SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
ZAP.COM CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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[ZAP.COM LOGO]
100 MERIDIAN CENTRE, SUITE 350
ROCHESTER, NEW YORK 14618
APRIL 18, 2005
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Zap.Com Corporation, to be held on June 1, 2005, at 10:30 a.m. local time, at
the Canandaigua Inn on the Lake, 770 South Main Street, Canandaigua, New York,
14424. At the meeting, we will consider those matters described in the
accompanying notice of annual meeting of stockholders, report on the progress of
the Company, comment on matters of interest and respond to your questions. A
copy of the Company's Annual Report to Stockholders for the year ended December
31, 2004 containing financial statements preceded or accompanies this mailing.
We appreciate your continued interest in Zap.Com.
Sincerely,
-s- Avram A. Glazer
AVRAM A. GLAZER,
President and Chief Executive Officer
ZAP.COM CORPORATION
100 MERIDIAN CENTRE, SUITE 350
ROCHESTER, NEW YORK 14618
(585) 242-2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 1, 2005
To the Stockholders of Zap.Com Corporation:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Zap.Com Corporation, a Nevada corporation ("Zap.Com" or the
"Company"), will be held at the Canandaigua Inn on the Lake, 770 South Main
Street, Canandaigua, New York, 14424, on June 1, 2005 at 10:30 a.m. local time,
for the following purposes:
1. To elect a director;
2. To consider and vote on a proposal to grant stock options to the
Company's President and Chief Executive Officer;
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors has set the close of business on April 13, 2005 as
the record date for the Annual Meeting. Only stockholders of record at the close
of business on the record date are entitled to notice of, and to vote at the
Annual Meeting and any adjournments thereof. The stock transfer books of the
Company will not be closed following the record date. A list of such
stockholders will be available during normal business hours at the offices of
the Company for inspection at least ten days prior to the Annual Meeting. A copy
of the Annual Report of the Company's operations during the year ended December
31, 2004 and Zap.Com's Information Statement accompanies this notice.
Stockholders are cordially invited and encouraged to attend the Annual
Meeting in person.
By Order of the Board of Directors,
-s- Avram A. Glazer
AVRAM A. GLAZER,
President and Chief Executive Officer
Rochester, New York
April 18, 2005
ZAP.COM CORPORATION
100 MERIDIAN CENTRE, SUITE 350
ROCHESTER, NEW YORK 14618
(585) 242-2000
INFORMATION STATEMENT
This Information Statement and the accompanying Notice of Annual Meeting of
Stockholders are being furnished to the stockholders of Zap.Com Corporation
("Zap.Com" or the "Company") by the Board of Directors in connection with the
Annual Meeting of Stockholders to be held on June 1, 2005 at 10:30 a.m. local
time, at the Canandaigua Inn on the Lake, 770 South Main Street, Canandaigua,
New York, 14424, and at any adjournments thereof (the "Annual Meeting").
It is contemplated that this Information Statement will first be mailed to
Zap.Com stockholders on or about April 20, 2005. WE ARE NOT ASKING YOU FOR A
PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
The principal executive offices of the Company are located at 100 Meridian
Centre, Suite 350, Rochester, New York 14618; telephone (585) 242-2400.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Annual Meeting, including any adjournment(s) thereof, the
stockholders of Zap.Com will be asked to consider and vote upon the election of
a director, and the other proposals summarized in the attached Notice of Annual
Meeting. The proposals are described in more detail in this Information
Statement. The Board knows of no other matters that are likely to be brought
before the Annual Meeting.
RECORD DATE; OUTSTANDING SHARES
The Board of Directors of the Company has fixed the close of business on
April 13, 2005 (the "Record Date") as the date for the determination of
stockholders who are entitled to vote at the Annual Meeting and at any
adjournment(s) or postponement(s) thereof. As of the Record Date, the Company's
issued and outstanding capital stock consisted of 50,004,474 shares of common
stock, par value $.001 per share (the "Common Stock"), which was held by
approximately 1,500 holders of record. Each share of Common Stock is entitled to
one vote in the election of directors and on each matter submitted for
stockholder approval. The Common Stock is the Company's only outstanding class
of stock as of the date of this Information Statement. As of the date of this
Information Statement, Zapata Corporation ("Zapata") holds 48,972,258 shares of
Zap.Com common stock, or approximately 98% of Zap.Com's outstanding Common
Stock. Accordingly, Zapata will be able to determine the outcome of the director
election and each proposal to be presented at the Annual Meeting. Zapata has
informed Zap.Com that it intends to vote in accordance with the Board's
recommendations on all proposals to be presented at the Annual Meeting.
QUORUM; ABSTENTIONS AND NON-VOTES; VOTE REQUIRED
The presence at the meeting, in person or by proxy, of the holders of a
majority of the Company's outstanding shares of voting stock is necessary to
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes (which occur if a broker or other nominee does
not have discretionary authority and has not received voting instructions from
the beneficial owner with respect to the particular item) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. If there are not sufficient shares represented in person or by
proxy at the meeting to constitute a quorum, the meeting may be adjourned or
postponed for a period of not more than 30 days at any one time, until a quorum
is in attendance.
With respect to the election of directors, the nominee receiving the
highest number of affirmative votes will be elected to the Board of Directors.
The affirmative vote of a majority of the shares of Common Stock voted at the
Annual Meeting will be necessary to approve the grant of stock options to our
President and Chief Executive Officer, to ratify the Board's appointment of
PricewaterhouseCoopers LLP as the Company's independent auditors. Abstentions
and broker non-votes will have no effect on the outcome of the election of
directors or the approval of the independent auditors.
The date of this Information Statement is April 18, 2005
1
PROPOSAL 1
ELECTION OF DIRECTOR
Pursuant to the Company's Restated Articles of Incorporation (the "Restated
Articles") and By-Laws, the size of the Board is currently set at one director.
Avram Glazer is the sole director.
Directors will be elected by a plurality of the votes cast for director
nominees at the Annual Meeting.
Mr. Glazer has nominated himself to serve for a one year term or until his
successor is duly qualified or elected. Mr. Glazer, age 44, has served as the
sole director and President and Chief Executive Officer of Zap.Com since its
formation in April 1998. Mr. Glazer also serves as Chairman of the Board,
President and Chief Executive Officer of Zapata Corporation (NYSE: ZAP) which as
of the date of this Information Statement holds of record and beneficially
approximately 98% of the Company's outstanding common stock. Mr. Glazer has
served as President and Chief Executive Officer of Zapata since 1995 and as
Chairman of the Board since March 2002. Mr. Glazer also serves as Chairman of
the Board of Omega Protein Corporation (NYSE: OME) (a marine protein company),
and as a director of Safety Components International Corp. (OTCBB: SAFY) ( a
manufacturer of automotive airbag components and safety fabrics).
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEE AS DIRECTOR.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During 2004, the Board of Directors met or acted by written consent twice.
Zap.Com's Board of Directors does not presently maintain any committees
since the Board only consists of one director. Upon expansion of the size of the
Board to three or more directors, the By-Laws require that two standing
committees of the Board of Directors be activated: the audit committee and the
compensation committee, each comprised of two or more directors. The members of
these committees will be appointed following the expansion of the Board to three
or more directors.
The primary purpose of the audit committee will be to (1) select the firm
of independent auditors that will audit Zap.Com's financial statements, (2)
discuss the scope and the results of the audit with the auditors and (3) review
Zap.Com's financial accounting and reporting principles. The audit committee
will also examine and discuss the adequacy of Zap.Com's financial controls with
the independent auditors and with management.
The functions of the compensation committee will be to review, approve and
recommend to the Board of Directors the terms and conditions of incentive bonus
plans applicable to corporate officers and key management personnel, to review
and approve the annual salary of the chief executive officer, and to administer
Zap.Com's 1999 Long-Term Incentive Plan.
Zap.Com's Board of Directors currently performs the functions of the audit
committee. The Board of Directors does not have a "financial expert". We believe
the cost related to retaining a financial expert at this time is prohibitive.
Further, because of our limited operations, we believe the services of a
financial expert are not warranted.
The Board of Directors does not have a nominating committee or a committee
performing the functions of a nominating committee. The Board of Directors
identifies and evaluates nominees for director. Since the Company only has
limited operations at this time and the Board of Directors only consists of one
director, the Board of Directors has not adopted a policy regarding the
consideration of stockholder recommendations for nominations or any formal
procedures for stockholders to recommend nominations. The Board of Directors
will, however, consider stockholder recommendations. Such recommendations should
be addressed to Avram Glazer, President and Chief Executive Officer, at the
Company's principal executive offices.
For the same reasons, the Board of Directors has not established a formal
process for stockholders to send communications to the Board of Directors.
Additionally, the Board of Directors has not implemented a formal
2
policy regarding director attendance at the Annual Meeting. Last year the
Company's sole director did not attend the Annual Meeting.
DIRECTOR COMPENSATION
Each director who is not an employee of Zap.Com may be compensated for
serving as a director at a set dollar amount to be determined by the Board. In
addition, each new non-employee director may upon joining the Board, be granted
options under the Zap.Com 1999 Long-Term Incentive Plan to purchase shares of
Zap.Com Common Stock at the fair market value for the shares. The Board will
determine the number and terms of the options to be granted to the new director.
There are no family relationships, or other arrangements or understandings
between or among any of the directors, executive officers or other persons under
which that person was selected to serve as a director or officer.
EXECUTIVE OFFICERS
The Company's officers serve at the pleasure of the Board of Directors. The
following table sets forth information concerning the executive officers of
Zap.Com as of the date of this Information Statement:
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
Avram A. Glazer........................... 44 President and Chief Executive Officer
Leonard DiSalvo........................... 46 Vice President -- Finance and Chief Financial
Officer
Gordon E. Forth........................... 43 Secretary
</Table>
Leonard DiSalvo, age 46, has served as Zap.Com's Vice President -- Finance
and Chief Financial Officer since April 1999. Mr. DiSalvo also serves as
Zapata's Vice President -- Finance and Chief Financial Officer, a position he
has held since joining Zapata in September 1998. Mr. DiSalvo serves as a
director of Zapata's majority-owned subsidiary, Safety Components International,
Inc. (OTCBB: SAFY), a position he has held since January 2004. Mr. DiSalvo also
swerves as Chairman of the Safety Components' Compensation Committee. Mr.
DiSalvo has over 20 years of experience in the areas of finance and accounting.
Mr. DiSalvo served as a finance manager for Constellation Brands, Inc., a
national manufacturer and distributor of wine, spirits and beer since 1996.
Prior to that position, Mr. DiSalvo held various management positions in the
areas of finance and accounting in the Contact Lens Division of Bausch & Lomb
Incorporated. Mr. DiSalvo is a Certified Public Accountant.
Gordon E. Forth, age 43, has served as Zap.Com's Secretary since April
1999. Mr. Forth also serves as Zapata's secretary. Mr. Forth is a partner of
Woods Oviatt Gilman LLP, a Rochester, New York based law firm, which provides
legal services to both Zapata and Zap.Com. Mr. Forth has practiced law at Woods
Oviatt Gilman since 1987.
CODE OF BUSINESS CONDUCT AND ETHICS
The Company has adopted a Code of Ethics and Business Conduct that applies
to all of the Company's directors and key employees, including the Company's
principal executive officer, principal accounting officer or controller or
persons performing similar functions (collectively, the "Selected Officers").
The Company will provide without charge, upon request, a copy of the Code of
Business Conduct and Ethics. Anyone wishing to obtain a copy should write to
Zap.Com Corporation Investor Relations, 100 Meridian Centre Suite 350,
Rochester, NY 14618.
EXECUTIVE COMPENSATION
Zap.Com presently has no employment agreements with its officers or other
key employees. A portion of the cost of the compensation of Zap.Com's executives
who are also employed by Zapata are allocated to Zap.Com under a services
agreement between Zapata and Zap.Com. Zap.Com has not reimbursed Zapata for
those costs, but has recognized these amounts as additional capital
contributions from Zapata. These costs
3
were based upon an estimate of the amount of time devoted by those employees to
the operation and affairs of each corporation.
None of the Company's executive officers received annual compensation in
excess of $100,000 during any of the last three completed fiscal years. Mr.
Glazer serves as Chairman of the Board, President and Chief Executive Officer of
Zapata and as President and Chief Executive Officer of Zap.Com. Zap.Com
recognized approximately $6,000, $4,000 and $4,000 as contributed capital from
Zapata Corporation for Mr. Glazer's annual salary for 2004, 2003 and 2002,
respectively, under its services agreement with Zapata. No amounts of Mr. A.
Glazer's bonuses were allocated to Zap.Com.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
FISCAL -------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
- --------------------------- ------ --------- -------- ------------
Avram A. Glazer...................................... 2004 $ --(1) -- 365,000
President and Chief Executive Officer 2003 --(1) -- --
2002 --(1) -- --
</Table>
- ---------------
(1) Mr. Glazer serves as Chairman of the Board, President and Chief Executive
Officer of Zapata and as President and Chief Executive Officer of Zap.Com.
Zap.Com recognized approximately $6,000, 4,000, and $4,000 as contributed
capital from Zapata Corporation for Mr. Glazer's annual salary for 2004,
2003 and 2002, respectively, under its shared services agreement with
Zapata. No amounts of Mr. A. Glazer's bonuses were allocated to Zap.Com.
OPTION GRANTS LAST FISCAL YEAR
The following table provides information concerning the grant of stock
options:
<Table>
<Caption>
POTENTIALLY
REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL
NUMBER OF TOTAL RATE OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
FISCAL OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------
YEAR NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
- ------ ---- ---------- ------------ --------- ---------- -------- ---------
2004 Avram A. Glazer........ 365,000(3) 71.4% $0.08 11/2/2009 $8,000 $18,000
</Table>
- ---------------
(1) Stock options are awarded at the fair market value of Common Stock at the
date of grant. All options are exercisable in cumulative one-third
installments vesting annually beginning on the first anniversary of the date
of grant.
(2) The amounts shown as potentially realizable values are based on arbitrarily
assumed rates of stock price appreciations of 5% and 10% over the full term
of the options (5 years), as required by applicable regulations and are
provided for illustrative purposes only and do not reflect the Company's
estimate or projection of future Common Stock prices.
(3) This grant of options is subject to approval of the Company's stockholders
at the June 1, 2005 annual meeting.
4
The following sets forth for each of the Named Officers options exercised
and the number and value of securities underlying unexercised options held by
the Named Officers as of the end of 2004.
AGGREGATED OPTIONS EXERCISES AND FISCAL YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
SHARES AT FISCAL YEAR-END IN-THE-MONEY OPTIONS
ACQUIRED VALUE --------------------------- AT FISCAL YEAR-END
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- ----------- -------- ----------- ------------- ----------------------------
Avram A. Glazer........... -- -- -- 365,000 (2) $0/$0
</Table>
- ---------------
(1) Based on the closing price on the NASD OTC Bulletin Board for Zap.Com's
Common Stock on December 31, 2004 of $.08, the closing price was equal to
the exercise price.
(2) This grant of options is subject to approval of the Company's stockholders
at the June 1, 2005 annual meeting.
1999 LONG-TERM INCENTIVE PLAN
The 1999 Long-Term Incentive Plan was approved by Zap.Com's Board and
Zapata as Zap.Com's sole stockholder in April 1999, and amended in October 1999.
Pursuant to the plan, awards may be made to existing and future officers, other
employees, consultants and directors of Zap.Com from time to time. The 1999
Incentive Plan is intended to promote the long-term financial interests and
growth of Zap.Com by providing employees, officers, directors and consultants of
Zap.Com with appropriate incentives and rewards to enter into and continue in
the employ of, or their relationship with, Zap.Com and to acquire a proprietary
interest in the long-term success of Zap.Com; and to reward the performance of
individual officers, other employees, consultants and directors in fulfilling
their responsibilities for long-range achievements.
Zap.Com's Board, or upon formation, the compensation committee (both of
which are referred to below as the "committee"), makes awards under the 1999
Incentive Plan from among those eligible persons who hold positions of
responsibility and whose performance, in the judgment of the committee, has a
significant effect on Zap.Com's success.
Under the 1999 Incentive Plan, 3,000,000 shares of Common Stock are
available for awards. The 1999 Incentive Plan provides for the grant of any or
all of the following types of awards: stock options, stock appreciation rights,
stock awards, cash awards, or other rights or interests. Stock options may be
incentive stock options that comply with Section 422 of the Code. Future
allocation of awards under the 1999 Incentive Plan is not currently determinable
as the allocation is dependent upon future decisions to be made by the committee
in its sole discretion, and the applicable provisions of the 1999 Incentive
Plan.
The exercise price of any stock option may, at the discretion of the
committee, be paid in cash or by surrendering shares or another award under the
1999 Incentive Plan, valued at fair market value on the date of exercise or any
combination of cash or stock.
Stock appreciation rights are rights to receive, without payment to
Zap.Com, cash or shares of Zap.Com Common Stock with a value determined by
reference to the difference between the exercise or strike price of the stock
appreciation rights and the fair market value or other specified valuation of
the shares at the time of exercise. Stock appreciation rights may be granted in
tandem with stock options or separately.
Stock awards may consist of shares of Zap.Com Common Stock or be
denominated in units of shares of Common Stock. A stock award may provide for
voting rights and dividend equivalent rights.
The committee may specify conditions for awards, including vesting service
and performance conditions. Vesting conditions may include, without limitation,
provision for acceleration in the case of a change-in-control of Zap.Com,
vesting conditions and performance conditions, including, without limitation,
performance conditions based on achievement of specific business objectives,
increases in specified indices and attaining specified growth measures or rates.
5
An award may provide for the granting or issuance of additional,
replacement or alternative awards upon the occurrence of specified events,
including the exercise of the original award.
An award may provide for a tax gross-up payment to a participant if a
change in control of Zap.Com results in the participant owing an excise tax or
other tax above the rate ordinarily applicable, due to the parachute tax
provisions of Section 280G of the Code or otherwise. The gross-up payment would
be in an amount so that the net amount received by the participant, after paying
the increased tax and any additional taxes on the additional amount, would be
equal to that receivable by the participant if the increased tax were not
applicable.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission (the "Commission") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company.
Directors, officers and greater than 10% stockholders are required by the
Commission's regulations to furnish the Company with copies of all Section 16(a)
forms they file. Based solely on a review of Forms 3 and 4 and amendments
thereto furnished to the Company during its most recent fiscal year, and Forms 5
and amendments thereto furnished to the Company with respect to its most recent
fiscal year, and certain written representations, no persons who were either a
director, officer, or beneficial owner of more than 10% of the Company's Common
Stock failed to file on a timely basis reports required by Section 16(a) of the
Exchange Act during the recent fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of Zap.Com has no compensation committee, or other
board committee performing equivalent functions. Decisions concerning the
compensation of Zap.Com executives, Avram Glazer and Leonard DiSalvo are made by
the Compensation Committee of the Board of Directors of Zapata Corporation. The
Board of Directors of Zap.Com is comprised only of Avram Glazer, Zap.Com's
President and Chief Executive Officer. No compensation for service to Zap.Com
was paid to Mr. Glazer or Mr. DiSalvo for the last fiscal year, except that they
were granted options to purchase 365,000 and 100,000 shares of common stock,
respectively, in October 2004. See "Proposal 2 -- Approval of Option Grant to
President and CEO."
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
No compensation was paid by the Company to its executive officers in 2003
or 2002 and no salary or bonus was paid in 2004. In 2004, the Board did award
options to its executive officers following the expiration of previously granted
options under their original five-year term. See "Proposal 2 -- Approval of
Option Grant to President and CEO." The Board has followed executive
compensation policies designed to provide incentives to its executives to focus
on both Zap.Com's current and long-term goals, with an overriding emphasis on
the ultimate objective of enhancing stockholder value. The Company's executive
compensation program has been comprised of cash and equity-based incentives,
which recognize individual achievement and encourage executive loyalty and
initiative. The Board considers equity ownership to be an important factor in
providing executives with a closer orientation to the Company and its
stockholders. Accordingly, the Board has granted options to purchase Common
Stock pursuant to Zap.Com's 1999 Long-Term Incentive Plan.
6
Base salaries for our executives have been established on a case-by-case
basis by the Board, based upon the executive's level of responsibility, prior
experience, breadth of knowledge, and salary requirements. The Board has granted
stock options upon hiring or based upon subjective considerations as to an
executive's contribution or potential contribution to the Company. Other
benefits offered to executives have been generally the same as those offered to
Zap.Com's other employees.
RESPECTFULLY SUBMITTED,
-s- Avram A. Glazer
AVRAM A. GLAZER,
Director
7
STOCKHOLDER RETURN PERFORMANCE GRAPH
The Commission requires a comparison of the cumulative total return of the
Company's Common Stock with that of (1) a broad equity market index and (2) a
published industry or line-of-business index, or index of peer companies with
similar market capitalization, over a five year period or such shorter that the
Company has been registered under Section 12 of the Securities Exchange Act of
1934 ("Exchange Act"). The Company registered pursuant to Section 12 on November
12, 1999 and its common stock has traded on the NASD OTC Bulletin Board since
November 30, 1999. The Company has selected to use the Russell 2000 Index as its
broad market index. For the second required comparison, the Company has selected
the RDG Internet Index.
The stock price performance on the following graph does not necessarily
indicate of future performance. The stock performance graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Information Statement into any filing under the Securities Act of 1933 or
under the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this graph by reference, and it shall not otherwise be
deemed filed.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ZAP.COM CORPORATION, THE RUSSELL 2000 INDEX
AND THE RDG INTERNET COMPOSITE INDEX
[PERFORMANCE GRAPH]
<Table>
<Caption>
CUMULATIVE TOTAL RETURN
--------------------------------------------------------------------------------
12/99 12/00 12/01 12/02 12/03 12/04
--------------------------------------------------------------------------------
Zap.Com Corporation 100.00 6.52 3.30 0.70 2.78 1.39
Russell 2000 100.00 96.98 99.39 79.03 116.38 137.71
RDG Internet 100.00 57.26 40.00 27.91 38.25 41.67
</Table>
* $100 invested on 12/31/99 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ZAPATA CORPORATION
Since its inception, Zap.Com has utilized the services of the Zapata's
management and staff under a shared services agreement that allocated these
costs on a percentage of time basis. Zap. Com also subleases its office space in
Rochester, New York from Zapata. Under the sublease agreement, annual rental
payments are allocated on a cost basis. Zapata has waived its rights under the
shared services agreement to be reimbursed for these expenses since May 1, 2000.
For the year ended December 31, 2004, approximately $13,000 was recorded as
contributed capital for these services.
OTHER
Gordon E. Forth, who serves as corporate secretary of Zap.Com, is a partner
at Woods Oviatt Gilman LLP, which has acts as counsel to Zap.Com and Zapata. Mr.
Forth also serves as corporate secretary to Zapata.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the number of shares of Common Stock owned
beneficially as of April 15, 2005 by
- each person known to the Company to beneficially own more than 5% of the
outstanding shares of Common Stock,
- each director,
- the Named Officers, and
- all directors and executive officers as a group.
Except to the extent indicated in the footnotes to the following table,
each of the persons or entities listed therein has sole voting and investment
power with respect to the shares which are reported as beneficially owned by
such person or entity. The Company does not know of any arrangements, including
any pledge by any person of securities of the Company, the operation of which
may at a subsequent date result in a change of control of the Company.
The following calculations are based upon the shares of the Company's
common stock issued and outstanding on April 15, 2005 plus the number of such
shares of common stock outstanding pursuant to SEC Rule 13d-3(d))1. Shares of
the Company's common stock subject to options exercisable within 60 days of
April 15, 2005 are deemed outstanding for purposes of computing the percentage
of the person holding such option but are not deemed outstanding for computing
the percentage of any other person.
SHARES BENEFICIALLY OWNED
<Table>
<Caption>
PERCENT OF
NAME AND BENEFICIAL OWNER NO. OF SHARES OWNERSHIP
- ------------------------- ------------- ----------
Zapata Corporation(1)(2).................................... 48,972,258 97.9%
Avram Glazer(3), President, CEO and Director................ 50,000 *
All Named Officers and directors as a group (3 persons)..... 50,000 *
</Table>
- ---------------
* Represents ownership of less than 1.0%
(1) Zapata's address is 100 Meridian Centre, Suite 350, Rochester, New York
14618. As a result of this ownership, Zapata controls Zap.Com. Malcolm
Glazer, through an entity he owns and controls, owns beneficially and of
record approximately 51% of Zapata's outstanding common stock and, by virtue
of that ownership, Malcolm Glazer may be deemed to control Zapata and,
therefore, to beneficially own the
9
Zap.Com securities held by Zapata. Mr. Glazer disclaims any beneficial ownership
of Zap.Com's common stock beneficially owned by Zapata.
(2) Zap.Com has registered 1,000,000 shares of Zap.Com common stock held by
Zapata for resale on a shelf basis under a separate registration statement.
These figures are subject to change if Zapata sells any of these shares.
(3) Avram Glazer's address is 100 Meridian Centre, Suite 350, Rochester, New
York 14618. Avram Glazer also beneficially owns 137,272 shares of common
stock of Zap.Com's parent company Zapata Corporation. This amount includes
107,672 shares subject to options exercisable within 60 days of April 15,
2005.
PROPOSAL 2
APPROVAL OF OPTION GRANT TO PRESIDENT AND CEO
On October 20, 2004, the Company's then outstanding stock options under its
1999 Long-Term Incentive Plan (the "PLAN") to its three executive officers
expired according to their original five year terms. These included options held
by President and CEO Avram Glazer to purchase 365,000 shares of Common Stock at
$2.00 per share. The Plan is described above under "Executive
Compensation -- 1999 Long-Term Incentive Plan." Following the expiration of
these stock options, Zap.Com's Board, comprised of its sole director, Avram A.
Glazer, approved the grant of stock options to these executive officers,
including himself, and three employees of Zapata Corporation. The grants cover
options to two other Zap.Com executive officers and to three Zapata employees to
purchase an aggregate of 146,300 shares of Zap.Com Common Stock. Mr. Glazer's
grant covers 365,000 shares of the Company's Common Stock. The options are
exercisable in cumulative one-third installments vesting annually beginning on
the first anniversary of the date of grant. The exercise price for these stock
options is $0.08 per share, which was the fair market price of the Common Stock
on the date of grant. The closing price per share of the Company's Common Stock
on the NASD OTC Bulletin Board on April 15, 2005, was $0.13. At the Board's
discretion, outstanding options may be amended to accelerate the vesting period
resulting in a one-time, non-cash charge to the Company. This potential charge
may be more or less than the amount which will be expensed ratably in accordance
with the provisions of Statement on Financial Accounting Standards No. 123R.
The options granted to Mr. Glazer are subject to the approval of Zap.Com's
stockholders, and are the subject of this proposal.
The Board of Directors considers that it is in the Company's best interest
to grant non-qualified stock options to the Company's President and CEO to
replace the previously expired options. None of the executive officers received
other compensation for their services in that capacity in 2004. The Compensation
Committee of the Board of Directors of Zapata Corporation, the Company's 98%
stockholder, has approved the grant and Zapata has indicated that it intends to
vote in favor of the proposal.
TAX TREATMENT
The options granted are non-qualified options for tax purposes. No taxable
income is recognized by an optionee upon the grant of an option. The optionee
will, in general, recognize ordinary income, in the year in which the option is
exercised, equal to the excess of the fair market value of the purchased shares
on the exercise date over the exercise price paid for the shares, and the
optionee will be required to satisfy the tax withholding requirements applicable
to such income. Upon a subsequent sale or exchange of shares acquired pursuant
to the exercise of an option, the optionee will have taxable gain or loss
measured by the difference between the amount realized on the disposition and
the tax basis of the shares (generally, the amount paid for the shares plus the
amount treated as ordinary income at the time the option was exercised).
If the Company complies with applicable reporting requirements and with the
restrictions of Section 162(m) of the Internal Revenue Code, it generally will
be entitled to an income tax deduction equal to the amount of ordinary income
recognized by the optionee with respect to the exercised option. The deduction
will in general be allowed for the taxable year of the Company in which such
ordinary income is recognized by the optionee.
10
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the meeting and entitled to
vote on this matter is required to approve Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PROPOSAL
TO GRANT STOCK OPTIONS TO THE COMPANY'S PRESIDENT AND CEO.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP
to act as the Company's independent auditors and to conduct an audit, in
accordance with auditing standards generally accepted in the United States of
America, of the Company's financial statements for the fiscal year ending
December 31, 2005.
The Board of Directors considers PricewaterhouseCoopers LLP to be well
qualified. A representative of that firm is expected to be present at the Annual
Meeting to respond to appropriate questions and will be given an opportunity to
make a statement if he or she so desires. Neither the firm nor any of its
partners has any direct financial interest or any indirect financial interest in
the Company other than as independent auditors. This selection is being
submitted for ratification at the meeting.
The affirmative vote of the holders of a majority of the shares of Common
Stock present at the meeting and entitled to vote is required for such
ratification. If not ratified, the selection will be reconsidered by the Board,
although the Board of Directors will not be required to select different
independent auditors for the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
BOARD'S APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our Board of Directors' policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors, PricewaterhouseCoopers
LLP. Our Board of Directors pre-approved all such audit and non-audit services
provided by the independent auditors. In 2004 and 2003, the Company did not
engage PricewaterhouseCoopers LLP to provide any non-audit 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 auditors and management are
required to periodically report to Board of Directors regarding the extent of
services provided by the independent auditors in accordance with this
pre-approval and the fees for the services performed to date. Board of Directors
may also pre-approve particular services on a case-by-case basis.
<Table>
<Caption>
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- -----------------
Audit Fees.................................................. $31,400 $32,500
Audit-Related Fees.......................................... -- --
Tax Fees.................................................... -- --
All Other Fees.............................................. -- --
</Table>
HOUSEHOLDING
The SEC allows the Company to deliver a single information statement and
annual report to an address shared by two or more stockholders. This delivery
method, referred to as "householding," can result in significant cost savings
for the Company. In order to take advantage of this opportunity, Zap.Com and
banks
11
and brokerage firms that hold your shares have delivered only one information
statement and annual report to multiple stockholders who share an address unless
the Company has received contrary instructions from one or more of the
stockholders. The Company will deliver promptly, upon written or oral request, a
separate copy of the information statement and annual report to a stockholder at
a shared address to which a single copy of the documents was delivered. A
stockholder who wishes to receive a separate copy of the information statement
and annual report, now or in the future, may obtain one, without charge, by
addressing a request to the Vice-President Finance and Chief Financial Officer,
Zap.Com Corporation, 100 Meridian Centre, Suite 350, Rochester, New York 14618,
(585) 242-2000. Stockholders sharing an address who are receiving multiple
copies of proxy materials and annual reports and wish to receive a single copy
of such materials in the future should submit their request by contacting the
Company in the same manner. If you are the beneficial owner, but not the record
holder, of the Company's shares and wish to receive only one copy of the
information statement and annual report in the future, you will need to contact
your broker, bank or other nominee to request that only a single copy of each
document be mailed to all stockholders at the shared address in the future.
OTHER MATTERS
As of the date of this Information Statement, the Board of Directors knows
of no other matter to be presented at the Annual Meeting.
By Order of the Board of Directors,
-s- Avram A. Glazer
AVRAM A. GLAZER,
President and Chief Executive Officer
Rochester, New York
April 18, 2005
12
APPENDIX A
ZAP.COM CORPORATION
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (the "OPTION AGREEMENT"), is entered into and
is effective as of November 2, 2004 (the "GRANT DATE"), between ZAP.COM
CORPORATION, a Nevada corporation (the "COMPANY"), and AVRAM A. GLAZER (the
"OPTIONEE").
W I T N E S S E T H:
A. This Agreement is being entered into by the Company and the Optionee to
evidence and set forth the terms and conditions of options to purchase shares of
the Company's common stock, par value $.001 per share (the "COMMON STOCK"),
which have been awarded to the Optionee under the Company's 1999 Long-Term
Incentive Plan (the "PLAN").
B. All capitalized terms used herein and not otherwise defined shall have
the meanings given thereto in the Plan and in Section 12 of this Agreement.
P R O V I S I O N S:
NOW, THEREFORE, in consideration of the premises, the terms and conditions
set forth herein, the mutual benefits to be gained by the performance thereof
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions herein, the
Company hereby grants to the Optionee, and the Optionee hereby accepts, a
non-qualified stock option to purchase (the "OPTION") from the Company up
to 365,000 shares of Common Stock (the "OPTION SHARES") at an exercise
price of $.08 per share (the "EXERCISE PRICE"). The number of Option Shares
and the Exercise Price are subject to adjustment upon the occurrence of
certain events to the extent and in the manner provided in Section 4(c) of
the Plan. This Option is intended to be treated as an option that does not
qualify as an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended.
2. VESTING. Subject to the terms and conditions herein, the Option
shall vest and become exercisable (i) with respect to 33 1/3% of the total
number of Option Shares, as of the first anniversary of the Grant Date;
(ii) with respect to an additional 33 1/3% of the Option Shares, as of the
second anniversary of the Grant Date; and (iii) with respect to the
remaining 33 1/3% of the total Option Shares, as of the third anniversary
of the Grant Date. These vesting installments shall be cumulative so that
the Optionee may purchase on or after each such anniversary and during the
remainder of the Option Period (defined below) that number of Option Shares
which the Optionee was entitled to purchase but did not purchase during any
preceding period or periods.
3. EXERCISE PERIOD. Subject to the terms and conditions herein, the
Optionee may exercise the vested portion of the Option at any time and from
time to time during the five (5) year period beginning on the Grant Date
(the "EXERCISE PERIOD"), provided that in the event that the exercise is
subsequent to the termination of Optionee's employment with the Company,
prior to any exercise (a) the Optionee shall have executed a waiver and
release in the form of EXHIBIT A annexed hereto ("WAIVER AND RELEASE") or
in another form satisfactory to the Company; and (b) the revocation period
provided in Section 6 of the Waiver and Release shall have expired without
the Optionee exercising his right of revocation thereunder. In the event
that Optionee revokes the Waiver and Release after execution, then both the
vested and unvested portion of the Option shall terminate and be of no
further force and effect.
4. TERMINATION AND ACCELERATION OF OPTION.
(a) Subject to the terms and conditions herein, in the event that the
Optionee terminates employment with the Company or the Company terminates
the Optionee's employment with the
A-1
Company for Cause (defined below), then (i) the unvested portion of the
Option as of the date of such termination shall terminate and be of no
further force or effect; and (ii) the vested portion of the Option may be
exercised during the period ending upon the earlier of the three (3) month
period after the first date on which such termination is effective and the
expiration of the Exercise Period. In the event that the Optionee's
employment with the Company is terminated by the Company without Cause or
due to death or disability, then (i) the unvested portion of the Option as
of the date of such termination shall terminate and be of no further force
or effect and (ii) the vested portion of the Option may be exercised during
the period ending upon the earlier of the twelve (12) month period after
the first date on which such termination is effective and the expiration of
the Exercise Period.
(b) If the Optionee performs services for the Company or an affiliate
of the Company in a capacity other than as a director or employee, then,
for purposes hereof, those services will be deemed to be continuous until
they are terminated, and they will be deemed to be terminated at the time
provided therefor in the consulting or other agreement governing the
performance of such services or, if there is no such agreement, at the time
the Company or an affiliate of the Company notifies the Optionee that it no
longer contemplates the utilization of such services.
(c) Notwithstanding anything else herein to the contrary, the Option,
to the extent that it is unvested, shall automatically vest and become
immediately exercisable (i) upon a dissolution or liquidation of the
Company or (ii) upon written election of the Committee in the event of a
Change of Control and any such election may be done with or without
condition that the Change of Control transaction be consummated. In
addition, if this Option accelerates as a result of a Change of Control,
the Committee may, in its sole discretion, cause the Option, to the extent
not previously exercised, to terminate on the effective date of the Change
of Control and as of such time, the Option shall cease to remain
outstanding unless the Committee determines that it can, and it is
expressly assumed by the successor corporation to the Company or the parent
thereof.
(d) In the event that the Optionee commences any claim, action,
proceeding or lawsuit against the Company, both the vested and unvested
portion of the Option shall immediately terminate and be of no further
force or effect.
(e) Notwithstanding anything to the contrary contained herein, any
portion of the Option which is unexercised shall terminate and be of no
further force or effect upon the expiration of the Exercise Period.
5. EXERCISE AND PAYMENT OF EXERCISE PRICE.
(a) The Option may be exercised only by delivery of a Notice of
Exercise in the form of EXHIBIT B annexed hereto (the "EXERCISE NOTICE") to
the Secretary of the Company, which shall state: (i) that the Optionee
elects to exercise the Option; (ii) the number of Option Shares with
respect to which the Option is being exercised (the "OPTION SHARES"); (iii)
the method of payment for the Option Shares pursuant to Section 5(b)
hereof; (iv) the date upon which the Optionee desires to consummate the
purchase of the Option Shares (which date must be prior to the termination
of the Option and no later than thirty (30) days from the delivery of such
Exercise Notice); and, (v) any representations of the Optionee required
under Section 11 hereof. If the Option is exercised by any person other
than the Optionee (to the extent permitted hereunder or under the Plan),
then the Exercise Notice shall be accompanied by evidence to the
satisfaction of the Company that such person has the legal right to
exercise the Option. The Exercise Notice shall be accompanied by payment of
the full amount of the aggregate Exercise Price due for the Option Shares
being purchased and appropriate withholding taxes. The Option may only be
exercised with respect to a whole number of shares.
(b) Payment of the Option Price for the Option Shares shall be made:
(i) in cash or by personal or certified check; (ii) by delivery of stock
certificates (in negotiable form) representing shares of Common Stock that
have been owned of record by the Optionee for at least six (6) months prior
to the date of exercise that have a Fair Market Value on the date of
exercise equal to the product of (A) the number of Option Shares,
multiplied by (B) the Exercise Price; (iii) a combination of either of the
methods set
A-2
forth in clauses (i) and (ii) above; (iv) (A) by arrangements which are
acceptable to the Committee and as permitted by applicable law whereby the
Optionee relinquishes a portion of the Option to the extent that it is
vested, or (B) in compliance with any other cashless exercise program
authorized by the Committee for use in connection with the Plan at the time
of such exercise; or (v) such other consideration as shall be acceptable to
the Committee as evidenced by its written authorization. Notwithstanding
the foregoing, the Company may from time to time change (or provide
alternatives to) the method of exercise of the Option by notice to the
Optionee, it being understood that from and after such notice the Optionee
will be bound by the method (or alternatives) specified in any such notice.
(c) As promptly as is feasible after the exercise of the Option, a
certificate for the Option Shares issuable on the exercise of the Option
shall be delivered to Optionee or to Optionee's personal representative,
heir or legatee; provided, however, that no certificates for Option Shares
will be so delivered until (i) appropriate arrangements have been made with
the Company for the withholding of any taxes which may be due with respect
to such Option Shares; (ii) the Option Price has been paid in full; (iii)
in the opinion of the Company's counsel, all applicable federal and state
laws and regulations have been complied with and (iv) if the Common Stock
is at the time listed on any stock exchange, until the Option Shares to be
delivered have been listed or authorized to be listed on such exchange upon
official notice of issuance. The Committee may condition delivery of
certificates for Option Shares upon the prior receipt from the Optionee of
any undertakings which it may determine are required to assure that the
certificates are being issued in compliance with federal and state
securities laws.
6. CONFIDENTIALITY. As a material inducement to the Company to grant
this Option and to enter into this Agreement, the Optionee hereby expressly
agrees to be bound by the following covenants, terms and conditions:
(a) During the course of the Optionee's relationship with the
Company or any of its affiliates, the Optionee has had, and will have,
access to Confidential Information relating to the Company and its
affiliates and parties with whom they may enter into transactions.
During the term of the Optionee's relationship with one or more of the
Company and its affiliates and thereafter, the Optionee agrees to keep
secret and retain in strictest confidence all of such Confidential
Information, and will not disclose, disseminate or use such information
for the Optionee's own advantage or for the advantage of any other
person or entity other than the Company or its Corporate Affiliates in
accordance with the terms of the Optionee's employment or relationship
with the Company. In the event disclosure of any such Confidential
Information is required or purportedly required by law, the Optionee
will provide the Company with prompt notice of any such requirement so
that the Company or its affiliates may seek an appropriate protective
order prior to disclosure.
(b) As requested by the Company from time to time and upon the
termination of the Optionee's employment with the Company for any
reason, the Optionee shall promptly deliver to the Company all copies
and embodiments, in whatever form, of all Confidential Information in
the Optionee's possession or within his control (including, but not
limited to, written records, notes, photographs, manuals, notebooks,
documentation, program listings, flow charts, magnetic media, disks,
diskettes, tapes and all other materials containing any Confidential
Information) irrespective of the location or form of such material and,
if requested by the Company, shall provide the Company with written
confirmation that all such materials have been delivered to the Company.
(c) The Optionee acknowledges that in the event the Optionee
violates any provisions of this Section 6, in addition to its other
rights and remedies, the Company shall be entitled to injunctive relief
without the necessity of proving actual damages. The Optionee further
acknowledges that if any provision of this Section 6 is held to be
unenforceable, the court making such holding shall have the power to
modify such provision and in its modified form such provision shall be
enforced.
(d) The Optionee acknowledges and agrees that the provisions of
this Section 6 are in addition to, and not in lieu of, any
confidentiality obligations which the Optionee may have with respect to
the Company and/or its affiliates, whether by agreement, fiduciary
obligation or otherwise and that the grant and exercisability of the
Option contemplated by this Agreement are expressly made
A-3
contingent on the Optionee's compliance with the provisions of this
Section 6. Without in any way limiting the provisions of this Section 6,
the Optionee further acknowledges and agrees that the provisions of this
Section 6 shall remain applicable in accordance with their terms after
the termination or cessation of employment with the Company, whether the
Optionee's termination or cessation of employment or service is
voluntary or involuntary.
7. NO EMPLOYMENT OR SERVICE RIGHTS. Nothing in this Agreement, shall
give the Optionee any right to continue in the employment or service of the
Company or any affiliate of the Company, or interfere in any way with the
right of the Company or any affiliate of the Company to terminate the
employment or service of the Optionee.
8. TRANSFER AND ASSIGNMENT. Except as provided in Paragraph 12 of the
Plan, no right or benefit under the Plan or this Agreement shall be subject
to anticipation, alienation, transfer, sale, assignment, pledge,
encumbrance or charge, whether voluntary, involuntary, direct or indirect,
by operation of law or otherwise, including, without limitation, a change
in beneficial interest of any trust and a change in ownership of a
corporation or partnership, but not including a change of legal and
beneficial title of a right or benefit resulting from the death of any
Optionee or the spouse of any Optionee (any such proscribed transaction
hereinafter a "DISPOSITION"). Any attempted Disposition will be null and
void unless approved in writing by the Committee. No right or benefit
hereunder shall in any manner be liable for or subject to any debts,
contracts, liabilities or torts of any Optionee or other person entitled to
such benefits.
9. NO STOCKHOLDER RIGHTS. The Optionee shall have no rights as a
stockholder of the Company with respect to any Option Shares unless and
until certificates evidencing such Option Shares shall have been issued by
the Company to the Optionee. Until such time, the Optionee shall not be
entitled to dividends or distributions in respect of any Option Shares or
to vote such shares on any matter submitted to the stockholders of the
Company. In addition, except as to such adjustments that from time to time
be made by the Company or the Committee in accordance with Section 4(c) of
the Plan, no adjustment shall be made or required to be made in respect of
dividends (ordinary or extraordinary, whether in cash, securities or any
other property) or distributions paid or made by the Company or any other
rights granted in respect of any Option Shares for which the record date
for such payment, distribution or grant is prior to the date upon which
certificates evidencing such Option Shares shall have been issued by the
Company.
10. WITHHOLDING TAXES. The Company may make such provisions as it may
deem appropriate for the withholding of any taxes that it determines is
required in connection with the Option granted pursuant hereto or the
issuance of any Option Shares.
11. SECURITIES LAWS.
(a) The Company may, but shall not be obligated to, register or
qualify the sale of the Option Shares under the Securities Act of 1933, as
amended ("'33 ACT") or any other applicable law.
(b) Unless at the time of exercise of the Option there shall be, in
the opinion of counsel for the Company, a valid and effective registration
statement under the '33 Act and appropriate qualification and registration
under applicable state securities laws relating to Option Shares being
acquired pursuant to the Option or an applicable exemption therefrom shall
apply, the Optionee shall be required, upon exercise of the Option, to give
to the Company a written representation, in a form reasonably satisfactory
to the Company, that he or she is acquiring the Option Shares for his or
her own account for investment, and not with a view to, or for sale in
connection with, the resale or distribution of any such shares. The
Optionee shall be further required to agree that he or she will not sell or
transfer any Option Shares acquired pursuant to exercise of the Option
until he or she provides the Company's counsel with an opinion of counsel
satisfactory to the Company to the effect that such proposed sale or
transfer will not result in a violation of the '33 Act or any applicable
state securities law, or a registration statement covering the sale or
transfer of the shares has been declared effective by the Securities and
Exchange Commission or appropriate state governmental authority, or he or
she obtains a no-action letter from the
A-4
Securities and Exchange Commission or appropriate state governmental
authority with respect to the proposed transfer.
(c) Stock certificates representing Option Shares acquired upon the
exercise of the Option that have not been registered under the '33 Act
shall bear the following legend (in addition to any other legend required
by law):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAW OF ANY
STATE. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH THOSE LAWS OR AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY
THAT SUCH SALE, OFFER FOR SALE, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION DOES NOT VIOLATE THE PROVISIONS OF SUCH LAWS.
If in the opinion of the Company and its counsel, any legend placed on
a stock certificate representing Option Shares sold under this Agreement is
no longer required, the holder of such a certificate shall be entitled to
exchange such certificate for a certificate representing the same number of
Option Shares but without such legend.
(d) The Committee may from time to time impose any conditions on the
exercise of the Option as it deems necessary or advisable to ensure that
all rights granted under the Plan satisfy the requirements of Rule 16b-3
under the Securities Exchange Act of 1934, as amended, or any successor
rule. Such conditions may include, without limitation, the partial or
complete suspension of the right to exercise the Option.
12. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "AFFILIATE" means an affiliate of the Company within the
meaning of Rule 405 under the '33 Act.
(b) "CAUSE" shall mean termination resulting from (i) the
continuing and material failure by the Optionee to fulfill the
Optionee's duties in his employment with the Company or willful
misconduct or gross neglect in the performance of such duties, (ii) the
material breach of this Agreement by the Optionee, (iii) committing
fraud, misappropriation or embezzlement in the performance of the
Optionee's duties in his employment with the Company or (iv) the
Optionee's commission of any felony for which the Optionee is convicted.
The Committee shall have the power to determine what constitutes a
termination for Cause and the date upon which such termination for Cause
occurs. Any such determination shall be final, conclusive and binding
upon the Optionee.
(c) "CORPORATE AFFILIATE" means Zapata or any of its subsidiaries.
(d) "CONFIDENTIAL INFORMATION" means information or material
proprietary to the Company or its Corporate Affiliates or designated as
Confidential Information by them and not generally known by non-Company
or non-Corporate Affiliate personnel, which the Optionee develops, or of
which Optionee obtains knowledge, or to which the Optionee may obtain
access, through or as a result of, the Optionee's relationship with the
Company or its Corporate Affiliates. Confidential Information includes,
but is not limited to, the following types of information and other
information of a similar nature (whether or not reduced to writing): any
facts, opinions, conclusions, projections, data, information, trade
secrets or know-how relating to any research project, work in process,
future development, engineering, manufacturing, marketing, financial or
personnel matter relating to the Company or its affiliates, their
present or future products, technology, sales, customers, employees,
investors, prospects, markets or business. Confidential Information also
includes any information described above which the Company or its
Corporate Affiliates obtain from other entities and which they treat as
proprietary or designate as Confidential Information, whether or not
owned or
A-5
developed by the Company or its Corporate Affiliates. Notwithstanding
the foregoing, information publicly known that is generally employed by
the trade at or after the time Optionee first learns of such
information, or generic information or knowledge which associate would
have learned in the course of similar employment or work elsewhere in
the trade, shall not be deemed part of the Confidential Information.
(e) "DISABILITY" means the inability of the Optionee to perform the
customary duties of the Optionee's employment or other service for the
Company or an affiliate of the Company by reason of a physical or mental
incapacity which is expected to result in death or be of indefinite
duration as determined by the Committee, in its sole and absolute
discretion.
(f) "EMPLOYMENT WITH THE COMPANY" shall mean and include employment
by Zapata or any other affiliate of the Company.
(f) "OPTIONEE" is used hereunder under circumstances applicable to
any other person or persons to whom an Award may be assigned in
accordance with the provisions of Section 8, the term "Optionee" shall
be deemed to include such person or persons, including any legal
representatives and/or legatees under a will. References to the
masculine gender herein also include the feminine gender for all
purposes.
13. MISCELLANEOUS.
(a) NOTICE. Unless otherwise provided herein, any notice or other
communication hereunder shall be in writing and shall be given by
registered or certified mail. All notices of the exercise by the Optionee
of the Option granted pursuant hereto shall be directed to Zap.Com
Corporation, Attention: Secretary or Chief Financial Officer, at the
Company's current address. Any notice given by the Company to the Optionee
shall be directed to him at the address set forth beneath his signature at
the end of this Agreement. The Company shall be under no obligation
whatsoever to advise or notify the Optionee of the existence, maturity or
termination of any rights hereunder and the Optionee shall be deemed to
have familiarized himself with all matters contained herein and in the Plan
which may affect any of the Optionee's rights or privileges hereunder.
(b) PLAN CONTROLS. This Agreement is subject to the Plan (as it may
be amended or modified from time to time to the extent permitted therein),
a copy of which has been furnished to the Optionee and for which the
Optionee acknowledges receipt. The terms and provisions of the Plan
(including any subsequent amendments thereto) are incorporated by
referenced herein. In the event of a conflict between any term or provision
contained herein and a term or provision of the Plan, the applicable terms
and provisions of the Plan shall govern and prevail.
(c) ADMINISTRATION. The Committee authorized to administer the Plan
will have full power and authority to interpret and apply the provisions of
this Agreement and act on behalf of the Company, and the decision of the
Committee as to any matter arising under this Agreement shall be final,
binding and conclusive as to all persons.
(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
(e) ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the
Plan) constitutes the entire agreement between the parties with respect to
the subject matter hereof and controls and supersedes any prior
understandings, agreements or representations by or between the parties,
written or oral with respect to its subject matter and may not be modified
except by written instrument executed by the parties. The Optionee has not
relied on any representation not set forth in this Agreement.
(f) APPLICABLE LAW. Except with respect to those terms related to the
issuance of stock governed by the corporate law of the State of Nevada,
this Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
A-6
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above.
ZAP.COM CORPORATION
By:
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Name:
Title:
OPTIONEE:
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Name:
Address:
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A-7
EXHIBIT A
WAIVER AND RELEASE
This WAIVER AND RELEASE is made the day of , 200 by
, residing at (hereinafter "EMPLOYEE"), for the benefit, and
in favor, of ZAP.COM CORPORATION, with offices located at 100 Meridian Centre,
Suite 350, Rochester, New York 14618 (hereinafter "ZAP.COM"), together with
parents, subsidiaries and affiliates, and the officers, directors, agents,
employees, successors and assigns of Zap.Com and each of the other
aforementioned entities (hereinafter Zap.Com and the other aforementioned
persons and entities to be referred to individually and collectively as the
"COMPANY").
WHEREAS, Employee and Company are parties to a certain Stock Option
Agreement dated as of , (the "OPTION");
WHEREAS, Employee and the Company mutually agree that Employee's employment
with the Company terminated effective , 200 ; and
WHEREAS, Section 3(b) of the Option expressly provides that Employee's
right to exercise the Option following Employee's termination of employment is
conditioned upon Employee executing this Waiver and Release and not revoking
within any revocation period that may be applicable thereto;
NOW, THEREFORE, in consideration of the Company continuing the Option
following Employee's termination, and other good and valuable consideration
received, receipt of which is accepted and acknowledged, Employee agrees as
follows:
1. Employee hereby waives, releases and forever discharges the Company
from and against any and all claims, causes of action, judgments, orders,
assessments, damages, losses, injuries, proceedings, interest, penalties,
fines, expenses, costs (including reasonable attorneys' fees and litigation
costs) and suits of any kind, in law or equity, which Employee, his/her
heirs, executors, legal representatives or assigns ever had, now have, or
hereafter may have against the Company by reason of any matter from the
beginning of the world to the date of this Waiver and Release, including,
but not limited to:
(a) any and all suits, proceedings, causes of action, damages,
injuries, salary, benefits, costs or claims arising out of or in
relation to Employee's employment with, or termination of employment
from the Company, including, but not limited to, any claims of illegal
discrimination or retaliation against you based on your age, sex, race,
religion, national origin, citizenship or disability; and
(b) any and all suits, proceedings, causes of action, damages,
injuries, costs or claims for violation of federal, state or local
constitutional, statutory or regulatory provisions affecting employment
rights and/or relationships including, but not limited to, the New York
State Executive Law, the Civil Rights Acts of 1964 and 1991, the Equal
Pay Act of 1963, the Age Discrimination in Employment Act of 1967
(ADEA), the Rehabilitation Act of 1973, the Employee Retirement Income
Security Act (ERISA), the Americans with Disabilities Act (ADA) and
Executive Order 11246, as each may have been amended or modified;
PROVIDED, HOWEVER, the Employee shall not and does not release the
Company from its right to exercise the Option with respect to the vested
portion thereof as specifically provided in the Option.
2. Employee represents and agrees that his/her employment with the
Company was terminated effective , 200 , and he/she waives any
right to hereafter seek or apply for employment with the Company.
3. Employee represents and agrees that he/she has not disclosed, and
will not at anytime disclose, to any person, firm, corporation or entity
any confidential or proprietary information concerning the business affairs
of the Company which he/she acquired in the course of, or as incident to,
his/her employment, for his/her own benefit, the benefit of any other
person, firm, corporation or entity, or to the detriment or intended or
probable detriment of the Company. Employee agrees that all papers,
documents and equipment which have come into the possession of Employee in
the course of business remain the property of the Company and/or the
Company, and shall not be disclosed, disseminated, taken, removed from the
Company's premises or copied without the express written permission of the
Company.
Employee further agrees that he/she will return on or before ,
200 , all records and property in his/her possession or custody belonging
to or relating in any way to the affairs of the Company.
4. Employee understands and agrees that this Waiver and Release and
the actions and matters settled and provided for herein, shall not
constitute (and may not be construed as) an admission of liability in any
respect by the Company, and Employee agrees to make no such representations
to any person or entity.
5. Employee represents and agrees that he/she is entering into this
Waiver and Release freely and voluntarily, and with a complete
understanding of its terms and consequences. Employee further represents
and agrees that the Company encouraged him/her to review this Waiver and
Release with his/her own private attorney prior to his/her execution hereof
and that he/she has had the opportunity to thoroughly discuss all aspects
of this Waiver and Release with a private attorney of his/her own choosing.
6. Employee represents and agrees that the Company offered him/her a
period of twenty-one (21) days from the date Employee first received this
Waiver and Release from the Company to review and consider this Waiver and
Release. Employee further represents and agrees that the Company advised
him/her that he/she has seven (7) days from the date of execution of this
Waiver and Release to revoke this Waiver and Release. Employee further
understands and agrees that no vested options under the Option Agreement
shall be exercisable until the aforementioned seven day revocation period
has expired, and provided that Employee has not revoked this Waiver and
Release as previously described.
7. Employee understands and acknowledges that if any legal action is
instituted by or brought on behalf of Employee against Company, Employee
agrees to pay back to Company all monies received as well as any other
thing of value received under this Waiver and Release (including
voluntarily surrendering any Option Shares to the Company that he may have
received upon exercise of the Option or the equivalent value thereof) and
to pay Company its costs and attorneys' fees in such action.
If in any legal action the Release set forth in Paragraph 1 of the
Waiver and Release is found to be unenforceable for any reason, then:
(a) this Waiver and Release shall be null and void from today on;
and
(b) any monetary benefit received by the Employee under the
Settlement after today and not previously returned to the Company under
this paragraph, shall be treated as an overpayment and shall have to be
repaid to the Company with interest at the rate of 9%.
This paragraph 7 does not apply to any thing of value given to
Employee for which Employee actually performed services and by law Employee
is entitled to receive.
8. Employee agrees to pay any collection or legal fees incurred by
Company to recover any overpayment or to enforce any portion of this Waiver
and Release.
9. Employee represents and agrees that he/she has read the entire
contents of this Waiver and Release and that this Waiver and Release
represents the entire understanding and agreement between Employee and the
Company, except that it does not replace or supersede any covenant not to
solicit, covenant not to compete or confidentiality agreement previously
signed by Employee or the Option in any respect. Employee agrees that no
representations or agreements have been made with respect to these matters
other than those contained in this Waiver and Release.
10. Employee agrees that, if any of the provisions of this Waiver and
Release shall be deemed illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall not invalidate or render unenforceable
the entire Waiver and Release, but rather the entire Waiver and Release
shall be construed as if not containing the particular illegal, invalid or
unenforceable provision or provisions, and the rights and obligations of
Employee and the Company shall be construed and enforced accordingly.
Further, under such circumstances, the Company and Employee agree to
exercise their best efforts to carry out the original intention of this
Waiver and Release and shall make such amendments and take such steps as
may be necessary to ensure the continued validity of this Waiver and
Release.
Dated:
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EMPLOYEE
STATE OF NEW YORK )
COUNTY OF )ss:
On the day of in the year 200 before me, the undersigned, a
Notary Public in and for said state, personally appeared , personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual(s) whose name(s) is (are) subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.
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Notary Public
EXHIBIT B
NOTICE OF EXERCISE OF STOCK OPTION
To: Zap.Com Corporation
The undersigned is a holder of a stock option (the "OPTION") to purchase
shares of Zap.Com Corporation (the "CORPORATION") Common Stock, $.001 par value
(the "COMMON STOCK"), issued pursuant to a Zap.Com Corporation Stock Option
Agreement dated as of (the "AGREEMENT"). A copy of the Agreement
evidencing such Option is annexed hereto.
The undersigned hereby elects to purchase shares of Common Stock
pursuant to the terms of such Option (the "OPTION SHARES"), and tenders herewith
payment in full in the amount of $ per share, for a total purchase price of
$ , with the payment of the purchase price being made in the form of
, pursuant to Section 5(b) of the Agreement. The undersigned wishes to
consummate the purchase of the Option Shares by or before .
In exercising his Option, the undersigned hereby confirms and acknowledges
that he is acquiring Option Shares for his own account for investment and not
with a view to, or for sale in connection with, the resale or distribution of
any such shares. The undersigned also confirms and acknowledges that he will not
sell or transfer any Option Shares acquired pursuant to the exercise of the
Option until he requests and receives an opinion of the Corporation's counsel to
the effect that such proposed sale or transfer will not result in a violation of
the Securities Act of 1933, as amended, or any applicable state securities law,
or a registration statement covering the sale or transfer of the Option Shares
has been declared effective by the Securities and Exchange Commission or
appropriate state governmental authority, or he obtains a no-action letter from
the Securities and Exchange Commission or appropriate state governmental
authority with respect to the proposed transfer.
The undersigned acknowledges and agrees that this purported exercise of the
Option is conditioned on, and subject to, (a) any compliance with requirements
of applicable federal and state securities laws deemed necessary by the Company,
(b) to the undersigned's satisfaction of all federal, state or local income and
employment tax withholding requirements applicable to this exercise, (c) to the
undersigned's execution and delivery of a Waiver and Release in the form of
Exhibit A to the Agreement and the expiration of applicable revocation period in
the event of the undersigned's termination of employment and (d) if the exercise
is made in connection with a Change of Control transaction, the vesting of the
Option Shares may be conditioned upon the consummation of the Change of Control
if the Committee has provided for this condition in its acceleration of the
Option.
Please issue a certificate or certificates representing said Option Shares
in the name of the undersigned or in such other name as is specified below. If
the Option Shares are being issued to any person other than the Optionee,
evidence of the right of such person to exercise the Option has been presented
to the Corporation and has been deemed satisfactory:
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Name
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Address:
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Social Security Number
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Date: