Option Plan, and 4,000,0004 million shares under our 2006 Incentive Stock Option Plan, and 14,500,00010 million shares under our 2007 Consultant Stock IncentivePlan, and 10 million shares under our 2008 Equity Compensation Plan. ZAP has 1 million shares authorized for issuance under its 2004 Consultant Stock Plan, but has not issued any of these options. All plans were approved by our shareholders. Asshareholders. The shares covered by outstanding options are subject to adjustment for changes in capitalization stock splits, stock dividends and similar events.
| Equity Compensation Plan Table |
Equity Compensation Plans Approved By Security Holders | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) (in thousands) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under Equity Compensation Plans (excluding securities reflected in column (a)) (c) (in thousands) |
Grants under the 2008 Equity Compensation Plan | 19,294 (1) | $0.37 | 0 |
Grants under the 2007 Consultant Stock Plan | 1,500 | $0.51 | 4,500 |
Grants under the 2006 Incentive Stock Plan | 3,290 | $0.72 | 817 |
Grants under the 2004 Consultant Stock Plan | — | $ — | 1,000 |
Grants under the 2002 Incentive Stock Plan | 2,694 | $0.92 | 6,204 |
Equity Compensation Plans Not Approved by Security Holders | — | — | — |
| ___________ | __________ | __________ |
Total | 26,778 | $0.47 | 13,087 |
(1) Certain options granted under the plan are subject to shareholder approval of December 31, 2007, 643,870 shares of common stock had been issued pursuant to options exercised outProposal No. 5.
New Plan Benefits
Because of the 2002 plan.limited number of shares available for issuance under the Stock Incentive Plan as of January 1, 2010, the Board of Directors granted awards that are contingent on stockholder approval of the Amended Plan. If the Amended Plan is not approved, no shares will be issued in connection with those awards and the awards will be cancelled.
The following New Plan Benefits Table contains the number of awards that have been made under the Stock Incentive Plan, but are contingent on stockholder approval of the Amended Plan, to the individuals and groups listed below. Because participation and the types of awards available for grant under the Stock Incentive Plan are subject to the discretion of the administrator, the amounts that any participant or group of participants may receive in the future if the Amended Plan is approved, other than the awards set forth in the New Plan Benefits table below, are not currently determinable.
New Plan Benefits in Fiscal Year 2011
Name and Position | | Amended 2008 Plan | | |
| Exercise Price ($) | | Shares underlying option (#) | | |
Steven Schneider, Co-Chief Executive Officer, Secretary and Director | | | | $0.39 | | 8,333,940 | | | |
Priscilla Lu Director | | | | $0.39 | | 5,600,364 | | | |
Executive Officer Group | | | | $0.39 | | 8,333,940 | | | |
Non-Executive Director Group | | | | | | 5,600,364 | | | |
Non-Executive Officer Employee Group | | | | — | | 0 | | | |
Vote Required
The following table sets forthaffirmative vote of a descriptionmajority of our equity compensation plans asthe shares of December 31, 2007:
Plan Category | | Number of Securities to be issued upon exercise of outstanding options and other rights | | Weighted-average exercise price of outstanding options and other rights | | Number of securities remaining available for future issuance under equity compensation plans, (excluding securities reflected in column (a)) |
| | (a) | | (b) | | (c) |
| | | | | | |
Equity compensation plans approved by security holders | | 15,500,000 | | $1.03 | | 157,194 |
| | | | | | |
Equity compensation plans not approved by security holders | | 14,500,000 | | $1.02 | | 8,463,658 |
| | | | | | |
Total | | 30,000,000 | | $1.03 | | 8,620,852 |
ZAP Common Stock present or represented by proxy and voting at the annual meeting, together with the affirmative vote of a majority of the required quorum, is required for approval of this proposal.
Recommendation of the Board of Directors - 21 - -
The Board of Directors recommends that the shareholders vote FOR the authorization of the Board to amend and restate the 2008 Equity Compensation Plan.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of September 29, 2008,known to ZAP with respect to beneficial ownership of ZAP Common Stock as of April 14, 2011 for (i) each director and nominee, (ii) each holder of 5.0% or greater of ZAP Common Stock, (iii) ZAP’s Co-Chief Executive Officers and the holdings of (1) each person who is the beneficial owner of more than five percent of our common stock, (2) each of our directors, (3) the CEO and each Named Executive Officer, and (4) all of our directors andtwo most highly compensated executive officers other than the Co-Chief Executive Officers and the Chief Financial Officer named in the table entitled “Summary Compensation Table” below (the “named executive officers”), and (iv) all executive officers and directors as a group. Unless otherwise listed below, the address for each investor is ZAP’s address: 501 Fourth Street, Santa Rosa, CA 95401.
Beneficial ownership of the common stock is determined in accordance withunder the rules of the Securities and Exchange Commission and generally includes any shares of common stock over which a person exercises sole or shared voting or investment powers, or of which a person has a rightpower with respect to acquire ownership at any time within 60 days of September 29, 2008.securities. Except as otherwise indicated in the footnotes to this table and subjectpursuant to applicable community property laws, to ZAP’s knowledge the persons named in thisthe table below have sole voting and investment power with respect to all shares of common stock held by them. Applicable percentage ownership in the following table is based on 60,688,927 ,shares of common stock outstanding as of September 29, 2008, plus, for each individual, any securities that individual has the right to acquire within 60 days of September 29, 2008.
UnlessCommon Stock beneficially owned. In addition, unless otherwise indicated, all persons named below the address of each of the principal shareholders is c/ocan be reached at ZAP, 501 Fourth Street, Santa Rosa, CaliforniaCA 95401. The number of shares beneficially owned by each person or group as of April 14, 2011 includes shares of Common Stock that such person or group had the right to acquire on or within 60 days after April 14, 2011, including, but not limited to, upon the exercise of options or the vesting of restricted stock units. References to options in the footnotes of the table below include only options to purchase shares outstanding as of April 14, 2011 that were exercisable on or within 60 days after April 14, 2011, and references to restricted stock units in the footnotes of the table below include only restricted stock units outstanding as of April 14, 2011 that would vest and could settle on or within 60 days after April 14, 2011. For each individual and group included in the table below, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the 218,104,955 shares of Common Stock outstanding on April 14, 2011 plus the number of shares of Common Stock that such person or group had the right to acquire on or within 60 days after April 14, 2011.
Name | Number of Shares Beneficially Owned _________ | Percent Owned ________ |
Goldenstone Worldwide Limited | 30,000,000 | 13.75% |
The Banks Group (1) | 15,048,297 | 6.59% |
Alex Wang | 4,000,000 | 1.83% |
Steven Schneider (2) | 24,139,219 | 10.10% |
Cathaya Capital L.P. (3) | 192,131,788 | 57.31% |
Priscilla Lu (4) | 192,131,788 | 57.31% |
William Hartman (5) | 2,440,841 | 1.10% |
Gary Dodd (6) | | * |
H. Dave Jones (7) | | * |
Mark Abdou (8) | | * |
Peter Scholl (9) | | * |
Benjamin Zhu | — | 0% |
Gomen Chong | — | 0% |
Georges Penalver | — | 0% |
Patrick Sevian | — | 0% |
All Directors and Executive Officers as a group (11 persons)(10) | 225,225,026 | 62.54% |
Name and Address | | Shares Beneficially Owned | | Percentage of Class |
| | | | |
| | | | |
Beneficial Owners of More than 5%: | | | | |
| | | | |
Jeffrey G. Banks (1),the Banks Group | | 4,136,297 | | 6.82% |
| | | | |
Fusion Capital Fund II, LLC (2) | | 2,750,000 | | 4.54% |
222 Merchandise Mart Plaza, Suite 9-112 Chicago, IL 60654 | | | | |
| | | | |
| | | | |
Current Directors, Nominees and Named Executive Officers: | | | | |
| | | | |
Steven Schneider (3) | | 17,629,809 | | 29.05% |
| | | | |
Gary Starr (4) | | 9,720,149 | | 16.02% |
| | | | |
Eqbal Al Yousuf (5) | | 7,162,454 | | 11.81% |
| | | | |
William Hartman (6) | | 2,336,238 | | 3.85% |
| | | | |
Amos Kazzaz (7) | | 1,250,106 | | 2.06% |
| | | | |
Peter Scholl * | | | | |
| | | | |
Randall S Waldman | | — | | — |
| | | | |
All Directors and Executive Officers as a group (7) persons) | | 38,098,756 | | 62.79% |
* Less than one percent._______________
* | Less than 1%. |
| |
(1) | Includes 2,505,000 warrants to purchase common stock. |
(2) | Represents 2,750,000 warrants10,200,000 shares of Common Stock issued to purchase common stock. Pursuant to the termsJeffrey & Banks, an affiliate of the warrant, Fusion Capital is not entitled to exercise the warrants to the extent such exercise would cause the aggregate number of shares of common stock beneficially owned by Fusion Capital to exceed 9.9% of the outstanding shares of the common stock following such exercise. Steve Martin is the managing partner. The address for Fusion Capital is 222 Merchandise Mart Plaza, Suite 9-112, Chicago, IL 60654.Banks Group. |
| |
(3)(2) | Includes 12,231,952 shares of common stockCommon Stock issuable upon the exercise of various warrants and 2,648,3578,741,320 shares of stockCommon Stock issuable upon the exercise of stock options.options that are currently exercisable or will be exercisable within 60 days of April 14, 2011. |
(3) | Includes (a) 84,265,000 shares of Common Stock issuable upon conversion of a promissory note and 20,000,000 shares of Common Stock issuable upon exercise of a warrant held by China Electric Vehicle Corporation, (b) 10,000,000 shares of Common Stock issuable upon the exercise of a warrant and 69,000,000 shares of Common Stock held by Cathaya Capital, L.P., (c) 6,000,000 shares of Common Stock held by Better World International Limited, (d) options to purchase 2,866,788 shares of Common Stock that are currently exercisable or will be exercisable within 60 days of April 14, 2011 held by Dr. Priscilla Marilyn Lu. |
(4) | Dr. Lu is the Chairman of the Board of Directors of ZAP and is also founder and general partner of Cathaya Capital Co., Ltd., the general partner of Cathaya Capital GP, L.P., which is the general partner of Cathaya Capital L.P., a Cayman Islands exempted limited partnership (“Cathaya”). Cathaya is the sole shareholder of China Electric Vehicle Corporation, a British Virgin Islands Company (“CEVC”). Dr. Lu is also a director of Better World International Limited, a British Virgin Islands company (“Better World”) and Cathaya is the majority shareholder of Better World. Accordingly, Ms. Lu’s beneficial ownership may be deemed to include (a) a promissory note convertible into 84,265,000 shares of Common Stock and a warrant to purchase 20,000,000 shares of Common Stock held by China Electric Vehicle Corporation, (b) 10,000,000 shares of Common Stock issuable upon the exercise of a warrant and 69,000,000 shares of Common Stock held by Cathaya Capital, L.P., (c) 6,000,000 shares of Common Stock held by Better World International Limited, (d) options to purchase 2,866,788 shares of Common Stock that are currently exercisable or will be exercisable within 60 days of April 14, 2011 held by Dr. Priscilla Marilyn Lu. Dr. Lu disclaims ownership of the shares beneficially owned by China Electric Vehicle Corporation, Cathaya Capital, L.P. and Better World International Limited, except to the extent of her pecuniary interest therein. |
(5) | Includes 6,013,846shares829,369 shares of common stockCommon Stock issuable upon the exercise of various warrants and 2,686,6911,003,333 shares of stockCommon Stock issuable upon the exercise of stock options.options that are currently exercisable or will be exercisable within 60 days of April 14, 2011. |
(5) | Shares were issued to Al-Yousuf LLC of which Mr Al-Yousuf is the President |
(6) | Includes 829,3691,150,000 shares of commonCommon Stock issuable upon the exercise of stock options that are currently exercisable or will be exercisable within 60 days of April 14, 2011. |
(7) | Includes 156,000 shares of Common Stock issuable upon the exercise of stock options that are currently exercisable or will be exercisable within 60 days of April 14, 2011. |
(8) | Includes 53,580 shares of Common Stock issuable upon the exercise of stock options that are currently exercisable or will be exercisable within 60 days of April 14, 2011. |
(9) | Includes 660,000 shares of Common Stock issuable upon the exercise of various warrants and 1,394,86953,580 shares of stockCommon Stock issuable upon the exercise of stock options. |
(7) | Includes 939,737 sharesoptions that are currently exercisable or will be exercisable within 60 days of stock issuable upon the exercise of stock options.April 14, 2011. |
Section 16(a) Beneficial Ownership Reporting Compliance(10) | Includes shares, options and warrants described in the notes above, as applicable. |
Equity Compensation Plan Information
Section 16(a)The following table provides information as of December 31, 2010 with respect to the shares of ZAP Common Stock that may be issued under existing equity compensation plans. ZAP has four active equity compensation plans: The 2008 Equity Compensation Plan, the 2007 Consultant Stock Plan, the Amended and Restated 2006 Incentive Stock Plan, and the 2002 Incentive Stock Plan. ZAP has 1 million shares authorized for issuance under its 2004 Consultant Stock Plan, but has not issued any of these options. These plans provide for the grant of incentive stock options and non-statutory options to employees, directors and consultants to ZAP. ZAP granted incentive stock options and non-statutory options at exercise price per share equal to the fair market value per of the Securities Exchange ActCommon Stock on the date of 1934 requiresgrant. The vesting generally, three years, and exercise provisions were determined by the Company’s officers, directors and persons beneficially owning more than 10%Board of the outstanding common stockDirectors, with a maximum life from five to ten years.
| | 2008 Plan | | | 2007 Plan | | | 2006 Plan | | | 2002 Plan | |
| | Number of Shares | | | Weighted Average Exercise Price | | | Number of Shares | | | Weighted Average Exercise Price | | | Number of Shares | | | Weighted Average Exercise Price | | | Number of Shares | | | Weighted Average Exercise Price | |
Outstanding at January 1, 2009 | | | — | | | | — | | | | 1,000 | | | $ | 1.03 | | | | 5,278 | | | $ | 0.93 | | | | 5,388 | | | $ | 0.97 | |
Granted | | | 18,974 | | | $ | 0.37 | | | | 1,560 | | | $ | 0.40 | | | | — | | | | — | | | | — | | | | — | |
Exercised | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Canceled | | | — | | | | — | | | | (1,160 | ) | | | 1.03 | | | | (2,996 | ) | | | 0.93 | | | | (2,592 | ) | | | 0.97 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2009 | | | 18,974 | | | $ | 0.37 | | | | 1,400 | | | $ | 0.37 | | | | 2,282 | | | $ | 0.86 | | | | 2,796 | | | $ | 1.08 | |
Plan transfer and adjustments | | | 40 | | | | — | | | | (1,000 | ) | | $ | 0.40 | | | | 1,074 | | | $ | 0.40 | | | | 1 | | | | — | |
Granted | | | 1,260 | | | $ | 0.34 | | | | 1,100 | | | $ | 0.48 | | | | — | | | | — | | | | — | | | | — | |
Exercised | | | (140 | ) | | $ | 0.25 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Canceled | | | (840 | ) | | $ | 0.27 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Outstanding number of shares exercisable and intrinsic value at December 31, 2010 | | | 19,294 | | | $ | 0.37 | | | | 1,500 | | | $ | 0.51 | | | | 3,290 | | | $ | 0.72 | | | | 2,694 | | | $ | 0.92 | |
The weighted average fair value of the Company to file reports of beneficial ownership and changes in beneficial ownership with the Securities and Exchange Commission (“SEC”). Officers, directors, and greater than 10% beneficial owners of common stock are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. The Company believes thatoptions granted during the fiscal yearyears ended December 31, 2010 and 2009 was $0.80 and $0.37.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Executive Officers
Set forth below are the names, ages, and certain biographical information about our current executive officers.
Executive Officer | Positions and Offices Held with ZAP |
Steven Schneider (1) | Co-Chief Executive Officer, Secretary and Director |
Alex Wang (1) | Co-Chief Executive Officer and Director |
Benjamin Zhu | Chief Financial Officer |
H. David Jones | Chief Operating Officer |
_________________
(1) Biographical information for Mr. Schneider and Mr. Wang is included above under Proposal No. 1 on page 5.
Benjamin Zhu, 40, has been ZAP’s Chief Financial Officer since March 2011. Prior to that, he was the deputy head of finance at BAIC Foton Auto Group, a large commercial vehicle manufacturer, since August 2009. From July 2008 to July 2009, Mr. Zhu served as the CFO of Ready Medicine Group, a drug wholesale and retail business, where he oversaw mergers and acquisitions in China in addition to financial responsibilities. From March 2007 to June 2008, Mr. Zhu was the finance director of Chery Global, one of China’s largest automobile manufacturers. From August 2005 to February 2007, Mr. Zhu was an audit director at Homeworld Hypermarket Group, a large retailer in China, where he helped prepare for ZAP’s initial public offering. Mr. Zhu also has 9 years of combined experience at the international accounting firms of Deloitte & Touche LLP and PricewaterhouseCoopers LLP. Mr. Zhu obtained a degree in Industry Economics from the Southwest University of Finance and Economics in China in 1993.
H. David Jones, 65, has been ZAP’s Chief Operating Officer since April 2010. Prior to that, from September 2008 to April 2010, Mr. Jones was an international consultant to Chevron’s wholly owned contracting organization Cabinda Gulf Oil Company Ltd. in Angola, Africa. From June 2006 to September 2008, Mr. Jones worked at Jones Realty, a real estate company. From June 1994 to June 2006, Mr. Jones held positions in interWAVE Communications, Inc., a provider of mobile GSM and CDMA networks, as Vice President of International Sales and Vice President of Marketing. Mr. Jones earned a Bachelor of Science degree in Business Administration from Capital University in Columbus, Ohio in 1967, an MBA from Ohio University in Athens, Ohio in 1969, and graduated from the Executive Management Program in the School of Organization and Management at Yale University in New Haven, CT in 1989.
Summary of Compensation
The following table sets forth the compensation earned by the named executive officers for services rendered in all capacities to ZAP and its subsidiaries for each of the last two or fewer fiscal years during which such individuals served as executive officers. ZAP’s named executive officers for fiscal 2010 include ZAP’s Co-Chief Executive Officers and directors timely filed an initial statementthe two most highly compensated executive officers other than the Co-Chief Executive Officers in fiscal 2010, or the Named Executive Officers.
Summary Compensation Table
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock awards ($)(1) | Option awards ($)(2) | Nonequity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($) |
Steven Schneider, Co-Chief Executive Officer and Secretary | 2010 2009 | 240,000 179,000 | — — | — 31,750 | — 3,522,541 | — — | — — | — — | 240,000 3,733,291 |
Alex Wang, Co-Chief Executive Officer (3) | 2010 2009 | 121,448 (4) — | — — | — — | — — | — — | — — | — — | 121,448 — |
H. David Jones, Chief Operations Officer (5) | 2010 2009 | 66,656 — | — — | 40,000 — | 120,000 — | — — | — — | 10,000 (6) — | 236,656 — |
Gary Dodd, President (7) | 2010 2009 | 100,000 58,337 | — 50,000 | 25,000 — | — 318,780 | — — | — — | — — | 125,000 427,117 |
(1) The amounts in the Stock Awards column represent the aggregate grant date fair values, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, of beneficial ownershiprestricted stock unit awards issued pursuant to the 2008 Equity Compensation Plan. The grant date fair value of securitiesthese awards is calculated using the closing price of ZAP’s Common Stock on Form 3.the grant date as if these awards were vested and issued on the grant date. There can be no assurance that these grant date fair values will ever be realized by the Named Executive Officers.
(2) The Company also believes that duringfair value of each option and warrant is estimated on the fiscal year endeddate of grant using the Black-Scholes-Merton option-pricing model with the following weighted-average assumptions:
| 2010 | 2009 |
Dividends | None | None |
Expected volatility | 107.5% to 122.6% | 113.5% – 158.2% |
Risk free interest rate | 1.20% to 2.98% | 2.93% - 3.31% |
Expected life | 5.0 – 5.75 years | 5.0 – 5.75 years |
(3) Mr. Wang was appointed as ZAP’s Co-Chief Executive Officer on October 25, 2010.
(4) Mr. Wang’s compensation for 2010 was RMB 800,000, represented here as the dollar exchange rate at December 31, 2011, paid by Jonway, ZAP’s 51% owned subsidiary.
(5) Mr. Jones was appointed as ZAP’s Chief Operations Officer on April 19, 2010.
(6) ZAP paid $10,000 in 2010 for the rental of an apartment for Mr. Jones in Santa Rosa, California.
(7) Mr. Dodd was appointed as ZAP’s President on June 1, 2009.
ZAP has no employment agreements with any employee as at December 31, 2010.
The following table shows the number of shares of ZAP Common Stock covered by exercisable and unexercisable stock options held by ZAP’s named executive officers as of December 31, 2010.
Outstanding Equity Awards At 2010 Fiscal Year-End
| Option Awards | Stock Awards |
Name | Number of Securities Underlying Unexercised Options (#) Exercisable) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) |
Steven Schneider, Co-Chief Executive Officer and Secretary | 220,000 550,000 566,117 348,588 572,686 390,966 1,000,000 5,092,963 | 0 0 0 0 0 0 0 3,240,977 | $0.23 $1.15 $1.20 $0.85 $0.94 $0.83 $0.39 $0.39 | 7/5/2012 6/23/2014 11/16/2014 6/7/2015 11/9/2017 8/11/2016 8/9/2014 8/9/2014 | — | — |
Alex Wang, Co-Chief Executive Officer | — | — | — | — | — | — |
H. David Jones, Chief Operations Officer | 88,889 | 312,111 | $0.30 | 4/7/2015 | — | — |
Gary Dodd, President | 1,150,00 | 0 | $0.40 | 5/30/2014 | — | — |
Potential Payments upon Termination or Change in Control
Acceleration of Equity Awards
The 2006 Incentive Stock Plan and 2002 Incentive Stock Plan provide that the Board of Directors or the Compensation Committee may, in its discretion, accelerate outstanding awards subject to vesting provisions in full upon a change in control. The 2008 Equity Compensation Plan provides that, unless as determined by the Board, outstanding awards subject to vesting provisions shall accelerate and vest in full upon a change in control. The 2007 all officersConsultant Stock Plan and directors timely filed certain transactions on Form 4s.
Legal Proceedings
There are no material proceedings to which any director, officer or affiliate of the registrant, any owner of record or beneficially of more than five percent of any class of voting securities of the registrant, or any associate of2004 Consultant Stock Plan do not contain any such director, officer, affiliate of the registrant, or security holder is a party adverse to the registrant or any of its subsidiaries or has a material interest adverse to the registrant or any of its subsidiaries also shall be described.provision.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TheFinancing Provided to ZAP by Cathaya Capital, L.P., Better World International Limited and China Electric Vehicle Corporation, Who Are Affiliated with Dr. Lu, Chairman of the Board of ZAP
Dr. Priscilla Lu was appointed as Chairman of ZAP’s Board of Directors has adopted written policieson August 6, 2009. Ms. Lu is also founder and proceduresgeneral partner of Cathaya Capital Co., Ltd., the general partner of Cathaya Capital GP, L.P., which is the general partner of Cathaya Capital L.P., a Cayman Islands exempted limited partnership (“Cathaya”). Cathaya is the sole shareholder of China Electric Vehicle Corporation, a British Virgin Islands Company (“CEVC”). Dr. Lu is also a director of Better World International Limited, a British Virgin Islands company (“Better World”) and Cathaya is the majority shareholder of Better World.
On August 6, 2009, ZAP entered into a Securities Purchase Agreement with Cathaya (the “2009 Securities Purchase Agreement”), pursuant to which Cathaya purchased 20 million shares of ZAP’s Common Stock at a price of $0.25 per share for an aggregate purchase price of $5 million. In addition warrants were also issued to Cathaya, which grants Cathaya the reviewright to purchase up to 10 million shares of ZAP’s Common Stock at a price of $0.50 per share. The warrants expire on August 6, 2014.
On August 6, 2009, in connection with the 2009 Securities Purchase Agreement, ZAP also entered into a Secured Loan Facility with Cathaya pursuant to a Secured Convertible Promissory Note (the “2009 Note”). The 2009 Note provides for an aggregate principal amount of up to $10 million in advances to be made to ZAP by Cathaya prior to October 1, 2012. The aggregate principal amount of the advances made under the 2009 Note accrues interest at a rate per annum equal to the greater of (i) five percent (5%), or (ii) three percent (3%) plus prime. The aggregate principal amount of each advance made under the 2009 Note plus interest becomes due and payable to Cathaya on the earlier of (i) the two year anniversary of the date such advance was made and (ii) December 31, 2012. The 2009 Note is convertible into shares of ZAP’s Common Stock at a conversion rate, subject to any transaction, arrangement or relationship betweenadjustments called for by the Companyterms of the 2009 Note, of 2,000 shares of Common Stock for each $1,000 principal amount of the 2009 Note being converted. The 2009 Note is secured by the terms and oneconditions of our executive officers, directors, director nominees or 5% shareholders (or their immediate family members), eacha security agreement covering all of whom we referZAP’s assets other than those assets specifically excluded from the lien created by the Security Agreement. Cathaya was also issued a warrant granting it the right to aspurchase up to 6 million shares of ZAP’s Common Stock at a “related person,” has a direct or indirect material interest and whenprice of $0.50 per share, based on the amount involved exceeds $120,000.advanced on the 2009 Note and expiring on August 6, 2014. As of April 22, 2011, no amounts have been advanced on the 2009 Note.
IfIn connection with the 2009 Securities Purchase Agreement and Dr. Lu’s appointment to the Board of Directors of ZAP, Dr. Lu was issued a related person proposesnonstatutory stock option to enterpurchase one million shares of ZAP’s Common Stock that was fully vested and exercisable when granted and a nonstatutory option to purchase 5,600,364 shares of ZAP, which vests in three equal yearly installments starting August 5, 2010.
On January 15, 2010, ZAP entered into such a transaction, arrangement or relationship, defined as a “related party transaction,” the related party must report the proposed related party transactionStock Purchase Agreement with Better World pursuant to our Chief Financial Officer. The policy callswhich ZAP issued Better World six million shares of ZAP’s Common Stock in exchange for the proposed related party transaction to be reviewed and, if deemed appropriate, approved by the Governance Committee. If practicable, the reporting, review and approval will occur prior to entry into a Distribution Agreement upon the transaction. If advance review and approval is not practicable,terms set forth in the Governance Committee will review, and, in its discretion, may ratify the related party transaction. Any related party transactions that are ongoing in nature will be reviewed annuallyStock Purchase Agreement.
On July 9, 2010, Cathaya entered into a securities purchase agreement pursuant to which it purchased forty-four million shares of ZAP’s Common Stock at a minimum. The related party transactions listed below were reviewed by the full Boardprice of Directors. The Governance Committee shall review future related party transactions$0.25 per share for an aggregate purchase price of $11 million.
Rental ArrangementOn November 10, 2010, ZAP entered into a Management Agreement with Cathaya, pursuant to which ZAP issued Cathaya five million shares of its Common Stock in exchange for Cathaya’s prior and ongoing transaction advisory, financial and management consulting services.
On January 12, 2011, ZAP entered into a Senior Secured Convertible Note and Warrant Purchase Agreement (the “CEVC Agreement”) with CEVC. Pursuant to the CEVC Agreement, (i) CEVC purchased from ZAP a Senior Secured Convertible Note (the “CEVC Note”) in the principal amount of US$19 million, (ii) ZAP issued to CEVC a warrant (the “CEVC Warrant”) exercisable for two years for the purchase of up to 20 million shares of ZAP’s Common Stock at $0.50 per share, subject to adjustments as set forth therein, (iii) ZAP, certain investors and CEVC entered into an Amended and Restated Voting Agreement that amended and restated that certain Voting Agreement, dated as of August 6, 2009, (iv) ZAP, certain investors and CEVC entered into an Amended and Restated Registration Rights Agreement that amended and restated that certain Registration Rights Agreement, dated as of August 6, 2009, which grants certain registration rights relating to the Note and the Warrant, and (v) ZAP and CEVC entered into a Security Agreement that secures the Note with all of ZAP’s assets other than those assets specifically excluded from the lien created by the Security Agreement.
The CEVC Note matures 13 months from issuance, accrues interest at a rate per annum of 8%, and is convertible upon the option of CEVC at any time, subject to any adjustments called for by the terms of the Note, into (a) shares of Common Stock of ZAP at a conversion rate of 4,435 shares of ZAP's Common Stock for each $1,000 in principal of the Note being converted, or (b) the capital stock of Zhejiang Jonway Automobile Co, Ltd. at a conversion rate of 0.003743% of such shares owned by ZAP for each $1,000 in principal of the Note being converted. Upon such a conversion, any accrued interest on the Note is waived.
ZAP used the proceeds of the CEVC Note to complete the acquisition of 51% of the capital stock of Zhejiang Jonway Automobile Co., Ltd.
Transactions with Al Yousuf LLC, Whose President was a Director of ZAP
ZAP entered into various financing arrangements during the second and third quarter of fiscal 2008 with The Al Yousuf Group, a Dubai-based conglomerate and a shareholder of ZAP. The President of Al Yousuf LLC is Mr. Eqbal Al Yousuf, who was a director of ZAP from 2007 until his resignation on December 30, 2010, and who negotiated the terms and provisions of the financing arrangements.
On July 30, 2008 we received a $10 million financing arrangement from the Al Yousuf Group, a Dubai-based conglomerate to provide future working capital to ZAP and help meet the growing demand for ZAP electric vehicles. The financing arrangement allowed for advances by ZAP commencing on the date of a promissory note (the “AY Note”). The initial outstanding principal sum advanced to ZAP under the AY Note was $1,760,000, which was used to pay off the existing secured note payable on ZAP’s corporate headquarters building. The AY Note matured on February 28, 2010. Interest only payments were due under the AY Note on a monthly basis, commencing on August 30, 2008. All principal and interest due under the AY Note is secured by the corporate headquarters building and land located in Santa Rosa, California.
On September 25, 2009, a complaint captioned Al Yousuf LLC v ZAP (Case No. SW 245950) was filed in the Superior Court for the County of Sonoma. The complaint alleged causes of action for judicial foreclosure and deficiency judgment in connection with a loan agreement with Al Yousuf LLC. In its complaint, Al Yousuf LLC claimed that ZAP has failed to make scheduled payments required under the loan agreement which is secured by real property that serves as ZAP’s principal executive offices. Al Yousuf LLC sought to foreclose on the property that secures the loan agreement and recover their attorneys fees, and obtain such other and further relief as the court may deem just and proper. On March 1, 2010, ZAP filed an offer to settle the complaint with Al Yousuf LLC pursuant to Section 998 of the California Code of Civil Procedure (the “Settlement Offer”), which was accepted by Al Yousuf LLC on April 5, 2010. Pursuant to the terms of the Settlement Offer, ZAP was to (1) pay to Al Yousuf LLC the total combined cash sum of $1,800,000 over a period of two years; (2) transfer the property located at 501 Fourth Street, Santa Rosa, California to Al Yousuf LLC; and (3) transfer the property located at 44720 Main Street, Mendocino, California to Al Yousuf LLC in exchange for ending the litigation.
In addition, ZAP borrowed $760,000 from Portable Energy LLC, a private equity company equally owned by ZAP and Al Yousuf, which amounts were due on demand. On December 27, 2010, ZAP entered into an agreement with Mr. Al Yousuf whereby it repurchased the 50% equity owned by Mr. Al Yousuf in Portable Energy LLC in exchange for 800,000 shares of ZAP common stock, and both parties released claims relating to this matter.
ThePurchase of Company Owned by ZAP President
In 2009, ZAP’s President and director Gary Dodd incorporated ZAP Motor Manufacturing Kentucky, Inc., a Kentucky corporation, or ZMMK, and applied for a loan from the U.S. Department of Energy under its Advanced Technology Vehicles Manufacturing Incentive Program. In March 2009, ZAP entered into a Manufacturing and Supply Agreement with ZMMK, pursuant to which, conditional upon ZMMK’s receipt of the loan, ZAP would engage ZMMK to manufacture certain of its products. Conditional upon ZMMK’s receipt of the loan, ZAP has the right to purchase a substantial equity ownership interest in ZMMK.
Transactions with Samyang, an Investor in ZAP Whose Vice Chairman is Steven Schneider, our Co-Chief Executive Officer, Secretary and Director
In April 2010, Steven Schneider, the Co-Chief Executive Officer, Secretary and director of ZAP, became the Vice Chairman of Samyang Optics Co., Ltd. (“Samyang”), an investor in ZAP.
On January 27, 2010, ZAP entered into an International Distribution Agreement, pursuant to which ZAP appointed Samyang as the exclusive distributor of certain ZAP electric vehicles, including the Jonway A380 5-door electric sports utility vehicle equipped with ZAP’s electric power train, in the Republic of Korea, as well as providing for negotiations for additional agreements related to the manufacture and assembly of ZAP vehicles by Samyang in Korea. In addition, on January 27, 2010, ZAP and Samyang entered into an initial purchase order pursuant to this agreement for the purchase of one hundred ZAP Jonway UFO electric sports utility vehicles. ZAP issued subordinated convertible promissory notes to Samyang Optics, Ltd. (“Samyang”) in the principal amount of $2 million on December 31, 2009 and $3 million on February 11, 2010 in connection with Samyang's investment in ZAP in the corresponding amounts. In December 2010, Samyang and ZAP agreed to convert the outstanding principal balance of $5 million plus approximately $259,000 in interest into 8,090,369 shares of ZAP Common Stock.
In connection with the completion of the Samyang investment, on February 24, 2010 ZAP purchased shares of Samyang for an aggregate purchase price of $2 million.
Rental Agreements Related to Steven Schneider, ZAP’s Co-Chief Executive Officer, Secretary and Director
ZAP rents office space, land and warehouse space from Mr. Steven Schneider, its CEOCo-Chief Executive Officer, Secretary and major shareholder.director. These properties are used to operate the car outlet and to store inventory. Rental expense was approximately $84,000$116,000 and $96,500$108,000 for the years ended December 31, 20072010 and 2006,2009, respectively.
Closing of the Jonway Transaction with Alex Wang as a Director and Co-CEO
Alex Wang is the Chief Executive Officer of Zhejiang Jonway Automobile Co. Ltd. and on October 25, 2010, ZAP appointed Mr. Wang as a director and as a Co-CEO of ZAP. On January 21, 2011, ZAP completed its acquisition of 51% of the capital stock of Jonway, pursuant to that Certain Equity Transfer Agreement for the Purchase and Transfer of Certain Equity Interest in Zhejiang Jonway Automobile Co., Ltd. between ZAP and Jonway Group Co. Ltd., dated July 2, 2010, as amended on April 15, 2011.
Joint Venture ZAP Hangzhou
On December 11, 2009, ZAP entered into a Joint Venture Agreement to establish a new U.S.-China company incorporated as ZAP Hangzhou to design and manufacture electric vehicle and infrastructure technology with Holley Group, the parent company of a global supplier of electric power meters and Better World International Limited, a company focused on infrastructure technology and services for electric vehicles. Priscilla Lu, Ph.D, the Chairman of the Board of Directors of ZAP, is also a director and shareholder of Better World International Limited. ZAP and Better World International Limited each have a 37.5% interest in ZAP Hangzhou, and Holley Group owns a 25% interest. The joint venture partners have also funded the initial capital requirements under the agreement for a total of $3 million, of which ZAP’s portion is $1.1 million.
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to be “soliciting material,” to be “filed” with the SEC or be subject to Regulation 14A or Regulation 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference in future filings with the SEC except to the extent that ZAP specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.
The Audit Committee has reviewed and discussed with ZAP’s management and Friedman LLP the audited consolidated financial statements of ZAP contained in ZAP’s Annual Report on Form 10-K for the 2010 fiscal year. The Audit Committee has also discussed with Friedman LLP the matters required to be discussed by SAS No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has received and reviewed the written disclosures and the letter from Friedman LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with Friedman LLP its independence from ZAP.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in ZAP’s Annual Report on Form 10-K for its 2010 fiscal year for filing with the Securities and Exchange Commission.
SOLICITATION OF PROXIES
This solicitation is being made by mail on behalf of our Board, but may also be made without additional remuneration by our officers or employees by telephone, telegraph, facsimile transmission, electronic means, personal interview or other similar means of communication. The expense ofIn addition, the preparation, printing and mailing of this Proxy StatementAudit Committee has selected Friedman LLP as ZAP’s independent registered public accounting firm for the year ending December 31, 2011, and the enclosed formBoard of proxy and Notice of Annual Meeting, and any additional material relatingDirectors concurred with such selection. The Audit Committee has recommended to the meeting, which may be furnished to shareholders bythat they ratify and approve the Board subsequent toselection of Friedman LLP as ZAP’s independent registered public accounting firm for the furnishing of this Proxy Statement, has been or will be borne by us. We will reimburse banks and brokers who hold shares in their name or custody, or in the name of nominees for others, for their out-of-pocket expenses incurred in forwarding copies of the proxy materials to those persons for whom they hold such shares. To obtain the necessary representation of shareholders at the meeting, supplementary solicitations may be made by mail, telephone or interview by our officers or selected securities dealers. We anticipate that the cost of such supplementary solicitations, if any, will not be material.year ending December 31, 2011.
INVESTOR INFORMATION
All reports filedSubmitted by the CompanyAudit Committee
Peter Scholl, Chairperson
Mark Abdou
SHAREHOLDER PROPOSALS FOR 2012 ANNUAL MEETING OF SHAREHOLDERS
Requirements for Shareholder Proposals to be Considered for Inclusion in ZAP’s Proxy Materials. Shareholders of ZAP may submit proposals on matters appropriate for shareholder action at meetings of ZAP’s shareholders in accordance with Rule 14a-8 promulgated under the SEC are available freeSecurities Exchange Act of charge via EDGAR through the SEC website at www.sec.gov. In addition, the public may read1934. For such proposals to be included in ZAP’s proxy materials relating to its 2012 Annual Meeting of Shareholders, all applicable requirements of Rule 14a-8 must be satisfied and copy materials filedsuch proposals must be received by the Company with the SEC at the SEC’s public reference room located at 450 Fifth St., N.W., Washington, D.C., 20549. You can obtain information about the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company also provides copies of its Forms 8-K, 10-K, 10-Q, Proxy, Annual Shareholders Report and press releases atZAP no charge to investors upon request and makes electronic copies of such reports and press releases available through its website at www.zapworld.com as soon as is practicable after filing such material with the SEC. Requestslater than January 12, 2012. Such proposals should be sentdelivered to the Company,ZAP, Attn: Secretary, 501 Fourth Street, Santa Rosa, CaliforniaCA 95401 attention: William Hartman, Corporate Secretary and Chief Financial Officer.(and we encourage you to send a copy via email to investor@zapworld.com), with a copy to Hogan Lovells, Attn: Jon Layman, 525 University Avenue, 3rd Floor, Palo Alto, CA 94301.
ANNUAL REPORTRequirements for Shareholder Proposals to be Brought Before the Annual Meeting. ZAP’s bylaws provide that, except in the case of proposals made in accordance with Rule 14a-8, for shareholder nominations to the Board of Directors or other proposals to be considered at an annual meeting of shareholders, the shareholder must have given timely notice thereof in writing to the Secretary of ZAP. A shareholder’s notice to ZAP’s Secretary must set forth the information required by ZAP’s bylaws and Rule 14a-4 promulgated under the Securities Exchange Act of 1934 with respect to each matter the shareholder proposes to bring before the annual meeting.
Our Annual Shareholders ReportIn addition, the proxy solicited by the Board of Directors for the fiscal year ended December 31, 20072012 Annual Meeting of Shareholders will confer discretionary authority to vote on (i) any proposal presented by a shareholder at that meeting for which ZAP has not been mailedprovided with notice on or prior to shareholders alongMarch 27, 2012 and (ii) any proposal made in accordance with the bylaw provisions, if the 2012 proxy statement briefly describes the matter and how management’s proxy holders intend to vote on it, if the shareholder does not comply with the requirements of Rule 14a-4(c)(2) under the Securities Exchange Act of 1934.
PROXY SOLICITATION AND COSTS
ZAP will bear the entire cost of this solicitation of proxies, including the preparation, assembly, printing, and mailing of the Notice of Internet Availability of Proxy Materials, this Proxy Statement, the proxy statement. We will, upon written request and without charge,any additional solicitation material that ZAP may provide to shareholders. Copies of solicitation material will be provided to brokerage firms, fiduciaries and custodians holding shares in their names that are beneficially owned by others so that they may forward the solicitation material to such beneficial owners. Further, the original solicitation of proxies by mail may be supplemented by solicitation by telephone and other means by directors, officers and employees of ZAP. No additional compensation will be paid to these individuals for any person solicited hereunder additional copies of our Annual SEC Report on Form 10-KSB, for the year ended December 31, 2007, as filed with thesuch services.
SHAREHOLDERS SHARING THE SAME ADDRESS
The Securities and Exchange Commission. Requests shouldCommission has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple shareholders who reside at the same address may receive a single copy of our annual report and proxy materials, including the Notice of Internet Availability of Proxy Materials, unless the affected shareholder has provided contrary instructions. This procedure reduces printing costs and postage fees.
Once again this year, a number of brokers with account holders who beneficially own our Common Stock will be addressed“householding” our annual report and proxy materials, including the Notice of Internet Availability of Proxy Materials. A single Notice of Internet Availability of Proxy Materials and, if applicable, a single set of annual report and other proxy materials will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the Corporateaffected shareholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Shareholders may revoke their consent at any time by contacting the Secretary of ZAP at ZAP's address.
Upon written or oral request, ZAP will promptly deliver a separate copy of the Notice of Internet Availability of Proxy Materials and, if applicable, a separate set of proxy materials to any beneficial owner at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice of Internet Availability of Proxy Materials and, if applicable, a separate set of proxy materials, you may write or call ZAP’s Investor Relations Department at ZAP, 501 Fourth Street, Santa Rosa, California, 95401. Also, suchCA 95401, Attention: Investor Relations.
Any shareholders who share the same address and currently receive multiple copies of our Notice of Internet Availability of Proxy Materials or annual report may be obtained from our Internet homepage at http://www.zapworld.com.
SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETING
Any shareholderand other proxy materials, who intendswish to submit a proposal at the 2009 Annual Meeting of Shareholders and who wishes to have the proposal considered for inclusionreceive only one copy in the proxy statement and formfuture, can contact their bank, broker or other holder of proxy for that meeting must, in additionrecord to complying with the applicable laws and regulations governing submission of such proposals, deliver the proposal to us for consideration no later than July 18, 2009, which is 120 calendar days. Rule 14a-4 of the SEC’s proxy rules allows a company to use discretionary voting authority to vote on matters coming before an annual meeting of shareholders, if the company does not have notice of the matter at least 45 days before the date corresponding to the date on which the company first mailed its proxy materials for the prior year’s annual meeting of shareholders or the date specified by an overriding advance notice provision in the company’s bylaws. Our bylaws do not contain such an advance notice provision. Accordingly, for our 2009 Annual Meeting of Shareholders, shareholders’ written notices must be received by us before July 18, 2009 for any proposal a shareholder wishes to bring before the meeting but for which such shareholder does not seek to have a written proposal considered for inclusion in the proxy statement and form of proxy. Such proposals should be sent to William Hartman, Corporate Secretary/CFO ,request information about householding.
FORM 10-K
ZAP WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF ZAP’S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010, INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS, SCHEDULES AND LIST OF EXHIBITS, AND ANY PARTICULAR EXHIBIT SPECIFICALLY REQUESTED. REQUESTS SHOULD BE SENT TO: ZAP, 501 Fourth Street, Santa Rosa, California 95401.
Where the date of the annual meeting has been changed by more than 30 days from the date of the previous year’s meeting, shareholders’ written notices must be received by us a reasonable time before we begin to print and mail proxy materials.
Any shareholder filing a written notice of nomination for director must describe various matters regarding the nominee and the shareholder, including such information as name, address, occupation and shares held. Any stockholder filing a notice to bring other business before a stockholder meeting must include in such notice, among other things, a brief description of the proposed business and the reasons for the business, and other specified matters. Copies of those requirements will be forwarded to any stockholder upon written request.FOURTH STREET, SANTA ROSA, CA 95401, ATTN: INVESTOR RELATIONS. THE ANNUAL REPORT ON FORM 10-K IS ALSO AVAILABLE AT WWW.ZAPWORLD.COM.
OTHER MATTERS
We are not awareThe Board of any businessDirectors knows of no other matters to be presented for considerationshareholder action at the meeting, other than that specified in the Notice of Annual Meeting. If anyannual meeting. However, if other matters aredo properly presented atcome before the annual meeting it isor any adjournments or postponements thereof, the intentionBoard of Directors intends that the persons named in the enclosed proxy toproxies will vote upon such matters in accordance with their best judgment.
| BY ORDER OF THE BOARD OF DIRECTORS |
Dated: May 11, 2011 | By: /S/ STEVEN SCHNEIDER Steven Schneider Co-Chief Executive Officer, Secretary and Director |
Appendix A
NOTICE CERTIFICATE OF AMENDMENT
TO BANKS, BROKER-DEALERSTHE
AMENDED AND VOTING TRUSTEES AND THEIR NOMINEESRESTATED ARTICLES OF INCORPORATION
OF
ZAP
Please advise us whether other persons areThe undersigned, Steven Schneider, hereby certifies that:
1. | He is the duly elected and acting Co-Chief Executive Officer and Secretary of ZAP, a California corporation (the “Corporation”). |
2. | Article III of the Articles of Incorporation of the Corporation is amended to add paragraph (3) below, which will read in full as follows: |
“3. Effective as of 5:00 p.m., Eastern time, on the beneficial ownersdate this Certificate of Amendment of Amended and Restated Articles of Incorporation is filed with the Secretary of State of the State of California, each [**] shares for which proxies are being solicited from you,of the Corporation's Common Stock, issued and if so,outstanding shall, automatically and without any action on the numberpart of copiesthe respective holders thereof, be combined and converted into one (1) share of this Proxy StatementCommon Stock of the Corporation. No fractional shares shall be issued and, other soliciting materials you wishin lieu thereof, any holder of less than one share of Common Stock shall be entitled to receive in order to supply copies tocash for such holder's fractional share based upon the beneficial ownersclosing sales price of the shares.Corporation's Common Stock as reported on OTC Bulletin Board on the date this Certificate of Amendment is filed with the Secretary of State of the State of California. All share numbers in this certificate will assume the split has occurred and reflect post-split numbers."
3. | The foregoing amendment has been approved by the Board of Directors of the Corporation in accordance with Section 902 of the California Corporations Code and the Bylaws of the Corporation. |
4. | The foregoing amendment was approved by the holders of the requisite number of shares of the Corporation in accordance with Section 902 and 903 of the California Corporations Code and the Bylaws of the Corporation. |
5. | The total number of outstanding shares entitled to vote with respect to the foregoing amendment was 218,668,760 shares of Common Stock, which were issued and outstanding on the record date. The number of shares of Common Stock voting in favor of the foregoing amendment equaled or exceeded the vote required. The vote required was more than 50% of the outstanding shares of Common Stock. The Corporation has no outstanding preferred shares. |
It is important that proxies be returned promptly, whether or not you expect to attendThe undersigned certifies under penalty of perjury under the Annual Meeting in person. We request that you complete, date and signlaws of the enclosed formState of proxy and return it promptly in the envelope provided for that purpose. By returning your proxy promptly you can help us avoid the expense of follow-up mailings to ensure a quorum soCalifornia, that the meeting can be held. Shareholders who attend the meeting may revoke a prior proxy and vote their proxy in person asmatters set forth in this Proxy Statement.Certificate are true and correct of his own knowledge.
Executed at Santa Rosa, California on .
| By Order of the Board of Directors | |
| | |
| William Hartman
Steven SchneiderWilliam Hartman
| |
| Corporate Secretary/CFOCo-Chief Executive Officer and Secretary |
** By approving this amendment, shareholders will approve the combination of any number of shares of Common Stock between and including four (4) and eight (8) into one (1) share of Common Stock. The Certificate of Amendment filed with the Secretary of State of the State of California will include only that number determined by the Board of Directors to be in the best interests of the Corporation and its shareholders. In accordance with these resolutions, the Board of Directors will not implement any amendment providing for a different split ratio.
Appendix B
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
ZAP
The undersigned, Steven Schneider, hereby certifies that:
1. | He is the duly elected and acting Co-Chief Executive Officer and Secretary of ZAP, a California corporation (the “Corporation”). |
2. | Article III, paragraph (1) of the Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) of the Corporation is amended and restated to read in full as follows: |
“1. Common Stock: The Corporation may issue 800,000,000 shares of Common Stock. Each share of Common Stock shall entitle the holder thereof to one (1) vote on each matter submitted to a vote of the shareholders.”
3. | The foregoing amendment has been approved by the Board of Directors of the Corporation in accordance with Section 902 of the California Corporations Code and the Bylaws of the Corporation. |
4. | The foregoing amendment was approved by the holders of the requisite number of shares of the Corporation in accordance with Section 902 and 903 of the California Corporations Code and the Bylaws of the Corporation. |
5. | The total number of outstanding shares entitled to vote with respect to the foregoing amendment was 218,668,760 shares of Common Stock, which were issued and outstanding on the record date. The number of shares of Common Stock voting in favor of the foregoing amendment equaled or exceeded the vote required. The vote required was more than 50% of the outstanding shares of Common Stock. The Corporation has no outstanding preferred shares. |
The undersigned certifies under penalty of perjury under the laws of the State of California, that the matters set forth in this Certificate are true and correct of his own knowledge.
Executed at Santa Rosa, California on .
| | |
| Santa Rosa, CaliforniaSteven Schneider |
| Co-Chief Executive Officer and Secretary |
ZAP
AMENDED AND RESTATED
2008 INCENTIVE STOCKEQUITY COMPENSATION PLAN
Stock Option AgreementI. ESTABLISHMENT OF PLAN; DEFINITIONS
Unless otherwise defined herein, capitalized terms contained in this Stock Option Agreement (this “Option Agreement”) shall have1.Purpose. The purpose of the meaning ascribed to such terms in theZAP 2008 Equity Compensation Plan is to encourage certain, officers, employees, directors and consultants of ZAP, a California corporation (the “Plan”).
ARTICLE I
NOTICE OF STOCK OPTION GRANT
Name: _______________________________
Address: _______________________________
The person noted above (the “Grantee”“Corporation”) has been grantedto acquire and hold stock in the Corporation as an Optionadded incentive to purchase shares of Stockremain with the Corporation and to increase their efforts in promoting the interests of the Corporation (“Shares”),and to enable the Corporation to attract and retain capable individuals.
2.Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings set forth below:
(a)“Annual Incentive Award” means an Award, denominated in cash, subject to attainment of performance goals (as described in Part VI) over a performance period of up to one year.
(b) “Applicable Law(s)” means the legal requirements relating to the Plan and the Award under applicable provisions of the corporate, securities, tax and other laws, rules, regulations and government orders, and the rules of any applicable stock exchange or national market system, of any jurisdiction applicable to the Awards granted to residents therein.
(c)“Award” shall mean the grant of any Stock Option, Stock Award, Performance Award or Annual Incentive Award pursuant to the Plan.
(d)“Board” shall mean the Board of Directors of the Corporation.
(e)“Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.
(f)“Committee” shall mean a committee made up of at least two members of the Board whose members shall, from time to time, be appointed by the Board. If a Committee has not been appointed by the Board, “Committee” shall mean the Board.
(g)“Corporation” shall mean ZAP, a California corporation.
(h)“Consultants” shall mean individuals or entities that provide services to the Corporation who are not Employees or Directors.
(i)“Covered Employees” means an Employee who is a covered employee within the meaning of Code Section 162(m)(3).
(j)“Directors” shall mean those members of the Board of Directors of the Corporation who are not Employees.
(k) “Disability” shall mean a medically determinable physical or mental condition which causes an Employee, Director or Consultant to be unable to engage in any substantial gainful activity and which can be expected to result in death or to be of long-continued and indefinite duration.
(l)“Employee” shall mean any common law employee, including officers, of the Corporation as determined under the Code and the Treasury Regulations thereunder.
(m)“Exchange Act” shall mean the Securities Exchange Act of 1934, as now in effect or as hereafter amended.
(n)“Fair Market Value” with regards to the grant of Stock Options shall mean (i) if the Stock is listed on a national securities exchange, the mean between the highest and lowest sales prices for the Stock on such date, or, if no such prices are reported for such day, then on the next preceding day on which there were reported prices; (ii) if the Stock is not listed on a national securities exchange, the closing price for the shares on such date, or if no such prices are reported for such day, then on the next preceding day on which there were reported prices; or (iii) as determined in good faith by the Board. ”Fair Market Value” with regards to Stock Awards shall be determined by the Board, in good faith and in its sole discretion.
(o)“Grantee” shall mean an officer, Employee, Director or Consultant granted an Award under this Plan.
(p)“Incentive Stock Option” shall mean an option granted pursuant to the Incentive Stock Option provisions as set forth in Part II of this Plan.
(q)“Non-Qualified Stock Option” shall mean an option granted pursuant to the Non-Qualified Stock Option provisions as set forth in Part III of this Plan.
(r)“Performance Award” means an Award made subject to the termsattainment of performance goals (as described in Part VI) over a performance period of greater than one year and conditionsup to ten (10) years.
(s)“Performance-Based Compensation” means compensation under an Award that is intended to satisfy the requirements of Code Section 162(m) for “qualified performance-based compensation” paid to Covered Employees. Notwithstanding the foregoing, nothing in the Plan and this Option Agreement, as follows:
Dateshall be construed to mean that an Award which does not satisfy the requirements for “qualified performance-based compensation” under Code Section 162(m) does not constitute performance-based compensation for other purposes, including for purposes of Grant: _______________________________________________
Vesting Commencement Date: _______________________________________________
Exercise Price per Share: _______________________________________________
Total Number of Shares Granted: _______________________________________________
Total Exercise Price: _______________________________________________
Code Section 409A.
Type of Option: | Incentive Stock Option/Non-Qualified Stock Option |
(t)“Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.
Expiration Date: | As provided in Section 2 of Article II of this Option Agreement. |
Vesting Schedule: | As provided in Section 3 of Article II of this Option Agreement. |
Exercise Schedule: | To the extent vested, the Option shall be exercisable during its term as provided in Section 3 of this Option Agreement. |
ARTICLE II
OPTION AGREEMENT
For good(u)“Plan” shall mean the ZAP Amended and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
This Option Agreement is entered into under the Corporation’sRestated 2008 Equity Compensation Plan as set forth herein and as further amended from time to time (the “Plan”). This Option Agreement and the Option granted under it are subject in every respecttime.
(v)“Restricted Stock” shall mean Stock which is issued pursuant to the Plan and the additional terms and conditions set forth in the Plan, which are incorporated herein in their entirety by this reference. In the event of a discrepancy between the termsRestricted Stock provisions as set forth in Part IV of this Plan.
(w)“Stock” shall mean authorized but unissued shares of the Common Stock of the Corporation or reacquired shares of the Corporation’s Common Stock.
(x)“Stock Award” shall mean an award of Restricted or Unrestricted Stock granted pursuant to this Plan.
(y)“Stock Option” shall mean an option granted pursuant to the Plan to purchase shares of Stock.
(z)“Ten Percent Shareholder” shall mean an Employee who at the time a Stock Option Agreement and thoseis granted owns stock possessing more than ten percent (10%) of the total combined voting power of all stock of the Corporation or of its parent or subsidiary corporation.
(zz)“Unrestricted Stock” shall mean Stock which is issued pursuant to the Unrestricted Stock provisions as set forth in Part V of this Plan.
3.Shares of Stock Subject to the Plan. Subject to the provisions of Section 2 of Part VII of the Plan, the terms as set forthStock which may be issued or transferred pursuant to Stock Options and Stock Awards granted under the Plan shall control.
and the Stock which is subject to outstanding but unexercised Stock Options under the Plan shall not exceed 40,000,000 shares in the aggregate, all of which may be granted as Incentive Stock Options. If a Stock Option shall expire and terminate for any reason, in whole or in part, without being exercised or, if Stock Awards are forfeited because the restrictions with respect to such Stock Awards shall not have been met or have lapsed, the number of shares of Stock which are no longer outstanding as Stock Awards or subject to Stock Options may again become available for the grant of Stock Awards or Stock Options. There shall be no terms and conditions in a Stock Award or Stock Option which provide that the exercise of an Incentive Stock Option reduces the number of shares of Stock for which an outstanding Non-Qualified Stock Option may be exercised; and there shall be no terms and conditions in a Stock Award or Stock Option which provide that the exercise of a Non-Qualified Stock Option reduces the number of shares of Stock for which an outstanding Incentive Stock Option may be exercised.
4.Limitation on Shares of Stock Subject to Awards and Cash Awards. During any time when the Corporation (i) has a class of equity security registered under Section 12 of the Exchange Act, (ii) is subject to Section 162(m) of the Code, and (iii) the transition period under Treasury Regulation Section 1.162-27(f)(2) has lapsed or does not apply:
(i) the maximum number of shares of Stock subject to Options that can be granted under the Plan to any person eligible for an award is 10,000,000 in a calendar year;
(ii) the maximum number of shares of Stock that can be granted under the Plan, other than pursuant to an Option, to any person eligible for an Award is 10,000,000 in a calendar year; and
(iii) the maximum amount that may be paid as an Annual Incentive Award in a calendar year to any person eligible for an Award shall be $10,000,000 and the maximum amount that may be paid as a cash-settled Performance Award in respect of a performance period by any person eligible for an Award shall be $10,000,000.
The preceding limitations are subject to adjustment as provided in Part VII.
5.Administration of the Plan. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan, the Committee shall have authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to it, to determine the terms and provisions of Stock Option and Stock Award agreements, and to make all other determinations necessary or advisable for the administration of the Plan. Any controversy or claim arising out of or related to this Plan shall be determined unilaterally by and at the sole discretion of the Committee.
6.Amendment or Termination. The Board may, at any time, alter, amend, suspend, discontinue, or terminate this Plan; provided, however, that such action shall not adversely affect the right of Grantees to Stock Awards or Stock Options previously granted and no amendment, without the approval of the stockholders of the Corporation, shall increase the maximum number of shares which may be awarded under the Plan in the aggregate, materially increase the benefits accruing to Grantees under the Plan, change the class of Employees eligible to receive options under the Plan, or materially modify the eligibility requirements for participation in the Plan.
7.Effective Date and Duration of the Plan. This Plan originally became effective on March 12, 2009. This Plan, as amended and restated, became effective on April __, 2011. This Plan shall terminate on the tenth anniversary of the original effective date, or such earlier date as may be determined by the Board, and no Stock Award or Stock Option may be issued or granted under the Plan thereafter, but such termination shall not affect any Stock Award or Stock Option theretofore issued or granted.
8.General.
(a)Each Stock Option and Stock Award shall be evidenced by a written instrument (which may be in the form of a unanimous written consent of the Board) containing such terms and conditions, not inconsistent with this Plan, as the Committee shall approve.
(b)The granting of a Stock Option or Stock Award in any year shall not give the Grantee any right to similar grants in future years or any right to be retained in the employ of the Corporation, and all Employees shall remain subject to discharge to the same extent as if the Plan were not in effect.
(c)No officer, Employee, Director or Consultant and no beneficiary or other person claiming under or through him, shall have any right, title or interest by reason of any Stock Option or any Stock Award to any particular assets of the Corporation, or any shares of Stock allocated or reserved for the purposes of the Plan or subject to any Stock Option or any Stock Award except as set forth herein. The Corporation shall not be required to establish any fund or make any other segregation of assets to assure the payment of any Stock Option or Stock Award.
(d)No right under the Plan shall be subject to anticipation, sale, assignment, pledge, encumbrance, or charge except by will or the laws of descent and distribution, and a Stock Option shall be exercisable during the Grantee’s lifetime only by the Grantee or his conservator.
(e)Notwithstanding any other provision of this Plan or agreements made pursuant thereto, the Corporation’s obligation to issue or deliver any certificate or certificates for shares of Stock under a Stock Option or Stock Award, and the transferability of Stock acquired by exercise of a Stock Option or grant of a Stock Award, shall be subject to all of the following conditions:
(i) Any registration or other qualification of such shares under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification which the Board shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and
(ii) The obtaining of any other consent, approval, or permit from any state or federal governmental agency which the Board shall, in its absolute discretion upon the advice of counsel, determine to be necessary or advisable.
(f)All payments to Grantees or to their legal representatives shall be subject to any applicable tax, community property, or other statutes or regulations of the United States or of any state or country having jurisdiction thereof. The Grantee may be required to pay to the Corporation the amount of any withholding taxes which the Corporation is required to withhold with respect to a Stock Option or its exercise or a Stock Award. In the event that such payment is not made when due, the Corporation shall have the right to deduct, to the extent permitted by law, from any payment of any kind otherwise due to such person all or part of the amount required to be withheld.
(g)In the case of a grant of a Stock Option or Stock Award to any Employee of a subsidiary of the Corporation, the Corporation may, if the Committee so directs, issue or transfer the shares, if any, covered by the Stock Option or Stock Award to the subsidiary, for such lawful consideration as the Committee may specify, upon the condition or understanding that the subsidiary will transfer the shares to the Employee in accordance with the terms of the Stock Option or Stock Award specified by the Committee pursuant to the provisions of the Plan. For purposes of this Section, a subsidiary shall mean any subsidiary corporation of the Corporation as defined in Section 424 of the Code.
(h)A Grantee entitled to Stock as a result of the exercise of a Stock Option or grant of a Stock Award shall not be deemed for any purpose to be, or have rights as, a shareholder of the Corporation by virtue of such exercise, except to the extent a stock certificate is issued therefor and then only from the date such certificate is issued. No adjustments shall be made for dividends or distributions or other rights for which the record date is prior to the date such stock certificate is issued. The Corporation shall issue any stock certificates required to be issued in connection with the exercise of a Stock Option with reasonable promptness after such exercise.
(i)The grant or exercise of Stock Options granted under the Plan or the grant of a Stock Award under the Plan shall be subject to, and shall in all respects comply with, Applicable Law relating to such grant or exercise, or to the number of shares of Stock which may be beneficially owned or held by any Grantee.
(j)The Corporation intends that the Plan shall comply with the requirements of Rule 16b-3 (the “Rule”) under the Securities Exchange Act of 1934, as amended, during the term of this Plan. Should any additional provisions be necessary for the Plan to comply with the requirements of the Rule, the Board may amend this Plan to add to or modify the provisions of this Plan accordingly.
(k)The Corporation intends that the Plan shall comply with the requirements of Section 409A of the Code, to the extent applicable. Should any changes to the Plan be necessary for the Plan to comply with the requirements of Code Section 409A the Board may amend this Plan to add to or modify the provisions of this Plan accordingly.
(l)The Corporation will seek stockholder approval in the manner and to the degree required under Applicable Laws. If the Corporation fails to obtain stockholder approval of the Plan within twelve (12) months after the date this Plan is adopted by the Board, pursuant to Section 422 of the Code, any Option granted as an Incentive Option at any time under the Plan will not qualify as an Incentive Option within the meaning of the Code and will be deemed to be a Non-Statutory Option.
(m)The Corporation intends that the Plan shall comply with the requirements of the California Corporations Code during the term of this Plan. Should any additional provisions be necessary for the Plan to comply with the requirements of the California Corporations Code, the Board may amend this Plan to add to or modify the provisions of this Plan accordingly.
II. INCENTIVE STOCK OPTION PROVISIONS
1.Granting of Incentive Stock Options.
(a)Only Employees of the Corporation shall be eligible to receive Incentive Stock Options under the Plan. Officers, Directors and Consultants of the Corporation who are not also Employees shall not be eligible to receive Incentive Stock Options.
(b)The purchase price of each share of Stock subject to an Incentive Stock Option shall not be less than 100% of the Fair Market Value of a share of the Stock on the date the Incentive Stock Option is granted; provided, however, that the purchase price of each share of Stock subject to an Incentive Stock Option granted to a Ten Percent Shareholder shall not be less than 110% of the Fair Market Value of a share of the Stock on the date the Incentive Stock Option is granted.
(c)No Incentive Stock Option shall be exercisable more than ten years from the date the Incentive Stock Option was granted; provided, however, that an Incentive Stock Option granted to a Ten Percent Shareholder shall not be exercisable more than five years from the date the Incentive Stock Option was granted.
(d)The Committee shall determine and designate from time to time those Employees who are to be granted Incentive Stock Options and specify the number of shares subject to each Incentive Stock Option.
(e)The Committee, in its sole discretion, shall determine whether any particular Incentive Stock Option shall become exercisable in one or more installments, specify the installment dates, and, within the limitations herein provided, determine the total period during which the Incentive Stock Option is exercisable. Further, the Committee may make such other provisions as may appear generally acceptable or desirable to the Committee or necessary to qualify its grants under the provisions of Section 422 of the Code.
(f)The Committee may grant at any time new Incentive Stock Options to an Employee who has previously received Incentive Stock Options or other options whether such prior Incentive Stock Options or other options are still outstanding, have previously been exercised in whole or in part, or are canceled in connection with the issuance of new Incentive Stock Options. The purchase price of the new Incentive Stock Options may be established by the Committee without regard to the existing Incentive Stock Options or other options.
(g)Notwithstanding any other provisions hereof, the aggregate Fair Market Value (determined at the time the option is granted) of the Stock with respect to which Incentive Stock Options are exercisable for the first time by the Employee during any calendar year (under all such plans of the Grantee’s employer corporation and its parent and subsidiary corporation) shall not exceed $100,000.
2.Exercise of Incentive Stock Options. Upon the exercise of any Incentive Stock Option, the option price for the Shares being purchased shall be payable to the Corporation in full either: (a) in cash or its equivalent; or (b) by delivery of previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total option price (provided that the Shares that are delivered must have been held by the Grantee for at least six (6) months prior to their delivery to satisfy the option price); or (c) by a combination of (a) and (b); or (d) by any other method approved by the Committee in its sole discretion, understanding that the exercise of this type of approval or discretion will result in the option so treated no longer qualifying as an Incentive Stock Option. Unless otherwise determined by the Committee, the delivery of previously acquired Shares may be done through attestation. No fractional shares may be tendered or accepted in payment of the option price.
Unless otherwise determined by the Committee, cashless exercises are permitted pursuant to Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with this Plan’s purpose and Applicable Law.
Subject to any governing rules or regulations, as soon as practicable after receipt of notification of exercise and full payment, the Corporation shall deliver to the Grantee, in the Grantee’s name, Share certificates in an appropriate amount based upon the number of Shares purchased pursuant to the Incentive Stock Option(s).
Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.
3.Termination of Employment.
(a)If a Grantee’s employment with the Corporation is terminated other than by Disability or death, the terms of any then outstanding Incentive Stock Option held by the Grantee shall extend for a period ending on the earlier of the date on which such Stock Option would otherwise expire or three months after such termination of employment, and such Stock Option shall be exercisable to the extent it was exercisable as of such last date of employment.
(b)If a Grantee’s employment with the Corporation is terminated by reason of Disability, the term of any then outstanding Incentive Stock Option held by the Grantee shall extend for a period ending on the earlier of the date on which such Stock Option would otherwise expire or twelve months after such termination of employment, and such Stock Option shall be exercisable to the extent it was exercisable as of such last date of employment.
(c)If a Grantee’s employment with the Corporation is terminated by reason of death, the representative of his estate or beneficiaries thereof to whom the Stock Option has notbeen transferred shall have the right during the period ending on the earlier of the date on which such Stock Option would otherwise expire or twelve months after such date of death, to exercise any then outstanding Incentive Stock Options in whole or in part. If a Grantee dies without having fully exercised any then outstanding Incentive Stock Options, the representative of his estate or beneficiaries thereof to whom the Stock Option has been transferred shall have the right to exercise such Stock Options in whole or in part.
III. NON-QUALIFIED STOCK OPTION PROVISIONS
1.Granting of Stock Options.
(a)Officers, Employees, Directors and Consultants shall be eligible to receive Non-Qualified Stock Options under the Plan.
(b)The Committee shall determine and designate from time to time those officers, Employees, Directors and Consultants who are to be granted Non-Qualified Stock Options and the amount subject to each Non-Qualified Stock Option.
(c)The Committee may grant at any time new Non-Qualified Stock Options to an Employee, Director or Consultant who has previously received Non-Qualified Stock Options or other Stock Options, whether such prior Non-Qualified Stock Options or other Stock Options are still outstanding, have previously been exercised in whole or sooner terminated,in part, or are canceled in connection with the issuance of new Non-Qualified Stock Options.
(d)The Committee shall expire one daydetermine the purchase price of each share of Stock subject to a Non-Qualified Stock Option. Such price shall not be less than ___________100% of the Fair Market Value of such Stock on the date the Non-Qualified Stock Option is granted.
(e)The Committee, in its sole discretion, shall determine whether any particular Non-Qualified Stock Option shall become exercisable in one or more installments, specify the installment dates, and, within the limitations herein provided, determine the total period during which the Non-Qualified Stock Option is exercisable. Further, the Committee may make such other provisions as may appear generally acceptable or desirable to the Committee, including the extension of a Non-Qualified Stock Option, provided that such extension does not extend the option beyond the period specified in paragraph (f) below.
(f)No Non-Qualified Stock Option shall be exercisable more than ten years from the Grant Date (the “Option Term”).
date such option is granted.
a) 2.The Option is exercisable asExercise of Stock Options. Upon the exercise of any given date only with respectNon-Qualified Stock Option, the option price for the Shares being purchased shall be payable to the portionCorporation in full either: (a) in cash or its equivalent; or (b) subject to the Committee’s approval, by delivery of previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total option price (provided that the Shares that are Vested asdelivered must have been held by the Grantee for at least six (6) months prior to their delivery to satisfy the option price); or (c) by a combination of that date. The Option(a) and (b); or (d) by any other method approved by the Committee in its sole discretion. Unless otherwise determined by the Committee, the delivery of previously acquired Shares may not be exercised following its expirationdone through attestation. No fractional shares may be tendered or earlier termination. The Option may not be exercised for any fractional Shares.accepted in payment of the option price.
b) The portionUnless otherwise determined by the Committee, cashless exercises are permitted pursuant to Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with this Plan’s purpose and Applicable Law.
Subject to any governing rules or regulations, as soon as practicable after receipt of notification of exercise and full payment, the Corporation shall deliver to the Grantee, in the Grantee’s name, Share certificates in an appropriate amount based upon the number of Shares purchased pursuant to the Non-Qualified Stock Option(s).
Unless otherwise determined by the Committee, all payments under all of the Option (i.e., the number or fraction of the Shares) that has vestedmethods indicated above shall be paid in the Grantee as of any given date is referred to in this Option Agreement as “Vested.” The portion of the Option that has not yet vested in the Grantee as of that date is are referred to as “Unvested.” The entire Option shall initially be Unvested. Subject to the termination of vesting pursuant to Section 3(c) or elsewhere in this Option Agreement, the Option shall vest and become exercisable at the times set forth in the following table:
Portion of OptionVesting | Vesting Date |
| |
| |
| |
United States dollars.
c) 3.InTermination of Relationship. If a Grantee’s employment with the event theCorporation is terminated, a Director Grantee ceases to serve actively as either an Officer, Employee,be a Director, or a Consultant or Director priorGrantee ceases to the end of the vesting period for any reason, with or without cause and whether at the election of the Grantee or the election of the Corporation or on account of the Grantee’s death or disability, all further vesting shall cease as of the last day of the Grantee’s service to the Corporation.
Section 4. | Cessation of Grantee’s Service |
(a) Ifbe a Grantee’s services with the Corporation are terminated,Consultant, other than by reason of Disability or death, the terms of any then outstanding Non-Qualified Stock Option held by the Grantee shall extend for a period ending on the earlier of the date established by the Committee at the time of grant or three months after the Grantee’s last date of services,employment or cessation of being a Director or Consultant, and such Stock Option shall be exercisable to the extent it was exercisable as of the date of termination of services.employment or cessation of being a Director or Consultant.
(b) (a)If a Grantee’s services areemployment is terminated by reason of Disability, a Director Grantee ceases to be a Director by reason of Disability or a Consultant Grantee ceases to be a Consultant by reason of Disability, the term of any then outstanding Non-Qualified Stock Option held by the Grantee shall extend for a period ending on the earlier of the date on which such Stock Option would otherwise expire or twelve months after the Grantee’s last date of services,employment or cessation of being a Director or Consultant, and such Stock Option shall be exercisable to the extent it was exercisable as of such last date of services.employment or cessation of being a Director or Consultant.
(c) (b)If a Grantee’s services areemployment is terminated by reason of death, a Director Grantee ceases to be a Director by reason of death or a Consultant Grantee ceases to be a Consultant by reason of death, the representative of his estate or beneficiaries thereof to whom the Stock Option has been transferred shall have the right during the period ending on the earlier of the date on which such Stock Option would otherwise expire or twelve months following his death to exercise any then outstanding Non-Qualified Stock Options in whole or in part. If a Grantee dies without having fully exercised any then outstanding Non-Qualified Stock Options, the representative of his estate or beneficiaries thereof to whom the Stock Option has been transferred shall have the right to exercise such Stock Options in whole or in part.
IV. RESTRICTED STOCK AWARDS
d) 1.Notwithstanding any other provisions set forth herein or in the Plan, in no event shall the Option be exercised after the expirationGrant of the Option Term.Restricted Stock.
Section 5. | Exercise of Option |
(a)Officers, Employees, Directors and Consultants shall be eligible to receive grants of Restricted Stock under the Plan.
a) (b)The OptionCommittee shall determine and designate from time to time those officers, Employees, Directors and Consultants who are to be granted Restricted Stock and the number of shares of Stock subject to such Stock Award.
(c)The Committee, in its sole discretion, shall make such terms and conditions applicable to the grant of Restricted Stock as may appear generally acceptable or desirable to the Committee, including, without limitation, granting Restricted Stock as a Performance Award.
2.Termination of Relationship.
(a)If a Grantee’s employment with the Corporation, a Director Grantee ceases to be a Director, or a Consultant Grantee ceases to be a Consultant, prior to the lapse of any restrictions applicable to the Restricted Stock such Stock shall be exercisableforfeited and the Grantee shall return the certificates representing such Stock to the Corporation.
(b)If the restrictions applicable to a grant of Restricted Stock shall lapse, the Grantee shall hold such Stock free and clear of all such restrictions except as otherwise provided in the Plan.
V. UNRESTRICTED STOCK AWARDS
1.Grant of Unrestricted Stock.
(a)Officers, Employees, Directors and Consultants shall be eligible to receive grants of Unrestricted Stock under the Plan.
(b)The Committee shall determine and designate from time to time those officers, Employees, Directors and Consultants who are to be granted Unrestricted Stock and number of shares of Stock subject to such Stock Award.
2.Issuance of Stock. The Grantee shall hold Stock issued pursuant to an Unrestricted Stock award free and clear of all restrictions except as otherwise provided in the Plan.
VI. TERMS AND CONDITIONS OF PERFORMANCE AWARDS AND ANNUAL INCENTIVE AWARDS
1.Grant of Performance Awards and Annual Incentive Awards.
Subject to the terms and provisions of the Plan, the Board, at any time and from time to time, may grant Performance Awards and/or Annual Incentive Awards to a Plan participant in such amounts and upon such terms as the Board shall determine. Each Performance Award and Annual Incentive Award shall have an initial value that is established by deliverythe Board at the time of an exercise noticegrant. The Board shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Annual Incentive Awards or Performance Awards that will be paid out to the Plan participant.
2.Earning of Performance Awards and Annual Incentive Awards.
Subject to the terms of the Plan, after the applicable Performance Period has ended, the holder of Performance Awards or Annual Incentive Awards shall be entitled to receive payout on the value and number of the Performance Awards or Annual Incentive Awards earned by the Plan participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.
3.Form and Timing of Payment of Performance Awards and Annual Incentive Awards.
Payment of earned Performance Awards and Annual Incentive Awards shall be as determined by the Board and as evidenced in the Award Agreement. Subject to the terms of the Plan, the Board, in its sole discretion, may pay earned Performance Awards in the form attachedof cash or in shares of Stock (or in a combination thereof) equal to the value of the earned Performance Awards at the close of the applicable Performance Period, or as Exhibit A (the “Exercise Notice”)soon as practicable after the end of the Performance Period; provided that, unless specifically provided in the Award Agreement pertaining to the grant of the Award, such payment shall stateoccur no later than the election15th day of the third month following the end of the calendar year in which the Performance Period ends. Any shares of Stock may be granted subject to exerciseany restrictions deemed appropriate by the Option,Board. The determination of the number of SharesBoard with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.
4.Performance Conditions.
The right of a Grantee to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Board. The Board may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions. If and to the extent required under Section 162(m) of the Code, any power or authority relating to an Award intended to qualify under Section 162(m) of the Code , shall be exercised by a committee of the Board satisfying the requirements of Section 162(m) of the Code, and any references herein to the Board shall be deemed to refer to such committee.
5.Performance Awards or Annual Incentive Awards Granted to Designated Covered Employees.
If and to the extent that the Board determines that a Performance or Annual Incentive Award to be granted to a Grantee who is designated by the Board as likely to be a Covered Employee should constitute “qualified performance-based compensation” for purposes of Code Section 162(m), the grant, exercise and/or settlement of such Award shall be contingent upon achievement of pre-established performance goals and other terms set forth in this Part VI.
(a)Performance Goals Generally.
The performance goals for Performance or Annual Incentive Awards shall consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Board consistent with this Section 5(a). Performance goals shall be objective and shall otherwise meet the requirements of Section 162(m) of the Code and regulations thereunder including the requirement that the level or levels of performance targeted by the Board result in the achievement of performance goals being “substantially uncertain.” The Board may determine that such Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two (2) or more of the performance goals must be achieved as a condition to the grant, exercise and/or settlement of such Awards. Performance goals may differ for Awards granted to any one Grantee or to different Grantees.
(b)Timing For Establishing Performance Goals.
Performance goals shall be established not later than the earlier of (i) 90 days after the beginning of any Performance Period applicable to such Awards and (ii) the day on which the Option is being exercised, andtwenty-five percent (25%) of any Performance Period applicable to such Awards has expired, or at such other representations and agreementsdate as may be required or permitted for “qualified performance-based compensation” under Section 162(m) of the Code.
(c)Settlement of Awards; Other Terms.
Settlement of such Awards shall be in cash, shares of Stock, other Awards or other property, in the discretion of the Board. The Board may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with such Awards. The Board shall specify the circumstances in which such Performance or Annual Incentive Awards shall be paid or forfeited in the event of termination of service by the Corporation. Grantee prior to the end of a Performance Period or settlement of Awards.
(d)Performance Measures.
The performance goals upon which the payment or vesting of a Performance or Annual Incentive Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to the following performance measures: (i) earnings per share; (ii) revenues or margins; (iii) cash flow; (iv) operating margin; (v) return on net assets, investment, capital, or equity; (vi) economic value added; (vii) direct contribution; (viii) net income; (ix) pretax earnings; (x) earnings before interest and taxes; (xi) earnings before interest, taxes, depreciation and amortization; (xii) earnings after interest expense and before extraordinary or special items; (xiii) operating income; (xiv) income before interest income or expense, unusual items and income taxes, local, state or federal and excluding budgeted and actual bonuses that might be paid under any ongoing bonus plans of the Corporation; (xv) working capital; (xvi) management of fixed costs or variable costs; (xvii) identification or consummation of investment opportunities or completion of specified projects in accordance with corporate business plans, including strategic mergers, acquisitions or divestitures; (xviii) total stockholder return; and (xix) debt reduction.
Business criteria may be (but are not required to be) measured on a basis consistent with U.S. Generally Accepted Accounting Principles.
Any performance measure(s) may be used to measure the performance of the Corporation, subsidiary, and/or affiliate as a whole or any business unit of the Corporation, subsidiary, and/or affiliate or any combination thereof, as the Board may deem appropriate, or any of the above performance measures as compared to the performance of a group of comparable companies, or published or special index that the Board, in its sole discretion, deems appropriate. The Board also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the performance measures specified in this Section 5(d).
(e)Evaluation of Performance.
The Board may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occur during a Performance Period: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (d) any reorganization and restructuring programs; (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Corporation’s annual report to stockholders for the applicable year; (f) acquisitions or divestitures; and (g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered Employees that are intended to qualify as Performance-Based Compensation, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.
(f)Adjustment of Performance-Based Compensation.
Awards that are intended to qualify as Performance-Based Compensation may not be adjusted upward. The Board shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis, or any combination as it determines.
(g)Board Discretion.
In the event that applicable tax and/or securities laws change to permit Board discretion to alter the governing performance measures without obtaining stockholder approval of such changes, the Board shall have sole discretion to make such changes without obtaining stockholder approval provided the exercise of such discretion does not violate Sections 162(m) or 409A of the Code. In addition, in the event that the Board determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Board may make such grants without satisfying the requirements of Section 162(m) of the Code and base vesting on performance measures other than those set forth in this Part VI.
6.Status of Awards Under Section 162(m) of the Code.
It is the intent of the Corporation that Awards under Section 5 of this Part VI granted to persons who are designated by the Board as likely to be Covered Employees within the meaning of Section 162(m) of the Code and regulations promulgated thereunder shall, if so designated by the Board, constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and regulations thereunder. If any provision of the Plan or any agreement relating to such Awards does not comply or is inconsistent with the requirements of Section 162(m) of the Code, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements.
VII. ADJUSTMENTS UPON MERGER, REORGANIZATION, DISSOLUTION
OR CHANGE IN CONTROL
1.Substitution of Options. In the event of a corporate merger or consolidation, or the acquisition by the Corporation of property or stock of an acquired corporation or any reorganization or other transaction qualifying under Section 424 of the Code, the Committee may, in accordance with the provisions of that Section, substitute Stock Options and Stock Awards under this Plan for Stock Options and Stock Awards and under the plan of the acquired corporation provided (i) the excess of the aggregate Fair Market Value of the shares of Stock subject to a Stock Option immediately after the substitution over the aggregate option price of such Stock is not more than the similar excess immediately before such substitution and (ii) the new Stock Option does not give the Grantee additional benefits, including any extension of the exercise period. Alternatively, the Committee may provide, that each Stock Option and Stock Award granted under the Plan shall terminate as of a date to be fixed by the Board; provided, that no less than thirty days written notice of the date so fixed shall be given to each holder, and each holder shall have the right, during the period of fifteen days preceding such termination, to exercise the Stock Options and Stock Awards as to all or any part of the Stock covered thereby, including Stock as to which such would not otherwise be exercisable.
2.Adjustment Provisions.
(a)In the event that a dividend shall be declared upon the Stock payable in shares of the Corporation’s common stock, the number of shares of Stock then subject to any Stock Option or Stock Award outstanding under the Plan and the number of shares reserved for the grant of Stock Options or Stock Awards pursuant to the Plan shall be adjusted by adding to each such share the number of shares which would be distributable in respect thereof if such shares had been outstanding on the date fixed for determining the shareholders of the Corporation entitled to receive such share dividend.
(b)If the shares of Stock outstanding are changed into or exchanged for a different number or class or other securities of the Corporation or of another corporation, whether through split-up, merger, consolidation, reorganization, reclassification or recapitalization then there shall be substituted for each share of Stock subject to any such Stock Option or Stock Award and for each share of Stock reserved for the grant of Stock Options or Stock Awards pursuant to the Plan the number and kind of shares or other securities into which each outstanding share of Stock shall have been so changed or for which each share shall have been exchanged.
(c)In the event there shall be any change, other than as specified above in this Section 2, in the number or kind of outstanding shares of Stock or of any shares or other securities into which such shares shall have been changed or for which they shall have been exchanged, then if the Board shall, in its sole discretion, determine that such change equitably requires an adjustment in the number or kind of shares theretofore reserved for the grant of Stock Options or Stock Awards pursuant to the Plan and of the shares then subject to Stock Options or Stock Awards, such adjustment shall be made by the Board and shall be effective and binding for all purposes of the Plan and of each Stock Option and Stock Award outstanding thereunder.
(d)In the case of any such substitution or adjustment as provided for in this Section 2, the option price set forth in each outstanding Stock Option for each share covered thereby prior to such substitution or adjustment will be the option price for all shares or other securities which shall have been substituted for such share or to which such share shall have been adjusted pursuant to this Section 2, and the price per share shall be adjusted accordingly.
(e)No Sharesadjustment or substitution provided for in this Section 2 shall require the Corporation to sell a fractional share, and the total substitution or adjustment with respect to each outstanding Stock Option shall be limited accordingly.
(f)Upon any adjustment made pursuant to this Section 2 the Corporation will, upon request, deliver to the Grantee a certificate setting forth the option price thereafter in effect and the number and kind of shares or other securities thereafter purchasable on the exercise of such Stock Option.
3.Dissolution or Liquidation. In the event of a proposed dissolution or liquidation of the Corporation, to the extent an Award has not been previously exercised, it will terminate immediately prior to the consummation of such proposed action.
4.Change in Control. Notwithstanding Sections 1 and 2 above, in the event of a Change of Control (as defined below), except as otherwise determined by the Board, the Grantee shall fully vest in and have the right to exercise the Awards as to all of the Stock, including Stock as to which it would not otherwise be vested or exercisable. If an Award becomes fully vested and exercisable as the result of a Change of Control, the Committee shall notify the Grantee in writing or electronically prior to the Change of Control that the Award shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Award shall terminate upon the expiration of such period. For purposes of this Agreement, a “Change of Control” means the happening of any of the following events:
When any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) (other than the Corporation, a subsidiary or a Corporation employee benefit plan, including any trustee of such plan acting as trustee) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing fifty percent (50%) or more of the combined voting power of the Corporation’s then outstanding securities entitled to vote generally in the election of directors; or
The stockholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, other than a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Corporation approve an agreement for the sale or disposition by the Corporation of all or substantially all the Corporation’s assets; or
A change in the composition of the Board of the Corporation, as a result of which less than a majority of the directors are Incumbent Directors. ”Incumbent Directors” shall mean directors who either (A) are directors of the Corporation as of the date the Plan is approved by the stockholders, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Corporation).
VIII. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Corporation against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, notion, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any Award agreement and against and from any and all amounts paid by him or her in settlement thereof, with the Corporation’s approval, or paid by him or her in settlement thereof, with the Corporation’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Corporation an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Corporation’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Corporation may have to indemnify them or hold them harmless.
IX. CONDITIONS UPON ISSUANCE OF SHARES
1.Legal Compliance. Stock shall not be issued pursuant to the exercise of an Award unless the Option unlessexercise of such Award and the issuance and such exercisedelivery of Stock shall comply with all applicable laws. Assuming such compliance, for income tax purposes the SharesApplicable Laws and shall be considered transferredfurther subject to the Grantee onapproval of counsel for the date on which the Option is exercisedCorporation with respect to such Shares. The Option shall be deemed exercised whencompliance.
2.Investment Representations. As a condition to the Corporation receives: (i) written or electronic Exercise Notice (in accordance with this Option Agreement) from the Grantee (or other person entitled to exercise the Option); (ii) full payment for the Shares with respect to which the Option is exercised; and (iii) any other documents required by this Option Agreement or the Exercise Notice. Full payment may consist of any consideration and method of payment permitted by this Option Agreement or the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Grantee. Until the Shares are issued (as evidenced by the appropriate entry on the books ofAward, the Corporation or of a duly authorized transfer agent ofmay require the Corporation), no rightGrantee exercising such Award to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Corporation shall issue (or cause to be issued) such Shares promptly after the Option is exercised. Exercise of the Option in any manner shall result in a decrease in the number of Shares thereafter available for sale under the Option, by the number of Shares as to which the Option is exercised.
Cashless Provisions:
b) Net Share Settlement. In lieu of the payment methods set forth above, the Purchase Price for the shares of Common Stock being purchased pursuant to the Option shall be payable to the Company in full subject to the Committee’s approval, by delivery of previously acquired shares of Common Stock having an aggregate Fair Market Valuerepresent and warrant at the time of any such exercise equal to the total Purchase Price (provided that the sharesStock is being purchased only for investment and without any present intention to sell or distribute such Stock if, in the opinion of Common Stock that are delivered must have been held bycounsel for the Holder for at least six (6) months prior to their delivery to satisfy the Purchase Price).Corporation, such a representation is required.
Cashless Exercise. Cashless exercises are permitted pursuant to Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions. Unless otherwise determined by the Committee, Holder may elect to exercise this Option by cashless exercise according to formula below:
X =3. Y (A-B)No Rights as Stockholder
A
Where X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under the portion of the Option being exercised (as adjusted to the date of such calculation).
A = the Fair Market Value of one share of the Company’s Common Stock.
B = Purchase Price (as adjusted to the date of such calculation).
Section 6. | No Rights of Grantees as Shareholders |
Neither the Grantee nor any personal representative shall be, or shallwill have any of the rights and privileges of a member of the Corporationstockholder with respect to any Shares,Stock until the Stock is issued to the said Grantee. After Stock is issued to the Grantee, the Grantee will be a stockholder and will have all the rights of a stockholder with respect to such Stock, including the right to vote and receive all dividends or other distributions made or paid with respect to such Stock.
4. Jurisdictions. In order to assure the viability of the Awards granted to Grantees residing in wholevarious jurisdictions, the Board may provide for such special terms as it may consider necessary or appropriate to accommodate differences in part, priorlocal law, tax policy, foreign exchange or custom applicable in the jurisdiction in which the participant resides or is employed. Moreover, the Board may approve such supplements to, or amendments, restatements, or alternative versions of the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Section I, Subsection 3 of the Plan. Notwithstanding the forgoing, the Board may not take any action hereunder, and no Awards shall be granted, that would violate any Applicable Laws.
5. Foreign Currency. A Grantee may be required to provide evidence that any currency used to pay the option price of any Award was acquired and taken out of the jurisdiction in which the Grantee resides in accordance with Applicable Laws, including foreign exchange control laws and regulations. In the event the option price for a grant is paid in Chinese Renminbi or other foreign currency, as permitted by the Committee, the amount payable will be determined by conversion from U.S. dollars at the official rate promulgated by the People’s Bank of China for Chinese Renminbi, or for jurisdictions other than the Peoples Republic of China, the exchange rate as selected by the Committee on the date of exerciseexercise.
X. LEGAL CONSTRUCTION
1.Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.
2.Severability. In the event any provision of the Option.Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
3.Requirements of Law. The granting of Awards and the issuance of Stock under the Plan shall be subject to all Applicable Laws.
4.Governing Law. The Plan and all Award agreements shall be construed in accordance with and governed by the laws of the State of California.
5.Captions. Captions are provided herein for convenience only, and shall not serve as a basis for interpretation or construction of the Plan.
ZAP
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 2011
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of ZAP hereby nominates, constitutes and appoints Steven Schneider the true and lawful attorney and proxy, with full power of substitution, for me and in my name, place and stead, to act and vote all of the Common Stock of ZAP standing in my name and on its books on April 25, 2011 at the annual meeting of shareholders to be held at the Hyatt Regency, San Francisco Airport, at 1333 Bayshore Highway, Burlingame, CA 94010 on June 20, 2011 at 10:00 a.m. (Pacific Time) and at any adjournment thereof, with all the powers the undersigned would possess if personally present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH DIRECTOR NOMINATED BY THE BOARD OF DIRECTORS (PROPOSAL NO. 1), AND “FOR” PROPOSALS NO. 2, 3, 4, AND 5. THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” THE DIRECTORS SET FORTH BELOW, AND “FOR” PROPOSALS 2, 3, 4, AND 5.
Section 7. | Nontransferability of Option |
During the Grantee’s lifetime, unless specifically authorized by the Board of Directors or a Committee, the Option shall be exercisable only by the Grantee and shall not be transferable except in case of the death of the Grantee or by will or the laws of descent and distribution. Address change/comments:
Section 8. | Term of Services/ Employment Not Affected |
Neither the granting of the Option nor its exercise shall be construed as granting to the Grantee any right with respect to his or her continued service to the Corporation, or any right to become employed if the Grantee is not an employee on the Grant Date. Except as may otherwise be limited by a written agreement between the Corporation and the Grantee, the right of the Corporation to terminate at will the Grantee’s service and/or employment at any time (whether by failure to reelect, removal, dismissal, discharge, retirement or otherwise) is specifically reserved by the Corporation and its Board of Directors.
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE CORPORATION’S RIGHT TO TERMINATE THE GRANTEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
Section 9. | Representations of Grantee |
(a) At the time the Option is exercised, the Grantee shall, if required by the Corporation, concurrently with the exercise of all or any portion of the Option, deliver to the Corporation an investment representation statement in a form satisfactory to the Corporation.
(b) If the Option is intended to be an Incentive Stock Option, the Grantee understands and acknowledges that the Corporation is not representing or warranting that the Option necessarily qualifies as such. The ability to obtain the tax treatment accorded to Incentive Stock Options under Code Section 422 upon exercise of the Option and the sale of the Stock acquired upon exercise is subject to timing requirements set forth in the Code. If the Option is intended to be, or is, a Non-Qualified Stock Option, the Grantee understands and acknowledges that certain tax consequences may result from the grant and/or exercise of the Option, and while the Option may be intended to comply with or be exempt from Code Section 409A, the Option may in fact be subject to Code Section 409A. The Grantee acknowledges that he or she has been informed to consult with his or her own tax advisor regarding the tax effects of the Option, including any tax consequences arising under Code Section 422, Code Section 409A or otherwise.
(c) The Grantee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all of the terms and provisions thereof. The Grantee has reviewed the Plan and the Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Option and fully understands all provisions of the Option. The Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Plan Committee upon any questions arising under the Plan or the Option. The Grantee further agrees to notify the Corporation upon any change in Grantee’s residence address.
(d) If requested by the Corporation or the representative of the underwriters of Stock (or other securities) of the Corporation, the Grantee hereby agrees that the Grantee shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Stock (or other securities) of the Corporation or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Stock (or other securities) of the Corporation held by the Grantee (other than those included in a registration) for a period specified by the representative of the underwriters of Stock (or other securities) of the Corporation not to exceed 180 days following the effective date of any registration statement of the Corporation filed under the Securities Act. The Grantee agrees to execute and deliver such other agreements as may be reasonably requested by the Corporation or the underwriter that are consistent with the foregoing or that are necessary to give further effect thereto. In addition, if requested by the Corporation or the representative of the underwriters of Stock (or other securities) of the Corporation, the Grantee shall provide, within ten days of such request, such information as may be required by the Corporation or such representative in connection with the completion of any public offering of the Corporation’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section shall not apply to a registration relating solely to employee benefit plans on Form S-8 or similar forms that may be promulgated in the future. The Corporation may impose stop-transfer instructions with respect to the shares of Stock (or other securities) subject to the foregoing restriction until the end of said 180-day period. The Grantee agrees that any transferee of the Option or Shares acquired pursuant to the Option shall be bound by this Section.
(e) The Grantee agrees to make appropriate arrangements with the Corporation (or the Parent or Subsidiary employing or retaining the Grantee) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. The Grantee acknowledges and agrees that the Corporation may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.
In the event that any court of competent jurisdiction shall finally determine that any provision, or any portion thereof, contained in this Option Agreement is void or unenforceable in any respect, then such provision shall be deemed limited to the extent that such court determines it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall determine any such provision, or portion thereof, to be wholly unenforceable, the remaining provisions of this Option Agreement nevertheless shall remain in full force and effect.
Section 12. | Amendments to the Stock Option Plan |
The Board of Directors shall have the authority to amend the stock option plan whenever they deem necessary.
Section 13. | Entire Agreement; Governing Law; Jurisdiction |
The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Corporation and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except by means of a writing signed by the Corporation and the Grantee. This agreement is governed by the internal substantive laws but not the choice of law rules of California. Any action brought concerning the transactions contemplated by this Option Agreement shall be brought only in the state or federal courts located in Los Angeles, California. The parties agree to submit to the jurisdiction of such courts and waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs
[Signature Page of Stock Option Agreement.]
IN WITNESS WHEREOF, the parties have executed this Option Agreement on the day and year first indicated above.
The Grantee: | ZAP (a California corporation): |
| |
Name:
| Name:
Title:
|
| |
Signature:
Address:
| Signature:
If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.Address:
Continued and to be signed on reverse side
|
SPOUSAL ACKNOWLEDGMENT
The undersigned spouse of the Grantee has read and hereby approves the foregoing Option Agreement. In consideration of the Corporation’s granting the Option to the Grantee in accordance with the terms of such Option Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Option Agreement, including (without limitation) the forfeiture to the Corporation (or its assigns) of any Shares in which the Grantee is not vested at the time of his or her termination of service.
Address:
Exhibit B
ZAP PROXY CARD
ZAP | VOTE BY INTERNET OR MAIL QUICK— *** www.proxyvote.comEASY *** IMMEDIATE
| |
501 Fourth Street | Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time |
Santa Rosa, CA 95401 | the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
ZAPELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
n YouIf you would like to reduce the costs incurred by our company in mailing proxy materials, you can nowconsent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote your shares electronically throughusing the Internet and, when prompted, indicate that you agree to receive or by mail.access proxy materials electronically in future years.
n This eliminatesVOTE BY PHONE — 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the need to returnday before the proxy card.
n Your electronic vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed, dated and returned the proxy card.
TO VOTE YOUR PROXY BY INTERNET
www.continentalstock.com.
cut-off date or meeting date. Have your proxy card in hand when you accesscall and then follow the above website. You will be prompted to enter the company number, proxy number and account number to create an electronic ballot. Follow the prompts to vote your shares.instructions.
TO VOTE YOUR PROXY BY MAIL
Mark, sign and date your proxy card below, detachand return it and returnin the postage-paid envelope provided.we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: þ
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
PLEASE DO NOT RETURN THE BELOW CARD IF VOTING ELECTRONICALLY |
The Board of Directors recommends you vote FOR the Election of all Nominees for Director: | o For All | o Withhold All | o For All Except To withhold authority to vote for any individual nominee, mark “For All Except” and write the number(s) of the nominee(s) on the line below. __________________________ |
1. Election of Directors Nominees | | | |
01 Priscilla Marilyn Lu 06 Patrick Sevian | 02 Alex Wang 07 Mark Abdou | 03 Steven Schneider | 04 Georges Penalver 05 Goman Chong |
The Board of Directors recommends you vote FOR proposals 2, 3, 4 and 5: |
2. Ratification of Appointment of Friedman LLP as ZAP’s Independent Registered Public Accounting Firm (Proposal No. 2) |
o FOR | o AGAINST | o ABSTAIN | |
3. Approval of an amendment to ZAP’s Charter to effect a reverse stock split within a range, with the ultimate ratio to be selected by our Board of Directors from among the ratios approved by the shareholders (Proposal No. 3) |
o FOR | o AG AINST | o ABSTAIN | |
4. Approval of an amendment to our Charter to increase the authorized shares of Common Stock from 400,000,000 to 800,000,000 (Proposal No. 4) |
o FOR | o AGAINST | o ABSTAIN | |
5. Approval of an amended and restated 2008 Equity Compensation Plan to, among other things, increase the shares of Common Stock available for issuance under the Plan to a total of 40,000,000 shares of Common Stock (Proposal No. 5) |
o FOR | o AGAINST | o ABSTAIN | |
NOTE: This proxy also delegates discretionary authority to vote with respect to any other business which may properly come before the meeting or any adjournment or postponement thereof. | For address change/comments, mark here o (see reverse for instructions) Please indicate if you plan to attend this meeting Yes o No o |
Please sign exactly as your name(s) appear(s) here. When signing as an attorney, executor, administrator, or other fiduciary, please give title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | Dated: __________________________, 2011
Signature
Signature |
V FOLD AND DETACH HERE AND READ THE REVERSE SIDE VImportant Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice and Proxy Statement is/are available at proxyvote.com. |
Please mark your votes like this x
The Board of DIrectors recommends a vote “FOR”For
all the Director Nominees listed
1. Election of Nominees: |
*** Exercise Your Right to Vote *** Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on June 20, 2011 ZAP Meeting Information Meeting Type:Annual Meeting For holders as of: April 25, 2011 Date: June 20, 2011 Time: 10:00 AM PDT All
| Withheld | For
All
Except
|
| o | o | o |
01 Steven Schneider
02 Eqbal Al Yousuf
03 Peter Scholl Location: | | 04 Gary StarrHyatt Regency, San Francisco Airport
1333 Bayshore Highway 05 Randall Waldman Burlingame, CA 94010 |
| | |
| | Write Exceptions Below |
You are receiving this communication because you hold shares in the above named company.
This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or request that a paper copy be sent to you (see reverse side).
We encourage you to access and review all of the important information contained in the proxy materials before voting.
See the reverse side of this notice to obtain
proxy materials and voting instructions.
— Before You Vote —
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Proxy Materials Available to VIEW or RECEIVE:
NOTICE PROXY STATEMENT 2010 ANNUAL REPORT TO SHAREHOLDERS
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1) BY INTERNET: | | www.proxyvote.com |
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— How To Vote —
Please Choose One of the Following Voting Methods
Vote In Person: Many shareholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote these shares.
Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the information that is printed in the box marked by the arrow à XXXX XXXX XXXX available and follow the instructions.
Vote By Phone: To vote by phone, go to www.proxyvote.com where the proxy materials and telephone voting instructions are available. You may also request a paper copy of the proxy materials and telephone voting instructions.
Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card.
Voting Items
The Board of Directors recommends you vote FOR the Election of all Nominees for Director: | | | |
1. Election of Directors Nominees | | | |
01 Priscilla Marilyn Lu 06 Patrick Sevian | 02 Alex Wang 07 Mark Abdou | 03 Steven Schneider | 04 Georges Penalver 05 Goman Chong |
The Board of Directors recommends you vote FOR proposals 2, 3, 4 and 5: |
2. Ratification of Appointment of Friedman LLP as ZAP’s Independent Registered Public Accounting Firm (Proposal No. 2) |
3. Approval of an amendment to ZAP’s Charter to effect a reverse stock split within a range, with the ultimate ratio to be selected by our Board of Directors from among the ratios approved by the shareholders (Proposal No. 3) |
4. Approval of an amendment to our Charter to increase the authorized shares of Common Stock from 400,000,000 to 800,000,000 (Proposal No. 4) |
5. Approval of an amended and restated 2008 Equity Compensation Plan to, among other things, increase the shares of Common Stock available for issuance under the Plan to a total of 40,000,000 shares of Common Stock (Proposal No. 5) |
(To withholdNOTE: This proxy also delegates discretionary authority to vote forwith respect to any individual nominee, mark “FOR ALL
EXCEPT”, and writeother business which may properly come before the nominee’s number in the box provided above to the right.)
meeting or any adjournment or postponement thereof.
The Board of Directors unanimously recommends that you vote “FOR”
Proposal No. 2, and Proposal No. 3.
2. APPROVAL OF THE COMPANY’S 2008 EMPLOYEE STOCK OPTION PLAN. | FOR | AGAINST | ABSTAIN |
| o | o | o |
3. RATIFICATION OF BAGELL, JOSEPHS, LEVINE & COMPANY LLC AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008.
| FOR | AGAINST | ABSTAIN |
| o | o | o |
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Signature(s)
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Note: Please mark, date and sign this proxy card and return it in the enclosed envelope. Please sign as your name appears on this card. If shares are registered in more than one name, all owners should sign. If signing in a fiduciary or representative capacity, please give full title and attach evidence of authority. Corporations please sign with corporate name by a duly authorized officer.