UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant toTo Section 14(a) of the Securities
Exchange Act of 1934
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ZAP
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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ZAP
501 Fourth Street
Santa Rosa, California 95401
June 15, 2007
Dear Shareholder:
You are cordially invited to attend the 2007 Annual Meeting of Shareholders of ZAP, which will be held at 2:00 p.m. pacific standard time on Sunday July 29, 2007 at the _______________________ZAP Warehouse located at, 806 Donahue Street, between 8th and 9th street, Santa Rosa, California 95401.
The Notice of Annual Meeting of Shareholders and the Proxy Statement that follow describe the business to be conducted at the meeting. We will also report on matters of current interest to our shareholders.
The Annual Report for the year ended December 31, 2006 and the Quarterly Report for the period ended March 31, 2007 are enclosed, and I hope you will read them carefully. Feel free to forward to us any questions you may have if you are unable to be present at the meeting. Our Internet website, located at http://www.zapworld.com, is a convenient way to communicate with us.
Also enclosed is a proxy authorizing two of our officers to vote your shares for you if you do not wish to attend the meeting in person. Whether or not you are able to attend the meeting, I urge you to complete your proxy and return it to our transfer agent, Continental Stock Transfer & Trust Company, in the enclosed addressed, postage-paid envelope, as a quorum of the shareholders must be present at the meeting, either in person or by proxy, for the conduct of business.
| Sincerely, |
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| Renay Cude |
Corporate Secretary |
ZAP
501 Fourth Street
Santa Rosa, California 95401
NOTICE OF SPECIALANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON [__________], 2006To Be Held July 29, 2007
_______________________June 15, 2007
To Our Shareholders:the Shareholders of ZAP:
Notice is hereby given that a special meetingThe 2007 Annual Meeting of shareholdersthe Shareholders of ZAP (the “Company”) will be held on Sunday July 29, 2007 at [________] located2:00 p.m. pacific standard time at, [__________],the ZAP Warehouse at 806 Donahue Street, between 8th and 9th street Santa Rosa, California [______________] on [____________], 2006, at [____] [_].m., P.S.T., for95401.
The purpose of the meeting is to consider and take action upon the following purposes:matters:
| 1. | Election of four directors. |
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| 2. | Approval of amendment to the Company’s Amended and Restated Articles of Incorporation to increase authorized shares of common stock. |
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| 3. | Ratification of Odenberg, Ullakko, Muranishi & Co. LLP as our independent accountants for the year ending December 31, 2007. |
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| 4. | Such other business as may properly be brought before the meeting and any postponements, continuations, or adjournments thereof. |
1.to approve the issuance and sale of up to 20,000,000 shares of common stock and up to 6,000,000 securities exercisable or convertible into shares of common stock at below-market prices, as more fully described in the accompanying proxy statement; and
2.to act upon such other business as may properly come before the special meeting or any postponement or adjournment thereof.
Our board of directors is not aware of any other business to come before the special meeting.
ShareholdersOnly shareholders of record as of the close of business on [____________], 2006May 29, 2007 are entitled to the notice of and to vote their sharesat the meeting or at any postponements, continuations or adjournments thereof. This notice, the proxy and Proxy Statement enclosed herewith are sent to you by order of our Board of Directors.
Our bylaws require that the holders of a majority of the common stock issued and outstanding and entitled to vote be present or represented at the meeting by proxy orin order to constitute a quorum for the transaction of business. It is important that your stock be represented at the special meeting.meeting regardless of the number of shares you hold. Whether or not you are able to be present in person, please sign and return promptly the enclosed proxy in the accompanying envelope, which requires no postage if mailed in the United States.
THE ENCLOSED PROXY IS BEING SOLICITED BY OUR BOARD OF DIRECTORS. OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSED ITEMS. YOUR VOTE IS IMPORTANT.
| By Order of the Board of Directors, |
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| Renay Cude |
| Corporate Secretary |
Santa Rosa, California
[____________], 2006
YOUR VOTE IS IMPORTANT
IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE SPECIAL MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
TABLE OF CONTENTS
SPECIAL MEETING OF SHAREHOLDERS
OF
ZAP
PROXY STATEMENT
Our boardThe enclosed proxy is solicited by the Board of directors solicits the accompanying proxyDirectors of ZAP (the “Board”) for use at the 2007 Annual Meeting of the Shareholders (the “Annual Meeting”) of ZAP, a special meeting of shareholdersCalifornia corporation (the “Special Meeting”“Company”) to be held on [____________], 2006,Sunday, July 29, 2007 at [____] [ ].m., P.S.T,2:00 p.m. pacific standard time at [________]The ZAP Warehouse located at [____________], Santa Rosa, California [_______]806 Donahue Street, between eight and at any adjournment or postponement thereof.
The approximate date that this proxy statement and the enclosed form of proxy are first being sent or given to our shareholders is [____________], 2006. Our corporate headquarters is located at 501 Fourth Street,ninth street, Santa Rosa, California 95401, and all postponements, continuations or adjournments thereof. This Proxy Statement and the enclosed proxy were first furnished to our telephone number is (707) 525-8658.shareholders on or about June 15, 2007. In this Proxy Statement, we use the terms “Company,” “ZAP,” “we,” “our,” and “us” to refer to ZAP.
At the Special Meeting, shareholders will vote on (i) the issuance and saleMay 29, 2007 (the “Record Date”) consisted of up to 20,000,00045,908,560 shares of common stock and up to 6,000,000 securities exercisable or convertible into shares of common stock at below-market prices, as more fully described in Proposal 1 below; and (ii) such other business as may properly come before the Special Meeting or any postponement or adjournment thereof. Our board of directors is not aware of any matters that will be brought before the Special Meeting, other than procedural matters, that are not referred to in the enclosed notice of the Special Meeting.
We require additional capital to expand our current operations and to capitalize on business opportunities associated with sales of our automobiles and consumer transportation products. The capital will be used primarily: (i) to purchase XebraTM vehicles, both sedan and utility truck models, from our Chinese partner to fulfill the increasing demand for 100% electric vehicles in the United States, and (ii) to continue building our dealer network and expanding our marketing initiatives. We will also use the proceeds to purchase consumer product inventory for the continued roll-out of new products, to add qualified sales and professional staff to execute on our business plan, and to expand our efforts in the research and development of advanced technology vehicles, such as the ethanol-driven OBVIO! automobiles and other fuel efficient vehicles.
stock. Only shareholders of record at the close of business on the record date, [____________], 2006,Record Date are entitled to receive notice of the Special Meeting and to vote shares of common stock held as of the record date at the SpecialAnnual Meeting. Each outstanding share of common stock entitles its holderis entitled to cast one vote on each matter to be voted upon.vote.
Please note that if you hold shares in “street name” (that is, through a broker or other nominee) and plan to attend and voteThe presence in person at the Special Meeting, you will need to bring evidence of your stock ownership, such as a copy of a brokerage statement, reflecting your stock ownership as of the record date.
Holdersor by proxy of a majority of theour outstanding shares of common stock must be present or representedentitled to vote at the SpecialAnnual Meeting in orderis necessary to have a quorum. Abstentions will be treated as shares present for the purpose of determining the presence ofprovide a quorum for the transaction of business at the Special Meeting. Brokers with no discretionmeeting. Under California law, abstentions and broker non-votes shall be counted for purposes of determining a quorum, but will not be counted for or against the proposals or for or against any of the directors. We do not consider abstentions or broker non-votes in calculating the number of votes cast. The term broker non-vote refers to shares held by brokers or nominees who have not received instructions on how to vote from the beneficial owners or persons entitled to vote if the broker or nominee indicates on the proxy that the broker or nominee does not have discretionary power to vote on the proposalmatter.
Your vote is very important. Whether or not you plan to attend the meeting in person, please sign and promptly return the enclosed proxy card, which requires no postage if mailed within the United States. All signed and returned proxies will not be counted towards quorum. Ifestablishing a quorum for the persons present ormeeting, regardless of how the shares are voted.
Shares represented by proxy at the Special Meeting constitute the holders of less than a majority of the outstanding shares of common stock as of the record date, the Special Meeting may be adjourned to a subsequent date for the purpose of obtaining a quorum.
If you complete and properly sign the accompanying proxy card and return it to us, it will be voted as directed. If you are a shareholder of record and you attendin accordance with your instructions. You may specify your choice by marking the Special Meeting, you may deliver your completedappropriate box on the proxy card in person. “Street name” shareholders who wish to vote at the Special Meeting will need to obtain a proxy card from the institution that holds their shares as a holder of record.card. If your proxy card is signed and returned by you or your broker or other nominee without specifying choices, your shares will be voted “FOR” Proposal No. 1.
Yes. Even after you have submitted your signedholders on the proxy youdeem advisable on all matters as may properly come before the meeting. You may revoke your proxy and change your vote at any time beforeprior to the proxy is exercisedAnnual Meeting by filing with our Corporate Secretary either a notice of revocation or a duly executedsubmitting another proxy bearing a later date. The powersdate, by giving written notice of revocation to us at our address indicated above or by voting in person at the meeting. Any notice of revocation sent to us must include your name and must be received prior to the Annual Meeting to be effective. Votes cast by proxy or in person at the meeting will be counted by the persons we appoint to act as election inspectors for the Annual Meeting.
No shareholder of the proxy holders will be suspended if you attend the Special Meeting in person and so request, although attendance at the Special Meeting will not by itself revoke a previously granted proxy.
Our board of directors unanimously recommends that shareholders vote for Proposal No. 1.
If your proxy card is properly executed and received in time for voting, and not revoked, such proxy card will be voted in accordance with your instructions marked on the proxy card. In the absence of any instructions or directions to the contrary, persons named in the enclosed proxy will vote all shares of common stock for Proposal No. 1.
The board does not know of any other matters other than the proposal set forth above that may be brought before the Special Meeting or any postponement or adjournment thereof. In the event that any other matters should come before the Special Meeting, the persons named in the enclosed proxy will have discretionary authority to vote all proxies not marked to the contrary with respect to such matters in accordance with their best judgment.
Per NYSE Arca Rule 5.3(d), the proposal to approve the issuance and sale of up to 20,000,000 shares of common stock and up to 6,000,000 securities exercisable or convertible into shares of common stock at below-market prices, referred to as Proposal No. 1, requires shareholder approval. Proposal No. 1 requires the approval of the affirmative vote of a majority of the shares of common stock present or represented and voting at the Special Meeting. Abstentions are not considered shares voting on Proposal No. 1, but can have the effect of preventing approval of Proposal No. 1 where the number of affirmative votes, although a majority of the votes cast for Proposal No. 1, does not constitute a majority of the required quorum.
A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. “Broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum if the broker has the discretion to vote on at least one proposal.
Under NYSE Arca Rule 9.4, discretionary broker voting is generally prohibited on all proposals. However, the rule allows a holder of record, such as a broker, to vote on a proposal without instruction from the beneficial owner if such person has discretion to vote on the proposal pursuant to the rules of another national securities exchange to which such record holder is a member.
Broker Is a Member of the NYSE Arca and another national securities exchange
A broker who is a member of both the NYSE Arca and another national securities exchange will have discretion to vote on Proposal No. 1. Therefore, a broker that does not receive specific instructions from the beneficial owner will have discretion to vote on Proposal No. 1. Given such discretion, a broker who returns a proxy signed, but with no vote indicated, will have its vote treated as a vote “FOR” Proposal No. 1.
Broker is Only a Member of the NYSE Arca
As NYSE Arca Rule 9.4 generally prohibits discretionary broker voting unless the broker has dual responsibilities on another exchange, a broker that is only a member of the NYSE Arca will not have discretion to vote on Proposal No. 1 without explicit directions from the beneficial owner. Where the broker does not receive instructions from the beneficial owner, those shares will not be counted towards quorum or voted towards the proposal as it will be a broker non-vote where the broker did not have discretion to vote on any proposal.
We will pay the cost of the proxy solicitation, including the cost of preparing, printing and mailing the notice of the Special Meeting, proxy statement and enclosed proxy card. In addition to the use of mail, our employees may solicit proxies personally and by telephone. Our employees will receive no compensation for soliciting proxies other than their regular salaries. We may request banks, brokers and other custodians, nominees and fiduciaries to forward copies of the proxy materials to beneficial owners of our common stock and to request authority for the execution of proxies. We may reimburse such persons for their expenses incurred in connection with these activities.
No shareholder,Company, whether abstaining, voting “FOR” or “AGAINST” Proposal No. 1the director nominees or “FOR” or “AGAINST” the amendment to the Articles of Incorporation and “FOR” or “AGAINST” ratification of the independent accountants will be entitled to appraisal rights or the right to receive cash for shares under California law or otherwise. At the date this proxy statementProxy Statement went to press, we did not know of any matters to be raised at the SpecialAnnual Meeting other than those referred to in Proposal No. 1.this Proxy Statement.
The voting requirements for each proposal discussed in this Proxy Statement are as follows:
PROPOSAL | | VOTE REQUIRED |
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| Election of Directors | | Plurality |
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| Approval of Amendment to the Articles of Incorporation to Increase Authorized Common Stock | | Majority of Shares Outstanding |
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| Ratification of Independent Accountant | | Majority of votes cast at Annual Meeting |
____________________
Election of Directors
The election of each director nominee requires the affirmative vote of a plurality of the votes cast in the election of directors. The director nominee will be elected if the votes cast favoring the election of the director exceed the votes cast opposing such an action. You may vote “FOR” or “AGAINST” with respect to the election of directors. Only votes “FOR” are counted in determining whether a plurality has been cast in favor of a director. Votes “AGAINST,” abstentions and broker non-votes will have no effect on the election of directors. Brokers may have the authority to vote on this proposal when they have not received instructions from the beneficial owner.
Shareholders will have the right to vote their shares cumulatively. However, shareholders will not be entitled to cumulate votes unless the shareholder has given notice at the Annual Meeting prior to voting of his or her intention to cumulate votes. If any shareholder has given such notice, then all shareholders entitled to vote may cumulate their votes by giving one candidate a number of votes equal to the number of directors to be elected multiplied by the number of his or her shares or by distributing such votes on the same principle among any number of candidates. If no shareholder elects to use cumulative voting then the shareholders shall be allowed to cast one vote per share owned for each of the seven positions on the Board of Directors. Votes cast against a candidate or that are withheld shall have no effect.
Approval of Amendment to the Articles of Incorporation to Increase Authorized Common Stock
The affirmative vote of the holders of a majority of the outstanding shares of common stock will be required to approve the authorization of the Board of Directors to increase the authorized common stock by amendment of the Company’s Amended and Restated Articles of Incorporation. As a result, abstentions and broker non-votes, if any, will have the same effect as a vote against this proposal. Brokers may have the authority to vote on this proposal when they have not received instructions from the beneficial owner.
Ratification of Odenberg, Ullakko, Muranishi & Co. LLP as Independent Accountants
An affirmative vote of a majority of the votes cast at the Annual Meeting is required for ratification of Odenberg, Ullakko, Muranishi & Co. LLP as our independent accountants for the year ending December 31, 2007. For ratification, this proposal must be approved by a majority of the votes cast by persons present at the Annual Meeting or represented by proxy and entitled to vote on the proposal. An abstention from voting on this proposal will have the effect of a vote “AGAINST.” Brokers may have the authority to vote on this proposal when they have not received instructions from the beneficial owner.
ELECTION OF DIRECTORS
Our Board of Directors currently has five members. Each of these directors is standing for re-election, to hold office until the next Annual Meeting of Shareholders. Each nominee elected as a director will continue in office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or retirement. The principal occupation and certain other information about the nominees are set forth below.
The nominees are currently members of the Board and have indicated a willingness to serve as directors if selected. Our Board has no reason to believe that any director nominee will be unable to serve as a director or will become unavailable for any reason. If, at the time of the Annual Meeting, any director nominee becomes unavailable for any reason, the persons entitled to vote the proxy will vote, as such persons determine in their discretion, for such substituted nominee, if any.
Vote Required
The election of each director nominee requires the affirmative vote of a plurality of the votes cast in the election of directors. The director nominee will be elected if the votes cast favoring the election of the director exceed the votes cast opposing such an action. You may vote “FOR” or “AGAINST” with respect to the election of directors. Only votes “FOR” are counted in determining whether a plurality has been cast in favor of a director. Votes “AGAINST”, abstentions and broker non-votes will have no effect on the election of directors. Brokers may have the authority to vote on this proposal when they have not received instructions from the beneficial owner.
Shareholders will have the right to vote their shares cumulatively. However, shareholders will not be entitled to cumulate votes unless the shareholder has given notice at the Annual Meeting prior to voting of his or her intention to cumulate votes. If any shareholder has given such notice, then all shareholders entitled to vote may cumulate their votes by giving one candidate a number of votes equal to the number of directors to be elected multiplied by the number of his or her shares or by distributing such votes on the same principle among any number of candidates. If no shareholder elects to use cumulative voting then the shareholders shall be allowed to cast one vote per share owned for each of the seven positions on the Board of Directors. Votes cast against a candidate or that are withheld shall have no effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THESE NOMINEES AS DIRECTORS.
Directors
The following table sets forth certain information with respect to our director nominees, including the name and age of each nominee, his or her principal occupation and business experience, and the commencement of his or her term as a director.
Name and Age | | Principal Occupation or Employment During the Past Five Years; Other Directorships | | Director Since |
| Gary Starr (51) | | Mr. Starr co-founded ZAP in 1994, has been a director since the Company’s inception and served as Chief Executive Officer from 2000 to 2002. He became chairman of the Board of Directors in October 2002. Mr. Starr founded US Electricar’s electric vehicle operation in 1983. Mr. Starr has several publications: “Electric Cars: Your Guide to Clean Motoring”, “The Shocking Truth of Electric Cars,” and “The True Cost of Oil.” In addition, he has appeared on more than 300 radio and television shows including Larry King Live, The Today Show, Inside Edition, CNN Headline News, Prime Time Live, the CBS Evening News and the McNeil Lehrer News Hour as an authority in the field of electric vehicles. Mr. Starr has a Bachelor of Science Degree from the University of California, Davis in Environmental Consulting and Advocacy. He is a frequent lecturer on electric cars and has developed several industry inventions. | | 1994 |
| | Principal Occupation or Employment During the Past Five Years; Other Directorships | | Director Since |
| Steven Schneider (46) | | Mr. Schneider has been director and Chief Executive Officer of ZAP since October 26, 2002. Schneider has a 30-year career in the Automotive industry and a long-time interest in fun, fuel-efficient cars. He has served as ZAP’s CEO since 2002, when the company acquired Auto Distributors, Inc. and Voltage Vehicles, businesses he founded which specialized in the distribution of electric and alternative fuel vehicles including automobiles, motorcycles and bicycles. Schneider also founded the RAP Group, an automotive liquidator and reseller, which ZAP also acquired. He serves on the board of directors of Apollo Energy Systems, a developer of fuel cells and advanced batteries. He also serves as a director of Rotoblock Corporation, a public company focused on the continued development of the oscillating piston engine. He is an active member with various industry groups, including the Electric Drive Transportation Association in Washington, DC. , and is a member of the Bay Area Alliance of CEOs. He lectures frequently on industry topics at universities and other organizations. | | 2002 |
| Renay Cude (30) | | Ms. Cude was appointed Corporate Secretary in August 2002, and has been a director of the Company since October 26, 2002. Ms. Cude is the President of our subsidiary, Voltage Vehicles, where she works closely with corporate counsel in obtaining all the required licensing in the 50 states for the proper distribution of advanced technology vehicles. Ms. Cude is also the President of ZAP Manufacturing and ZAP Rentals. Prior to joining ZAP, from 1997 to 2002, Ms. Cude worked as a legal secretary for various law firms. Ms. Cude has over five years experience working in the bankruptcy field where she helped companies through the reorganization process. Ms. Cude holds an Associates Degree in General Education from Santa Rosa Junior College. | | 2002 |
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| Peter Scholl (60) | | Mr. Scholl is currently an independent engineering consultant and has been a director since July 2006. From 2003 to 2005, Mr. Scholl served as President of Rotoblock Inc. in Canada and Rotoblock Corporation, a Nevada corporation, in the development of Oscillating Piston Engine technology. He served as President of Unimont Inc., a real estate development firm, in Penticton, Canada from 2001 to 2003. From 1996 to 2000, Mr. Scholl worked on the development of water purification systems in Arizona. Mr. Scholl has a Bachelor’s of Science degree in Mechanical Engineering from the Institute of Technology in Biel, Switzerland. | | 2006 |
Compensation of Outside Directors
Starting in April 2006, all outside directors received $500 and a grant of $500 of common stock for attendance at each Board meeting and each committee meeting. Outside Directors are also reimbursed for out-of-pocket travel and other expenses incurred in attending Board and/or committee meetings. Prior to April 2006, we did not provide our outside directors with cash or other forms of compensation, although we did reimburse their out-of-pocket expenses. Each Outside Director also received 20,000 shares of common stock in December 2006 as an additional compensation incentive.
Corporate Governance Principles and Board Matters
ZAP is committed to having sound corporate governance principles and practices. ZAP’s primary corporate governance documents, including our Code of Ethics and Committee Charters, are available to the public on our website at http://www.zapworld.com. The following is a discussion of our current governance principles and practices.
Director Independence
The following director is independent directors as that term is defined under NASDAQ Rule 4200(a)(15):
Peter H. Scholl
Board Meetings
During 2006, our Board met or conferred by telephone 26 times. During 2006, all directors attended at least 75% of the aggregate of (i) the total number of meetings of the Board during 2006 and (ii) the total number of meetings held by all committees of the Board on which such director served in 2006. The Company does not have a policy with regard to attendance of directors at annual meetings, but encourages attendance of all meetings.
Committees of the Board
Audit Committee
The Board’s Audit Committee is comprised of Peter Scholl and Gary Starr and formerely Raymond Byrne, who resigned from the Board of Directors in May 2007. During 2006, the Audit Committee met four (4) times. All current members of the Audit Committee are financially literate and are able to read and understand fundamental financial statements, including a balance sheet, income statement and cash flow statement.
The Audit Committee assists the Board of Directors in its oversight of the quality and integrity of the accounting, auditing, and reporting practices of the Company. The Audit Committee’s role includes overseeing the work of the Company’s internal accounting and financial reporting and internal auditing processes and discussing with management the Company’s processes to manage business and financial risk, and for compliance with significant applicable legal, ethical, and regulatory requirements. The Audit Committee is responsible for the appointment, compensation, retention, and oversight of the independent auditor engaged to prepare or issue audit reports on the financial statements and internal control over financial reporting of the Company. The Audit Committee relies on the expertise and knowledge of management and the independent auditor in carrying out its oversight responsibilities. The Committee’s
specific responsibilities are delineated in the Audit Committee Charter. The Audit Committee Charter is available on the ZAP website at http://www.zapworld.com.
Compensation Committee
The Board���s Compensation Committee is comprised of Gary Starr and Peter Scholl. During 2006, the Compensation Committee met three (3) times. A copy of the Compensation Committee Charter is available on the ZAP website at http://www.zapworld.com. The Compensation Committee, among other things, advises the Board on all matters pertaining to compensation programs and policies, approves the compensation payable to each of the officers of the Company, reviews proposed compensation of executives as provided in the Company’s executive compensation plan and administers the Company’s stock option plans.
Corporate Governance and Nominating Committee
The Board’s Corporate Governance and Nominating Committee (the “Governance Committee”) is comprised of Peter Scholl and Gary Starr. During 2006, the Governance Committee met three (3) times. The Governance Committee has adopted a charter, which has been ratified and approved by the Board. A copy of the Governance Committee Charter is available on the ZAP website at http://www.zapworld.com.
The Governance Committee, among other things, identifies, evaluates and recommends individuals qualified to be directors of the Company. Members of the Board of Directors should have the highest professional and personal ethics and values. They should have broad experience at the policy-making level in business, government, education, technology or public interest. They should be able to provide insights and practical wisdom based on their experience and expertise. They should be committed to enhancing shareholder value and should have sufficient time to effectively carry out their duties. Their service on other Boards of public companies should be limited to a reasonable number.
The Governance Committee annually reviews the appropriate skills and characteristics required of Board members in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of the shareholders. In conducting this assessment, the committee considers diversity, age, skills, and such other factors as it deems appropriate given the current needs of the Board and the Company, to maintain a balance of knowledge, experience and capability.
Code of Ethics
The Board has adopted a Code of Ethics to provide guidance on maintaining the Company’s commitment to being honest and ethical in its business endeavors. The Code of Ethics covers a wide range of business practices, procedures and basic principles regarding corporate and personal conduct and applies to all directors, executives, officers and employees. A copy of the Code of Ethics is available on the ZAP website http://www.zapworld.com or may be obtained by written request submitted to the Corporate Secretary at ZAP, 501 Fourth Street, Santa Rosa,CA 95401. The Company intends to satisfy any disclosure requirements regarding amendments to, or waivers from, any provision of the Code of Ethics by disclosing on the Company’s website, by press release and/or on a current report on Form 8-K.
Selection of New Directors
Directors are elected annually by the shareholders at the Annual Meeting. The Board proposes a slate of nominees for consideration each year. Between Annual Meetings, the Board may elect directors to serve until the next Annual Meeting. The Governance Committee will consider qualified candidates for possible nomination that are submitted by shareholders in accordance with the Company’s bylaws and policies regarding director nominations. Any shareholder nominations will be evaluated using the same criteria set forth in the Governance Committee Charter as are applicable to persons nominated by other sources.
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 stock held by the nominee, if any; and (vi) a signed statement of the nominee consenting to serve if elected. In addition, the stockholder 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 Governance 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. Any shareholder desiring to present a nomination for consideration by the Governance Committee prior to the 2008 Annual Meeting must do so in accordance with the Company’s policies and bylaws.
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 |
| Gary Starr (51) | | Mr. Starr co-founded ZAP in 1994 and has served as Chairman of the Board of Directors since October 2002. More detailed information regarding Mr. Starr’s business experience is set forth under “Directors.” | | 1994 |
| | | | |
| Steven Schneider (46) | | 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 |
| | | | |
| Renay Cude (30) | | Ms. Cude serves as Corporate Secretary of ZAP and President of Voltage Vehicles, ZAP manufacturing and ZAP Rentals. More detailed information regarding Ms. Cude’s business experience is set for under “Directors.” | | 2002 |
| | | | |
| William Hartman (59) | | 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 (50) | | 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 |
Family Relationships
There are no family relationships among any of our officers or directors.
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, 2006. The following table summarizes all compensation for fiscal year 2006 received by our Chief Executive Officer, and the Company’s three most highly compensated executives. Each of these officers is referred to as a “named executive officer.”
| Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) |
| | | | | | | | | | |
Steven Schneider, CEO Principal Executive Officer | 2006 | 120,000 | — | 17,800 | 419,756 | | | | 557,556 |
| Gary Starr, Chairman | 2006 | 120,000 | | 17,800 | 419,756 | | | | 557,556 |
| | | | | | | | | | |
William Hartman Principal Financial Officer | 2006 | 115,000 | | 17,800 | 100,000 | | | | 232,800 |
| | | | | | | | | | |
Renay Cude Corporate Secretary | 2006 | 78,000 | | 17,800 | 419,756 | | | | 515,556 |
| (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. |
Employment Agreements
We currently have employment agreements with three 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 $127,000. 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.
Gary Starr, Chairman of the Board
We entered into an employment agreement with Gary Starr on October 1, 2003. The agreement provides that Mr. Starr will serve as Chairman of the Board of Directors of ZAP 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. Starr’s current salary is set at $127,000. In addition, the agreement provides that should ZAP become profitable, Mr. Starr’s salary will automatically be increased by 10% 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.
Renay Cude, Corporate Secretary
We entered into an employment agreement with Renay Cude on October 1, 2003. The agreement provides that Ms. Cude will serve as Corporate Secretary of ZAP through October 1, 2008 and receive a salary, benefits and options equal to the highest paid non corporate officer-employee of ZAP, but in no event less than $36,000 per year. Ms. Cude’s current salary is set at $78,000. In addition, the agreement provides that should ZAP become profitable, Ms. Cude’s salary will automatically be increased by 10% for every $100,000 in profits, calculated on a quarterly basis. Ms. Cude 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. Ms. Cude 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 her employment without cause, Ms. Cude is entitled to her full salary for the remainder of the term of the agreement. Should ZAP elect to terminate Ms. Cude’s employment in the case of a merger or reclassify Ms. Cude without cause prior to the expiration of the employment agreement, the Company must retain Ms. Cude as an employee or consultant for a period of five years for an aggregate salary of $250,000, payable bi-monthly, or make a lump sum payment of $150,000. The agreement automatically renews for successive five year periods unless terminated by either party upon proper notice. On March 30, 2007, the Board of Directors of ZAP did approve the extension of the employment agreement with Ms. Cude through October 1, 2013.
The following table sets forth certain information concerning stock option awards granted to our named executive officers.
OPTION AWARDS | STOCK AWARDS |
| | | | | | | | | | |
| Name | Number of securities underlying unexercised options (#) Exercisable | Number of securities underlying unexercised options (#) Unexercis-able | Equity Incentive Plan Awards: Number of Securities underlying unexercised unearned options (#) | Option exercise price ($) | 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 (1) | 1,690,786 | — | | 1.00 | 7/1/12 | | | | |
| Steve Schneider (2) | 200,000 | | | 0.25 | 7/5/12 | | | | |
| Steve Schneider (2) | 486,111 | 13,889 | | 1.26 | 6/23/14 | | | | |
| Steve Schneider (2) | 428,877 | 85,775 | | 1.32 | 11/16/14 | | | | |
| Steve Schneider (2) | 211,265 | 105,633 | | 0.93 | 6/7/15 | | | | |
| Steve Schneider (1) | 355,424 | | | 0.91 | 8/11/16 | | | | |
| Gary Starr (1) | 1,470,671 | | | 1.00 | 7/1/12 | | | | |
| Gary Starr (2) | 116,667 | | | 1.20 | 12/19/11 | | | | |
| Gary Starr (2) | 150,000 | | | 0.25 | 7/5/12 | | | | |
| Gary Starr (2) | 486,111 | 13,889 | | 1.26 | 6/23/14 | | | | |
| Gary Starr (2) | 428,877 | 85,775 | | 1.32 | 11/16/14 | | | | |
| Gary Starr (2) | 211,265 | 105,633 | | 0.93 | 6/7/15 | | | | |
| Gary Starr (1) | 355,424 | | | 0.91 | 8/11/16 | | | | |
| Renay Cude (1) | 1,525,786 | | | 1.00 | 7/1/12 | | | | |
| Renay Cude (1) | 161,700 | | | 0.50 | 12/2/13 | | | | |
| Renay Cude (2) | 48,611 | 13,889 | | 1.26 | 6/23/14 | | | | |
| Renay Cude (2) | 428,877 | 85,775 | | 1.32 | 11/16/14 | | | | |
| Renay Cude (2) | 211,265 | 105,633 | | 0.93 | 6/7/15 | | | | |
| Renay Cude (1) | 355,424 | | | 0.91 | 8/11/16 | | | | |
| William Hartman (1) | 687,500 | | | 1.00 | 7/1/12 | | | | |
| William Hartman (2) | 41,667 | 8,333 | | 1.32 | 11/16/14 | | | | |
| William Hartman (2) | 25,000 | | | 1.20 | 12/19/11 | | | | |
| William Hartman (2) | 72,917 | 2,083 | | 1.26 | 6/23/14 | | | | |
| William Hartman (1) | 100,000 | | | 1.03 | 9/18/16 | | | | |
| (1) | The award was fully vested at time of issuance. |
| (2) | The award vests equally over 36 months from date of grant. The option has a ten year life. |
Director Compensation
The following director compensation disclosure reflects all compensation awarded to, earned by or paid to the directors below for the fiscal year ended December 31, 2006.
| 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 ($) |
| | | | | | | | |
| Raymond F. Byrne (1) | 3,000 | 20,800 | | | | | 23,800 |
| Peter H. Scholl (1) | 3,000 | 20,800 | | | | | 23,800 |
| (1) | Both independent directors received a stock award with value of $17,800 for their service on the Board and $3,000 for attending Board meetings. Raymond Byrne resigned as a Director in May, 2007. |
Compensation of Directors
Starting in April 2006, all directors received $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 and/or committee meetings. Prior to April 2006, we did not provide our directors with cash or other forms of compensation, although we did reimburse their out-of-pocket expenses. Each Director also received 20,000 shares of common stock in December 2006 as an additional compensation incentive.
Equity Compensation Plan Information
We have adopted stock incentive plans to provide incentives to attract and retain officers, directors, key employees and consultants. We currently have reserved a total of 15,500,000 shares of our common stock for granting awards, including 1,500,000 shares under our 1999 Incentive Stock Option Plan, 10,000,000 shares under our 2002 Incentive Stock Option Plan, and 4,000,000 shares under our 2006 Incentive Stock Option Plan. All plans were approved by our shareholders. As of December 31, 2006, 643,870 shares of common stock had been issued pursuant to options exercised out of the 2002 plan.
The following table sets forth a description of our equity compensation plans as of December 31, 2006:
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 | | | | | | |
| | | | | | | |
Equity compensation plans not approved by security holders(1) | | | | | | |
| | | | | | | |
| | | | | | |
___________________
STOCK OWNERSHIP
The following table sets forth certain information, as of August 14, 2006,May 29, 2007, with respect to 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) our chief executive officerthe CEO and each of our executive officers,Named Executive Officer, and (4) all of our directors and executive officers as a group.
Beneficial ownership of the common stock is determined in accordance with the rules of the Securities and Exchange Commission and 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 right to acquire ownership at any time within 60 days of August 14, 2006.May 29, 2007. Except as otherwise indicated, and subject to applicable community property laws, the persons named in this table 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 35,542,42645,908,560 shares of common stock outstanding as of August 14, 2006,May 29, 2007, plus, for each individual, any securities that individual has the right to acquire within 60 days of August 14, 2006.May 29, 2007.
Unless otherwise indicated below, the address of each of the principal shareholders is c/o ZAP, 501 Fourth Street, Santa Rosa, California 95401.
Name and Address | | Shares Beneficially Owned | | Percentage of Class |
| | | | | |
Beneficial Owners of More than 5%: | | | | |
| Sunshine 511 Holdings (1) | | 3,000,000 | | 7.8% |
101 N. Clematis Street, Suite 511 West Palm Beach, Florida 33401 | | | | |
| | | | | |
| Daka Development Ltd. (2) | | 2,860,719 | | 7.5% |
8/F Leroy Plaza, Unit C 15 Cheung Shun Street Chung Sha Wan Kin, Hong Kong | | | | |
| | | | | |
| Fusion Capital Fund II, LLC (3) | | 2,500,000 | | 6.6% |
222 Merchandise Mart Plaza, Suite 9-112 Chicago, IL 60654 | | | | |
| | | | | |
| Jeffrey G. Banks (4) | | 4,414,672 | | 11.6% |
1314 Sunny Hills Road Oakland, CA 94610 | | | | |
| | | | | |
| Phi-Nest Fund, LP (5) | | 2,441,176 | | 6.9% |
2385 Executive Drive, Suite 100 Boca Raton, Florida 33431 | | | | |
| | | | | |
| | | | | |
Directors and Executive Officers: | | | | |
| Steven Schneider (6) | | 15,664,655 | | 32.4% |
| | | | | |
| Gary Starr (7) | | 7,362,182 | | 17.6% |
| | | | | |
| William Hartman (8) | | 706,806 | | 2.0% |
| | | | | |
| Renay Cude (9) | | 2,443,437 | | 6.4% |
| | | | | |
| Max Scheder-Bieschin (10) | | 569,167 | | 1.6% |
| | | | | |
| Guy Fieri (11) | | 102,186 | | * |
| | | | | |
| | | Name and Address | | Shares Beneficially Owned | | Percentage of Class | |
| | | | | | | | |
| | | Beneficial Owners of More than 5%: | | | | | |
| | | Sunshine 511 Holdings (1) | | 3,300,000 | | 6.7% | |
| | | 101 N. Clematis Street, Suite 511 West Palm Beach, Florida 33401 | | | | | |
| | | | | | | | |
| | | Daka Development Ltd. (2) | | 2,799,136 | | 5.9% | |
| | | 8/F Leroy Plaza, Unit C 15 Cheung Shun Street Chung Sha Wan Kin, Hong Kong | | | | | |
| | | | | | | | |
| | | Fusion Capital Fund II, LLC (3) | | 2,750,000 | | 5.6% | |
| | | 222 Merchandise Mart Plaza, Suite 9-112 Chicago, IL 60654 | | | | | |
| | | | | | | | |
| | | Jeffrey G. Banks (4) | | 6,828,373 | | 13.2% | |
| | | c/o The Banks Group, LLC PO Box 10287 Oakland, CA 94610 | | | | | |
| | | | | | | | |
| | | Current Directors, Nominees and Named Executive Officers: | | | | | |
| | | Steven Schneider (5) | | 17,200,628 | | 27.9% | |
| | | | | | | | |
| | | Gary Starr (6) | | 8,423,792 | | 15.5% | |
| | | | | | | | |
| | | William Hartman (7) | | 1,057,681 | | 2.1% | |
| | | | | | | | |
| | | Renay Cude (8) | | 2,927,159 | | 6.1% | |
| | | | | | | | |
| | | Peter Scholl (9) | | 625,218 | | 1.3% | |
| | | | | | | | |
Name and Address | | Shares Beneficially Owned | | Percentage of Class |
| | | | | |
| Matthias Heinze (12) | | 251,111 | | * |
| | | | | |
| Raymond Byrne | | 0 | | * |
| | | | | |
| Peter Scholl (13) | | 600,000 | | 1.7% |
| | | | | |
| All Directors and Executive Officers as a group (9 persons) | | 27,699,544 | | 46.8% |
_______________
| (1) | Includes 3,000,000 shares ofRepresents 3,300,000 warrants to purchase common stock issuable upon the exercise of warrants. The managing partner is Andrew Schneider, a cousin of ZAP’s CEO.stock. The address for Sunshine 511 Holdings is 101 N. Clematis Street, Suite 511, West Palm Beach, FL 33401. |
| (2) | Includes 2,352,056 shares of2,587,262 warrants to purchase common stock issuable upon the exercise of warrants.stock. The managing partner is Raymond Chow. The address for Daka Development is Unit C 8/F Leroy Plaza, 15 Cheung Shun Street, Chung Sha Wan Kin, Hong Kong. |
| (3) | Includes 2,500,000 shares ofRepresents 2,750,000 warrants to purchase common stock issuable upon the exercise of warrants.stock. Pursuant to the terms of the warrants,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. |
| (4) | Includes 2,550,0005,005,000 warrants to purchase common stock. |
| (5) | Includes 12,159,266 shares of common stock issuable upon the exercise of warrants. |
(5) | The address for Phi-Nest Fund, L.P. is 2385 Executive Drive, Suite 100, Boca Raton, FL 33431. Mr. Howard Deverett isvarious warrants and 1,911,682 shares of stock issuable upon the Fund Manager.exercise of stock options. |
| (6) | Includes 11,353,8785,441,160 shares of common stock issuable upon the exercise of various warrants and 1,385,7771,950,250 shares of stock issuable upon the exercise of stock options. |
| (7) | Includes 4,946,509709,500 shares of common stock issuable upon the exercise of various warrants and 1,452,444271,181 shares of stock issuable upon the exercise of stock options. |
| (8) | Includes 545,0001,525,786 shares of common stock issuable upon the exercise of various warrants and 111,8061,318,472 shares of stock issuable upon the exercise of stock options. |
| (9) | Includes 1,387,078 shares of common stock issuable upon the exercise of warrants and 1,000,994 shares of stock issuable upon the exercise of stock options. |
(10) | Includes 350,000 shares of common stock issuable upon the exercise of warrants and 204,167 shares of stock issuable upon the exercise of stock options. |
(11) | Includes 65,278 shares of common stock issuable upon the exercise of stock options. |
(12) | Includes 100,000 shares of common stock issuable upon the exercise of warrants and 150,000 shares of stock issuable upon the exercise of stock options. |
(13) | Includes 600,000 shares of common stock issuable upon the exercise of various warrants. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers, directors and persons beneficially owning more than 10% of the outstanding common stock 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 that during the fiscal year ended December 31, 2006, all officers and directors timely filed an initial statement of beneficial ownership of securities on Form 3. The Company also believes that during the fiscal year ended December 31, 2006, all officers and directors timely filed certain transactions on Form 4s.
As of the date of this Proxy Statement, the Company is not aware of any filings made by 10% beneficial owners of our common stock and believes that all such beneficial owners failed to file Forms 3 and 4.
See Proposal No. 1 belowCERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Property Rental
The Company rents office space, land and warehouse space from its CEO and major shareholder. These properties are used to operate the car outlet and to store inventory. Rental expense was approximately $96,500 and $196,000 for a description of transactions or arrangements that may result in the change in control of our company.year ended December 31, 2006 and 2005, respectively.
SubjectAUTHORIZATION FOR THE BOARD TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has approved and recommends that the shareholders adopt an amendment to shareholder approval atZAP’s Amended and Restated Articles of Incorporation to increase the Special Meeting, our boardtotal authorized shares of directors has determined that it is in the best interestscommon stock of the companyCompany from 200 million to 400 million. The Company is currently authorized to issue 50 million shares of preferred stock, and our shareholders to raise between $10.0 million and $15.0 million of capital by sellingthe proposed amendment will not affect this authorization.
To effect the increase in authorized shares of our common stock, it is proposed that the first paragraph of Article III of our Amended and securities exercisable or convertible intoRestated Articles of Incorporation be amended to read in its entirety as follows:
“The Corporation shall be authorized to issue 400,000,000 shares of our common stock atCommon Stock. Each share of Common Stock shall entitle the holder thereof to one (1) vote on each matter submitted to a price that will represent a discount fromvote of the market priceshareholders.”
Outstanding Shares
As of our common stock. We may offer these securities in one or more financing transactions, all of which are collectively referred to in this proxy statement as the financing transaction. We anticipate that the purchase price per shareMay 29, 2007, 45,908,560 shares of common stock (assuming no value is attributed to any convertible securitieswere issued in the financing transaction) issued in the financing transaction will represent a discountand outstanding, 24 million shares of between 10% to 50% from the market price of our common stock onare reserved for issuance upon exercise of options that are outstanding or reserved for issuance under the date any agreement is signed to raise the funds. The actual discount to the market price will be determined based on a numberCompany’s equity incentive plans;6 million shares of factors, including but not limited to market conditions, stock price, volume and similar factors. For this purpose, the market price will be equal to the market price of a share of our common stock as reported on the NYSE Arca, or such other market on which ourare reserved for consulting expenses and 70 million shares of common stock may be trading. The descriptionare reserved for issuance upon the exercise of outstanding warrants; and the remaining shares of common stock are reserved for issuance upon the conversion of the potential financing transaction in this proxy statement is not intended to constitute an offer, orconvertible debt.
Purpose for the solicitation of an offer, to purchase our securities to be offered in the financing transaction.Proposed Amendment
ReasonsAs of May 29, 2007, the Company has 54 million shares of common stock available for general corporate purposes based on the Financing Transaction. In reaching our decision to seek approval from our shareholders to potentially raise between $10.0 million and $15.0 million in the financing transaction, our board of directors consulted with our senior management and considered a number of factors in favorshares outstanding and the number of shares reserved for future issuances. As a general matter, the proposed financing. Currently, we requireBoard of Directors does not believe this is an adequate number of shares to assure that there will be sufficient shares available to respond to future business requiring the issuance of shares, issuances of common stock under the Company’s equity compensation plans, dividends and the issuance of common stock for other general corporate purposes. At present, the Company needs additional capital to continue expanding ourits current operations. The Company’s primary capital will be used primarily:needs are: (i) to purchase Xebra™Xebra™ vehicles, both sedan and utility truck models,trucks from ourZAP’s Chinese partner to fulfill the increasing demand for 100% electric vehicles in the United States, and (ii) to continue building our dealer network and expanding our marketingZAP’s market initiatives. We willZAP also use the proceedsrequires financing to purchase consumer product inventory for the continued roll-out of new products, to add qualified sales and professional staff to execute on ourZAP’s business plan, and to expand ourZAP’s efforts in the research and development of advanced technology vehicles, such as the ethanol-driven OBVIO! automobilesAutomobiles and other fuel efficient vehicles.The Company plans to issue additional common stock to obtain equity financing, approval of the proposed amendment to the Articles will allow the Company to act promptly in the event opportunities requiring the issuance of additional shares arise. Failure of the shareholders to approve the proposed amendment would adversely affect the Company’s ability to pursue such opportunities.
Certain Effects of the Proposed Amendment
After considering numerousWe are not introducing this proposal with the intent that it be utilized as a type of anti-takeover device. However, this action could, under certain circumstances, have an anti-takeover effect. For example, if we became the subject of a hostile takeover attempt, we could attempt to obstruct the takeover by issuing shares of common stock, which would have the effect of diluting the voting power of the outstanding shares and increasing the cost of the potential financing alternatives, including alternate financing structures, our boardtakeover. In addition, the increase in authorized shares, if approved, may have the effect of directors determineddiscouraging a challenge for control or make it less likely that such a potential private placementchallenge, if attempted, would be successful. Our Board of Directors and executive officers have no knowledge of any current effort to obtain control of ZAP or to accumulate large amounts of our common stock, and other securities exercisable or convertible into common stock was the best available alternative and would provide the greatest potential value for the company and our shareholders,this proposal is not being presented as well as provide the necessary capital to pursue our long-term strategic goals.
As discussed below, on August 23, 2006, we received notice from NYSE Regulation, Inc. that we are not in compliance with certain continued listing requirements. We believe that an infusion of new capital will allow us to execute our business plan, which we believe will assist us in regaining compliance with the NYSE Arca’s continued listing requirements.anti-takeover device.
Use of Proceeds. Under our current business plan, we estimate that any net proceeds of the financing transaction will be used as follows:
· | To purchase additional Xebra™ vehicles, both the sedan and the utility truck models;
|
· | To continue building out our dealer network and expanding our marketing initiatives regarding electric and other advanced technology vehicles; |
· | To purchase additional consumer product inventory, including our new scooter and portable energy products; |
· | To attract and retain qualified sales and professional staff in order to execute on our business plan; and |
· | To expand our efforts in research and development and to invest in ventures focused on expanding our mission in advanced technology vehicles. |
The allocationproposed amendment to the Amended and Restated Articles of proceeds will be based on our assumptions concerningIncorporation does not change the timing of the receipt of proceeds in the financing transaction, our business objectives, finances and other matters. If current assumptions are not accurate, or other unforeseen conditions or opportunities affecting our business arise, there could be material
changes to our operational expectations. Therefore, we could find it advisable to allocate the proceeds of the financing transaction in a manner different from that described.
Terms of the Financing Transaction. The final terms of the financing transactioncommon stock. All shares of common stock, including those now authorized and those that would be authorized by the proposed amendment to our Amended and Restated Articles of Incorporation, are equal in rank and have the same voting rights, the same rights to dividends and the same liquidation rights. Holders of the common stock do not currently known.have preemptive rights or appraisal rights. However, shareholders should consider that additional issuances of common stock could have a dilutive effect on the financing transaction will be subject to the requirements described in this Proposal No. 1.earnings per share, voting power and share holdings of current shareholders.
It is anticipated that we will raise from $10.0 million to $15.0 million by offering and selling securities consistingAuthorized shares of common stock and warrantsmay be issued by the Board of Directors from time to purchasetime without further shareholder approval, except in situations where shareholder approval is required by state law. Shareholders of the Company have no preemptive right to acquire additional shares of common stock. As of the date of this proxy statement, we are unable to provide you with an approximate price per share for the common stock, to be sold in the financing transaction. However, we do anticipatewhich means that the price per share will be at a discount to the market price of our common stock of between 10% to 50% as of the date we sign any agreement to raise the funds. Based upon the market price of our common stock, as reported on the NYSE Arca on the record date, the price per share would be between $[ ] to $[ ]. However, this range is based on the market price of our common stock as of the record date and could vary, perhaps substantially, depending upon the market price of our common stock as of the date we sign any agreement to raise the funds and the discount to market factors described above. Wecurrent shareholders do not anticipate that we will attributehave a right to purchase any value to the warrants that we contemplate issuing in the financing transaction. The maximum numbernew issue of shares of common stock in order to maintain their proportionate ownership interest in the Company.
Reserved Shares upon Approval of the Amendment
If this proposal is approved by a majority of the shareholders entitled to vote on this proposal, and warrants or other securities exercisable or convertibleafter taking into account the reserve requirements described above, we will have 254 million shares of common stock that we may issue in the financing transaction will depend upon the market price of the common stock on the date we sell the securities in the financing transaction. However, the aggregate number of shares of common stock that we may issue shall not exceed 20,000,000 shares of common stock and the total number of warrants or other securities exercisable or convertible into shares of common stock that we may issue shall not exceed 6,000,000, including the issuance of securities to placement agents as compensationavailable for their services related to the financing transaction.general corporate purposes.
As of the record date, the closing price of our common stock as reported on the NYSE Arca was $[___]. The board of directors believes the ability to sell our securities at a discount from the market price of our common stock as of the date of an agreement with a placement agent is necessary to provide the board with maximum flexibility in setting the terms of the financing transaction.Effective Date
We have not determinedIf the final termsproposed amendment to the Amended and conditionsRestated Articles of Incorporation is approved by shareholders, it would become effective upon the filing of a Certificate of Amendment with the California Secretary of State, which wefiling would issueoccur promptly after the securities to be authorized for issuance in accordance with this Proposal No. 1. The board of directors will determine the terms and conditions of any such issuances in its sole discretion. We cannot assure you that we will be able to sell any or all of the securities on terms satisfactory to us.Annual Meeting.
Vote Required
Any sharesThe affirmative vote of common stock issued pursuant to the financing transaction will haveholders of a majority of the rights and privileges, including the voting, dividend and liquidation rights that the presently outstanding shares of common stock possess under ourwill be required to approve the authorization of the Board of Directors to increase the authorized common stock by amendment of the Company’s Amended and Restated Articles of Incorporation. Our shareholders generally doAs a result, abstentions and broker non-votes, if any, will have the same effect as a vote against this proposal. Brokers may have the authority to vote on this proposal when they have not have preemptive rights with respect to our common stock and existing holders of common stock would not have any preferential or participation rights ifreceived instructions from the board of directors issues additional shares of common stock, warrants or other securities in the financing transaction.beneficial owner.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF AN AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK.
ROPOSAL NO. 3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTING FIRM
The final termsBoard of warrants or other securities exercisable or convertible into sharesDirectors, upon the recommendation of common stock that we may issue inits Audit Committee, has ratified the financing transaction, including, but not limitedselection of Odenberg, Ullakko, Muranishi & Co. LLP to any conversion or redemption prices and other matters,serve as our independent public accounting firm for 2007, subject to ratification by our shareholders. Representatives of Odenberg, Ullakko, Muranishi & Co. LLP will be determined by our board of directors. We estimate that any warrants issuedpresent at the Annual Meeting to answer questions. They also will have the opportunity to make a placement agent as placement agent compensation will be at a premiumstatement if they desire to the offering price, but will likely be at a discount to the market price on the date of any agreement with a placement agent. We estimate that any warrants issued to investors in the financing transaction will be at a premium to the market price of our common stock on the date any agreement is signed to raise the funds.do so.
We are asking forour shareholders to ratify the flexibility to issue sharesselection of common stock or other securities exercisable or convertible into shares of our common stock on such termsOdenberg, Ullakko, Muranishi & Co. LLP as our boardindependent public accounting firm. Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of directors may determineOdenberg, Ullakko, Muranishi & Co. LLP to be appropriate from time to time. If our shareholders approve this Proposal No. 1for ratification because we value our shareholders’ views on the Company’s independent public accounting firm and as a matter of good corporate practice. In the event that our shareholders fail to ratify the selection, it will be considered as a direction to the Board of Directors and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent public accounting firm, subject to ratification by the Board, at any time during the Special Meeting, we will not solicit further authorization for the issuance of securitiesyear if it determines that such a change would be in the financing transaction by a votebest interests of shareholders prior to such issuance, unless otherwise required under applicable laws, rules or regulations.the Company and our shareholders.
We intendVote Required
An affirmative vote of a majority of the votes cast at the Annual Meeting is required for ratification of Odenberg, Ullakko, Muranishi & Co. LLP as our independent accountants for the year ending December 31, 2007. For ratification, this proposal must be approved by a majority of the votes cast, including abstentions, by persons present at the Annual Meeting or represented by proxy and entitled to offer these securities in an offering which is exemptvote on the proposal. An abstention from voting on this proposal will have the effect of a vote “AGAINST.” Brokers may have the authority to vote on this proposal when they have not received instructions from the registrationbeneficial owner.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF ODENBERG, ULLAKKO, MURANISHI & CO. LLP AS OUR INDEPENDENT PUBLIC ACCOUNTING FIRM FOR 2007.
Audit and Non-Audit Fees
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered by Odenberg, Ullakko, Muranishi & Co. LLP for the audit of the Company’s annual financial statements for the years ended December 31, 2006, and December 31, 2005, and fees billed for other services rendered by Odenberg, Ullakko, Muranishi & Co. LLP during those periods.
| | | 2006 | | | 2005 | |
| | $ | | | | $ | | |
| | | | | | | | | |
| | $ | | | | | | |
| | | | | | | | | |
| | | | | | | | |
| | | | | | | | | |
| | | | | | | | |
| Total | | $ | 247,000 | | | $ | 230,000 | |
| (1) | Audit fees include fees invoiced for the audit of the Company’s annual financial statements and the quarterly reviews of these statements, as well as fees for consultation regarding accounting issues and their impact on or presentation in the Company’s financial statements. |
| (2) | This category includes fees billed for assurance and related services that are reasonably related to the performance of the audits or reviews of the financial statements and are not reported under “Audit Fees,” and generally consist of fees for due diligence in connection with acquisitions, accounting consultation and audits of employee benefit plans. |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Public Accounting Firm
The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. 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 auditors and management are required to periodically report to the Audit Committee 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. The Audit Committee may also pre-approve particular services on a case-by-case basis.
Audit Committee Report
The Audit Committee of the Board of Directors was composed of two directors through March 2007 whom the Board has determined to be independent under applicable SEC rules. The Audit Committee operates under a written charter adopted by the Board in June 2005 that is available at http://www.zapworld.com.
The primary purpose of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities with respect to matters involving the accounting, financial reporting and internal control functions of the Company. The Audit Committee has sole authority to select the Company’s independent registered public accounting firm.
Management is responsible for preparing the Company’s financial statements so that they comply with generally accepted accounting principles and fairly presents the Company’s financial condition, results of operations and cash flows; issuing financial reports that comply with the requirements of the Securities ActSEC; and establishing and maintaining adequate internal control structures and procedures for financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has reviewed and discussed the audited financial statements with management and the independent registered public accounting firm. The Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as currently in effect.
registration or exemption from such registration requirements. It is anticipated that we will register the resale of the securities sold in the financing transaction under the Securities Act.
This proxy statement is not an offer to sell or the solicitation of an offer to buy shares of common stock or any other securities. Offers and sales of shares of common stock and securities exercisable into shares of common stock will only be made in private placement transactions exempt from the registration requirements of the Securities Act and applicable state securities laws on the terms and subject to the conditions of the disclosure documents prepared for such offer and sale.
Listing on the NYSE Arca. Our common stock is listed on the NYSE Arca. Subject to shareholder approval of Proposal No. 1 and the consummation of the financing transaction, we intend to file an additional listing application with the NYSE Arca to list the shares of common stock and the common stock issuable upon exercise of warrants to be issued in the financing transaction.
As indicated in our Current Report on Form 8-K filed on August 29, 2006, we are currently not in compliance with the continued listing standards of the NYSE Arca. In particular, we are not in compliance with the requirement that we have total net tangible assets of at least $500,000, or a net worth of at least $2,000,000. Further, from July 11, 2006 through August 17, 2006, our common stock closed below the $1.00 per share minimum bid price requirement.
We intend to submit a plan to NYSE Regulation, Inc. by September 15, 2006 setting forth the steps that we intend to take to regain compliance with the NYSE Arca’s continued listing standards within 18 months. In order to be in compliance, we must, among other requirements, have total net tangible assets of at least $500,000, or a net worth of at least $2,000,000, as well as maintain a minimum bid price of at least $1.00 per share.
Shareholder Approval Requirement. Under NYSE Arca Rule 5.3(d), we are required to obtain shareholder approval in connection with any transaction, other than a public offering, that involves the sale, issuance or potential issuance of common stock, or securities convertible into common stock, that equals 20% or more of our then-outstanding common stock if we issue the stock at a price below the greater of its book value or market value at the time of issuance. As of the record date, we had [__________] shares of common stock outstanding, and the book value of a share of common stock was $[____]. Accordingly, because our proposed issuance of up to 20,000,000 shares of our common stock at a discount from the market price of our common stock on the date we sign any agreement to raise the funds will be in excess of the NYSE Arca 20% threshold, we submit this Proposal No. 1 for the shareholders’ approval in order to comply with NYSE Arca rules.
In addition, our issuance of securities in connection with the financing transaction will require that we comply with the registration requirements under applicable federal and state securities laws or determine that the issuance satisfies an applicable exemption from such registration requirements. Shareholder approval does not obviate the need for compliance with the requirements of the Securities Act, the Securities Exchange Act of 1934 or other NYSE Arca requirements. For example, if we issue all or a substantial portion of these 20,000,000 shares in a sale for cash to a single purchaser or to a group of affiliated purchasers that could be deemed to control us as a result of such purchase, we may need to obtain further shareholder approval for such issuance, and either we, or the purchasers, or both, may be required to file additional reports with the SEC.
Dissenters’ Rights. Under California law, shareholders will not have any dissenters’ or appraisal rights in connection with this Proposal No. 1.
Dilutive and Other Effects of the Approval of This Proposal No. 1. If this Proposal No. 1 is approved, our company will have the authority to issue, without further shareholder approval, up to 20,000,000 shares of common stock and up to 6,000,000 securities exercisable or convertible into shares of our common stock.
Potential Dilutive Effect on Our Stock. As a result of the financing transaction, the number of shares of outstanding common stock will increase substantially and significantly dilute the ownership interests and proportionate voting power of the existing shareholders. The exercise or conversion of securities exercisable or convertible into shares of common stock and anti-dilution adjustments to the exercise or conversion price of such securities could further dilute the ownership interests and voting power of existing shareholders.
If this Proposal No. 1 is approvedBased on the above discussions and we sell all 20,000,000 sharesreview with management and the independent registered public accounting firm, the Audit Committee recommended to the Board of common stock, our shareholders will incur significant dilution of their interests in our company. As ofDirectors that the record date, there were [________] shares of our common stock outstanding. Assuming the issuance of all 20,000,000 shares, purchasers of our common stockaudited financial statements be included in the financing transaction will own approximately [_____]% of our outstanding common stock immediately followingCompany’s Annual Report on Form 10-KSB for the financing transaction. Current shareholders as of the record date will own approximately [____]% of our outstanding common stock. Further dilution will occur upon the exercise of any of the convertible securities, including the warrants that may be issued in the financing transaction. Shareholders should consider the potential dilution in determining whether to approve this Proposal No. 1.
Potential Negative Effect on Our Stock Price. As a result of the financing transaction, we may issue a substantial number of shares of our common stock and warrants or other securities exercisable or convertible into shares of our common stock, at a per share price below the market price of the common stock as of the date of issuance. The issuance of common stock and shares of common stock issuable upon exercise of warrants or conversion of other securities could have a depressive effect on the market price of our common stock by increasing the number of shares of common stock outstanding. Such downward pressure could encourage short sales by certain investors, which could place further downward pressure on the price of the common stock.
If we issue 20,000,000 additional shares of our common stock in the future, a substantial portion of those shares will become eligibleyear ended December 31, 2006 for sale in the public markets, subject to certain volume limitations, after expiration of the one-year holding period required under Rule 144 of the Securities Act and all of the shares could be eligible for sale in the public markets after two years pursuant to Rule 144(k), without any volume limitations. These shares could become eligible for resale in the public markets earlier if, in connectionfiling with the sale of the shares, we agree to file a registration statement with the SEC covering the resale of the shares. Any such sales, or the anticipation of the possibility of such sales, represent an overhang on the market and could depress the market price of our common stock. Similarly, a continuous series of warrant exercises, followed by sales of the common stock in the public markets might adversely impact the value of our common stock. The board of directors may generally attempt to moderate the timing and amount of sales of our common stock to the public in an effort to minimize any adverse pressure on the value of the common stock. No assurance can be given, however, that these attempts will be successful.SEC.
Certain Purchasers May Become Significant Shareholders. As a result of the financing transaction, one or more persons could become the beneficial owner of a substantial amount of our common stock and, as such, will have significant voting power with respect to our shares and be able to exert substantial influence over our business and affairs if they choose to do so. Any such person or persons will likely to be able to affect the outcome of all matters brought before the shareholders, including the election of all directors and the approval of mergers and other business combination transactions.
Future Stock Issuances Could Effect a Change in Control of Our Company. As a result of the financing transaction, we could issue 20,000,000 additional shares of common stock, which is approximately [____]% of the number of shares of common stock outstanding as of the record date. This would result in a change in the persons having control of our company. The persons acquiring control would have significant voting power and be able to control our business and affairs if they choose to do so. Any such person or persons will determine the outcome of all matters brought before the shareholders, including the election of all directors and the approval of mergers and other business combination transactions.
Principal Effect of Non-Approval of Proposal No. 1. Absent shareholder approval of this Proposal No. 1, we will be unable to consummate a financing transaction described in this Proposal No. 1 and raise additional capital to purchase additional Xebra™ vehicle inventory to satisfy current demand, purchase consumer product inventory, fund research and development of new vehicles and products, increase our marketing and distribution efforts, or hire additional qualified sales and professional staff. If we are unable to undertake these and similar initiatives, it could have a materially adverse effect on our business.
Interests of Certain Persons in Proposal No. 1. None of our directors or officers intends to purchase, directly or indirectly, any securities to be issued by us in the financing transaction.
Recommendation | | The Audit Committee of the Board of Directors |
| | Peter Scholl |
| | Gary Starr |
| | Raymond Bryne * |
*Mr. Bryne resigned from the Board of Directors in May 2007.
SOLICITATION OF PROXIES
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “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 of the preparation, printing and mailing of this Proxy Statement and the enclosed form of proxy and Notice of Annual Meeting, and any additional material relating to the meeting, which may be furnished to shareholders by the Board subsequent to 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.
FOR” THE APPROVAL OF PROPOSAL NO. 1.ANNUAL REPORT AND QUARTERLY REPORT
Our Annual Report for the fiscal year ended December 31, 2006 and the Quarterly Report for the period ended March 31, 2007 has been mailed to shareholders along with this Proxy Statement. We will, upon written request and without charge, provide to any person solicited hereunder additional copies of our Annual Report on Form 10-KSB, for the year ended December 31, 2006, as filed with the Securities and Exchange Commission. Requests should be addressed to the Investor Relations Department, ZAP, 501 Fourth Street, Santa Rosa, California, 95401. Also, such report may be obtained from our Internet homepage at http://www.zapworld.com. OTHER MATTERS
We are not aware of any business to be presented for consideration at the meeting, other than that specified in the Notice of Annual Meeting. If any other matters are properly presented at the meeting, it is the intention of the persons named in the enclosed proxy to vote in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 2008 ANNUAL MEETING
Any shareholder who intends to submit a proposal at the 20072008 Annual Meeting of Shareholders and who wishes to have the proposal considered for inclusion in the proxy statement and form of proxy for that meeting must, in addition to complying with the applicable laws and regulations governing submission of such proposals, deliver the proposal to us for consideration no later than December 31, 2006.2007. 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 20072008 Annual Meeting of Shareholders, shareholders’ written notices must be received by us before March 16, 20072008 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 Renay Cude, Corporate Secretary, ZAP 501 Fourth Street, Santa Rosa, California 95401.
We file reports with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. We will, upon written request and without charge, provide to any person solicited hereunder copies of any of our reports, as filed with the Securities and Exchange Commission. Requests should be addressed to the Investor Relations Department, ZAP, 501 Fourth Street, Santa Rosa, California, 95401. Also, such reports may be obtained from our Internet homepage at http://www.zapworld.com.
NOTICE TO BANKS, BROKER-DEALERS
AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise us whether other persons are the beneficial owners of the shares for which proxies are being solicited from you, and, if so, the number of copies of this Proxy Statement and other soliciting materials you wish to receive in order to supply copies to the beneficial owners of the shares.
It is important that proxies be returned promptly, whether or not you expect to attend the Annual Meeting in person. We request that you complete, date and sign the enclosed form 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 so that the meeting can be held. Shareholders who attend the meeting may revoke a prior proxy and vote their proxy in person as set forth in this Proxy Statement.
| By Order of the Board of Directors |
| |
| |
| Renay Cude |
| Corporate Secretary |
| |
| Santa Rosa, California |
ZAP
| † | You can now vote your shares electronically through the Internet or by mail. |
| This eliminates the need to return the proxy card. |
| 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.
Have your proxy card in hand when you access 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.
TO VOTE YOUR PROXY BY MAIL
Mark, sign and date your proxy card below, detach it and return it in the postage-paid envelope provided.
PLEASE DO NOT RETURN THE BELOW CARD IF VOTING ELECTRONICALLY
~ FOLD AND DETACH HERE AND READ THE REVERSE SIDE ~
| The Board of Directors recommends a vote “FOR” all the Director Nominees listed | Please mark your votes like this | x |
| | | | | Write Exceptions Below |
| 01 Steven Schneider 02 Gary Starr 03 Renay Cude 04 Peter Scholl | For All o | Withheld All o | For All Except o | | |
(To withhold authority to vote for any individual nominee, mark “FOR ALL EXCEPT”, and write the nominee’s number in the box provided above to the right.)
The Board of Directors unanimously recommends that you vote “FOR” Proposal No.2, and Proposal No. 3.
2. APPROVAL OF AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK: | For o | o | Abstain o | |
3. RATIFICATION OF SELECTION OF ODENBURG, ULLAKKO, MURANISHI & CO. LLP AS OUR INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007. | For o | o | Abstain o | |
| COMPANY ID: PROXY NUMBER: ACCOUNT NUMBER: |
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.
Signature(s)
| Signature(s)
| Date
|
REVOCABLE PROXYANNUAL MEETING OF SHAREHOLDERS
Sunday, July 29, 2007
2:00 pm Pacific Standard Time
To Be Held At the
ZAP WAREHOUSE
806 Donahue Street
SpecialBetween 8th and 9th Street
Santa Rosa, CA 95401
~ FOLD AND DETACH HERE AND READ THE REVERSE SIDE ~
This Proxy is solicited on Behalf of the Board of Directors
The undersigned holder(s) of the stock of ZAP acknowledges(s) receipt of the Notice of Annual Meeting of Shareholders -[__________], 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
of ZAP, dated June 15, 2007 a Proxy Statement of the Board of Directors of the same date. The undersigned hereby constitutes and appoints Steven Schneider andappoint(s) Renay Cude, attorney and each of them, as attorneys-in-fact and proxies of the undersigned,proxy, with full power of substitution for and in the name, place and stead of the undersigned to appear at the Special Meeting of Shareholders (the “Special Meeting”) of ZAP (the “Company”) to be held at [_________] located at [____________], Santa Rosa, California [______], on [__________], 2006 at [____] [ ].m., P.S.T., and at any postponement or adjournment thereof, andrevocation, to vote, as designated below all of the shares of common stock (“Common Stock”), of the Company whichStock that the undersigned is entitled to vote, with all the powers and authoritythat the undersigned would possess ifIF personally present.present at the 2007 Annual Meeting of Shareholders of ZAP, to be held at the Zap Warehouse, 806 Donahue Street, between 8th and 9th Street Santa Rosa, CA 95401, on Sunday July 29, 2007 at 2:00 p.m. Pacific Standard Time, and at any adjournments thereof. The undersigned directs this proxy to vote as indicated on the reverse sideholder of this proxy card.is granted discretionary authority to cumulate votes in the election of directors among those nominees for whom the undersigned has granted authority to vote.
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED, THE PERSONS NAMED HEREIN INTEND TO VOTE FOR PROPOSAL NO. 1. IF ANY OTHER BUSINESS IS PRESENTED AT THE SPECIAL MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE SPECIAL MEETING.This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder(s). If no direction is made, this proxy will be voted “FOR” the nominees of the Board of Directors in the election of directors, and “FOR” the ratification of the section of Odenburg, Ullakko, Muranishi & Co. LLP as the Company’s independent accountants for the year ending December 31, 2007. This proxy also delegates discretionary authority to vote with respect to any other business that may properly come before the meeting or any postponements, continuations or adjournments thereof.
THE PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES (OR, IF ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE POWERS CONFERRED BY THIS PROXY.Important - This Proxy must be Signed, Dated and returned promptly
(Continued and to be signed onplease see reverse side)
for voting instructions
The Board of Directors recommends a vote “FOR” the proposal listed below.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1.To issue and sell up to 20,000,000 shares of Common Stock and up to 6,000,000 securities exercisable or convertible into shares of Common Stock at below-market prices.
2.In their discretion, the proxies are authorized to vote on any other business as may properly come before the Special Meeting or any postponement or adjournment thereof.
Should the undersigned be present and choose to vote at the Special Meeting or at any postponement or adjournment thereof, and after notification to the Corporate Secretary of the Company at the Special Meeting of the shareholder’s decision to terminate this proxy, then the power of such attorneys or proxies shall be terminated and shall have no force and effect. This proxy may also be revoked by filing a written notice of revocation with the Corporate Secretary or by duly executing a proxy bearing a later date.
The undersigned hereby acknowledges receipt of Notice of the Special Meeting and the Proxy Statement relating thereto.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
__________________________________________________DATE:_________________, 2006
Signature(s)(Please date this Proxy)
NOTE: | Please sign exactly as your name or names appear on this proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
