<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
BROOKTROUT TECHNOLOGY, INC.
(Name of Registrant as Specified In Its Charter)
BROOKTROUT TECHNOLOGY, INC.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
BROOKTROUT TECHNOLOGY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 14, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of Brooktrout Technology, Inc. (the "Company") will be held on
Thursday, May 14, 1998 at 9:30 a.m., local time, at Fleet National Bank, 75
State Street, Boston, Massachusetts 02109 for the following purposes:
1. To elect two Class III Directors, each to serve for a three-year term
until the year 2001 annual meeting of stockholders and until their respective
successors are duly elected and qualified;
2. To consider and act upon a proposal to approve an amendment to the
Company's 1992 Stock Incentive Plan, as amended, ("the "1992 Plan") to increase
the number of shares of the Company's common stock subject to issuance under the
1992 Plan;
3. To consider and act upon a proposal to approve an amendment to the
Company's Amended and Restated 1992 Stock Purchase Plan (the "Purchase Plan") to
increase the number of shares of the Company's common stock subject to issuance
under the Purchase Plan;
4. To consider and act upon a proposal to ratify and approve the selection
of Deloitte & Touche LLP as the Company's independent auditors for the fiscal
year ending December 31, 1998; and
5. To consider and act upon any other matters which may properly be
brought before the Annual Meeting and any adjournments or postponements thereof.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on March 20, 1998 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof. Only
stockholders of record of the Company's common stock, $.01 par value per share
(the "Common Stock"), at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting and at any adjournments or
postponements thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
postage-prepaid envelope. Any proxy may be revoked by delivery of a later dated
proxy. Stockholders of record who attend the Annual Meeting may vote in person,
even if they have previously delivered a signed proxy.
By Order of the Board of Directors,
David W. Duehren
Clerk
Needham, Massachusetts
April 1, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE POSTAGE-PREPAID ENVELOPE PROVIDED.
IF YOU WISH TO VOTE YOUR SHARES IN PERSON AT THE MEETING, YOUR PROXY MAY BE
REVOKED.
<PAGE> 3
BROOKTROUT TECHNOLOGY, INC.
410 FIRST AVENUE
NEEDHAM, MASSACHUSETTS 02194
-------------------------------
PROXY STATEMENT
-------------------------------
FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 14, 1998
April 1, 1998
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Brooktrout Technology, Inc. (the "Company")
from stockholders of the outstanding shares of capital stock of the Company for
use at the 1998 Annual Meeting of Stockholders of the Company to be held on
Thursday, May 14, 1998, and any adjournments or postponements thereof (the
"Annual Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting.
This proxy statement, the accompanying Notice of Annual Meeting and the
Proxy Card are first being sent to stockholders on or about April 1, 1998. The
Board of Directors has fixed the close of business on March 20, 1998 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record of
the Company's Common Stock, par value $.01 per share (the "Common Stock"), at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 10,753,834 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting. Holders
of Common Stock outstanding as of the close of business on the Record Date will
be entitled to one vote for each share.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Shares that reflect abstentions or "broker nonvotes" (i.e., shares
represented at the meeting held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
such shares and, with respect to one or more but not all issues, such brokers or
nominees do not have discretionary voting power to vote such shares) will be
counted for purposes of determining whether a quorum is present for the
transaction of business at the meeting. Abstentions and broker nonvotes will
have no impact on the outcome of the vote on a particular proposal presented at
the meeting. With respect to the election of directors, votes may only be cast
in favor of or withheld from each nominee, votes that are withheld will be
excluded entirely from the vote and will have no effect.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE. SHARES
REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE VOTE AT THE
ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING AS DIRECTED
IN THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED AND NO INSTRUCTIONS ARE
GIVEN, THE PROXY WILL BE VOTED FOR (I) THE ELECTION OF THE NOMINEES FOR CLASS
III DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT; (II) APPROVAL OF THE
INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK
SUBJECT TO ISSUANCE UNDER THE COMPANY'S 1992 STOCK INCENTIVE PLAN; (III)
APPROVAL OF THE INCREASE OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK
SUBJECT TO ISSUANCE UNDER THE 1992 STOCK PURCHASE PLAN; AND (IV) THE
RATIFICATION AND APPROVAL OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR. IT IS NOT
ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE SET FORTH IN THIS PROXY
<PAGE> 4
STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING. IF OTHER MATTERS ARE
PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDERS.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Clerk of the Company at the
address of the Company set forth above, by filing a duly executed proxy bearing
a later date, or by appearing in person and voting by ballot at the Annual
Meeting. Any stockholder of record as of the Record Date attending the Annual
Meeting may vote in person whether or not a proxy has been previously given, but
the presence (without further action) of a stockholder at the Annual Meeting
will not constitute revocation of a previously given proxy.
The Annual Report of the Company, including financial statements for the
fiscal year ended December 31, 1997 ("Fiscal 1997"), is being mailed to
stockholders concurrently with this proxy statement. The Annual Report, however,
is not part of the proxy solicitation materials, except for certain parts of the
Annual Report which are expressly incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."
PRINCIPAL STOCKHOLDERS
As of March 10, 1998, no person or entity was known by the Company to be a
beneficial owner of more than 5% of the Common Stock of the Company.
ELECTION OF A CLASS OF DIRECTORS
(ITEM 1 OF THE PROXY CARD)
The Board of Directors of the Company is comprised of six members and is
divided into three classes, with the Directors in each class serving for a term
of three years and until their successors are duly elected and qualified. As the
term of one class expires, a successor class is elected at each annual meeting
of stockholders.
At the Annual Meeting, two Class III Directors will be elected to serve
until the 2001 annual meeting of stockholders and until their successors are
duly elected and qualified. The Board of Directors has nominated Eric R. Giler
and Robert G. Barrett to serve as Class III Directors (the "Nominees"). Each of
the Nominees is currently serving as a Director of the Company. The Board of
Directors anticipates that each of the Nominees will serve, if elected, as
Director. However, if any person nominated by the Board of Directors is unable
to accept election, the proxies will be voted for the election of such other
person or persons as the Board of Directors may recommend.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present or represented at the Annual Meeting is required for the election
of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
2
<PAGE> 5
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following table sets forth certain information with respect to the two
Nominees for election as directors at the Annual Meeting and those continuing
Directors of the Company whose terms expire at the annual meetings of
stockholders in 1999 and 2000, based on information furnished to the Company by
each director as of January 31, 1998.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL DIRECTOR
OCCUPATION FOR PAST FIVE YEARS AGE SINCE
------------------------------ --- --------
<S> <C> <C>
CLASS III NOMINEES FOR ELECTION AT 1998 ANNUAL
MEETING - TERM TO EXPIRE IN 2001
Eric R. Giler............................................... 42 1984
President and Director of the Company since the
Company's inception in 1984 and Director of NeTegrity,
Inc. and various privately-held high technology
companies.
Robert G. Barrett........................................... 53 1990
General Partner of Battery Ventures, L.P. since 1984;
Director of Peerless Systems Corp. and various
privately-held high technology companies.
CLASS I CONTINUING DIRECTORS - TERM TO EXPIRE IN 1999
David L. Chapman............................................ 63 1992
President and Chief Executive Officer of NorthPoint
Software Ventures, Inc. since February 1992; from March
1990 to February 1992, General Partner and Executive
Vice President of Landmark Ventures, Inc.; from March
1988 to March 1990, President and Chief Executive
Officer of Computer Power Group, Americas; from March
1986 to March 1988, Chairman, Vice Chairman, President
and Chief Executive Officer of Cullinet Software, Inc.;
and Director of various privately-held high technology
companies.
David W. Duehren............................................ 39 1984
Vice President of Research and Development and a
Director of the Company since the Company's inception
in 1984.
CLASS II CONTINUING DIRECTORS - TERM TO EXPIRE IN 2000
Patrick T. Hynes............................................ 38 1984
Vice President of Advanced Product Engineering since
January 1994 and a Director of the Company since the
Company's inception in 1984. Mr. Hynes was Vice
President of Engineering from the Company's inception
to December 1993.
W. Brooke Tunstall.......................................... 76 1990
President of Brooke Tunstall Associates since January
1, 1985, and a Senior Advisor to Mercer Management
Consulting, a subsidiary of Marsh and McLennan, Inc.,
from November 1987 to January 1994.
</TABLE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors. The Company has a six member Board of Directors.
Pursuant to the terms of the Company's Articles of Organization, the directors
are divided into three classes. Class III directors hold office for a term
expiring at the Annual Meeting. Class I directors hold office for a term
expiring at the annual meeting of stockholders to be held in 1999. Class II
directors hold office for a term expiring at the annual meeting of stockholders
to be held in 2000. Each director will hold office for the term to which he is
elected and until his successor is duly elected and qualified. At each annual
meeting of stockholders of the Company, the successors to the class of directors
whose terms expire at that meeting will be elected to hold office for a term
continuing until the annual meeting of stockholders held in the third year
following the year of their election and the election and qualification of their
successors.
3
<PAGE> 6
The Board of Directors of the Company held 5 meetings during Fiscal 1997.
During Fiscal 1997, each of the directors attended at least 75% of the total
number of meetings of the Board of Directors and of the committees of which he
was a member.
The Company has standing Audit and Compensation Committees.
Audit Committee. The members of the Audit Committee are Messrs. Barrett,
Chapman and Tunstall. The Audit Committee reviews the internal accounting
procedures of the Company and consults with and reviews the services provided by
the Company's independent auditors. During Fiscal 1997, the Audit Committee held
5 meetings.
Compensation Committee. The members of the Compensation Committee are
Messrs. Barrett, Chapman and Giler. The Compensation Committee reviews and
recommends to the Board of Directors the compensation and benefits of all of the
officers of the Company and reviews general policy matters relating to
compensation and benefits of employees of the Company. During Fiscal 1997, the
Compensation Committee of the Company held 2 meetings. The non-employee
Directors who are members of the Compensation Committee, Messrs. Barrett and
Chapman, also administer the Company's stock option and stock purchase plans.
The Board of Directors selects nominees for election as directors of the
Company. The Board of Directors will consider a nominee for election to the
Board recommended by a stockholder of record if such recommendation is presented
on a timely basis in accordance with, and is accompanied by the information
required by the Company's By-laws. The Company does not maintain a standing
nominating committee.
DIRECTOR COMPENSATION
Directors of the Company who are also employees receive no additional
compensation for their services as directors. Each non-employee director
receives an annual director's fee of $10,000, payable quarterly. Each
non-employee director also receives $1,000 in connection with each Board of
Directors or committee meeting attended. The Company has implemented its 1992
Stock Incentive Plan which provides that non-employee directors who are not
stockholders who beneficially own 10% or more of the Company's Common Stock or
affiliates of such stockholders, will receive stock options according to a
specified formula.
4
<PAGE> 7
OWNERSHIP BY MANAGEMENT OF EQUITY SECURITIES
The following table shows the beneficial ownership of Common Stock,
reported to the Company as of January 31, 1998, including shares as to which a
right to acquire ownership within 60 days exists, of each director and Nominee,
the President and the four other most highly compensated executive officers of
the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT
NAME* OF COMMON STOCK(1)** OF CLASS
----- -------------------- --------
<S> <C> <C>
Robert G. Barrett........................................... 17,251(2) +
David L. Chapman............................................ 41,291(3) +
W. Brooke Tunstall.......................................... 41,937(4) +
Eric R. Giler............................................... 469,021(5) 4.4%
David W. Duehren............................................ 498,050(6) 4.6%
Patrick T. Hynes............................................ 139,985(7) 1.3%
Stephen A. Ide.............................................. 121,103(8) 1.1%
Robert C. Leahy............................................. 196,162(9) 1.8%
Jonathan J. Sirota.......................................... 138,018(10) 1.3%
All directors and executive officers as a group (9
persons).................................................. 1,662,818(11) 15.5%
</TABLE>
- ---------------
* Except as otherwise indicated, the address of the beneficial owner is: c/o
Brooktrout Technology, Inc., 410 First Avenue, Needham, MA 02194.
** Adjusted to give effect to stock splits.
+ Less than 1%.
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to the information contained in the remaining footnotes to this
table as set forth below.
(2) Includes 7,501 shares subject to options exercisable within 60 days.
(3) Includes 10,312 shares subject to options exercisable within 60 days and
675 shares held by Mr. Chapman's wife, as to which 675 shares he disclaims
beneficial ownership.
(4) Includes 32,812 shares subject to options exercisable within 60 days and
1,125 shares held by Mr. Tunstall's wife, as to which 1,125 shares he
disclaims beneficial ownership.
(5) Includes 239,754 shares subject to options exercisable within 60 days,
212,317 shares held jointly with Mr. Giler's wife and 450 shares held by
Mr. Giler's minor sons, as to which 450 shares he disclaims beneficial
ownership.
(6) Includes 125,169 shares subject to options exercisable within 60 days and
102,510 shares held by Mr. Duehren's wife, as to which 102,510 shares he
disclaims beneficial ownership.
(7) Includes 48,879 shares subject to options exercisable within 60 days.
(8) Includes 121,103 shares subject to options exercisable within 60 days.
(9) Includes 166,450 shares subject to options exercisable within 60 days.
(10) Includes 118,750 shares subject to options exercisable within 60 days and
450 shares held by Mr. Sirota's wife, as to which 450 shares he disclaims
beneficial ownership.
(11) See Notes 2-10 above.
5
<PAGE> 8
EXECUTIVE COMPENSATION
Summary of Compensation in Fiscal 1997. The following table sets forth
information concerning compensation for services in all capacities awarded to,
earned by or paid to the Company's President and the four other most highly
compensated executive officers of the Company (the "Named Executives") during
Fiscal 1997 and fiscal years 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION SECURITIES
---------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION
--------------------------- ---- ------ ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
Eric R. Giler............................... 1997 $220,000 $112,343 37,500 $2,925(2)
President 1996 194,000 252,060 112,500(1)
1995 185,000 124,630 --
David W. Duehren............................ 1997 165,000 49,768 25,000 2,745(2)
Vice President of Research and 1996 147,000 107,537 75,000(1)
Development 1995 140,000 56,084 --
Stephen A. Ide.............................. 1997 160,000 59,728 25,000 2,774(2)
Sr. Vice President 1996 160,000 156,276 75,000(1)
President, Interspeed, Inc. 1995 120,000 123,625 --
Robert C. Leahy............................. 1997 160,000 59,728 25,000 2,775(2)
Vice President of Finance and Operations 1996 150,000 139,388 75,000(1)
and Treasurer 1995 142,000 74,778 --
Jonathan J. Sirota.......................... 1997 165,000 51,909 25,000 2,947(2)
Vice President of Engineering 1996 147,000 133,140 75,000(1)
1995 140,000 56,084 45,000(1)
</TABLE>
- ---------------
(1) Adjusted to reflect stock split subsequent to grant.
(2) Reflects the Company's matching contributions to employee's 401(k) plan.
Company matching began in 1997.
Stock Options Granted in Fiscal 1997. In August 1992, the Company
implemented the 1992 Plan pursuant to which options to purchase Common Stock of
the Company may be granted to non-employee directors, officers and other
employees of the Company. The following table sets forth the stock options
granted under the 1992 Plan during Fiscal 1997 to the Named Executives.
6
<PAGE> 9
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------
PERCENT
NUMBER OF TOTAL
OF SHARES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT
OPTIONS EMPLOYEES IN PRICE EXPIRATION DATE
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE VALUE($)(1)
---- ---------- ------------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Eric R. Giler........................ 37,500 7.8% $10.63 08/26/2007 $272,936
David W. Duehren..................... 25,000 5.2% $10.63 08/26/2007 $181,957
Stephen A. Ide....................... 25,000 5.2% $10.63 08/26/2007 $181,957
Robert C. Leahy...................... 25,000 5.2% $10.63 08/26/2007 $181,957
Jonathan J. Sirota................... 25,000 5.2% $10.63 08/26/2007 $181,957
</TABLE>
- ---------------
(1) The estimated grant date present value reflected in this column is
determined using the Black-Scholes option pricing model. The material
assumptions and adjustments incorporated in the Black-Scholes option pricing
model in estimating the value of the options reflected above include (i) an
exercise price as indicated in the table above; (ii) options are exercised
at the end of a five year period; (iii) interest rates representing the
interest rate on U.S. Treasury securities with maturity dates of five years
as of the date of grant; and (iv) volatility of approximately 82% calculated
using daily stock prices from October 1992 to the date of grant. The
ultimate value of the options will depend on the future market price of the
Common Stock, which cannot be forecast with reasonable accuracy. The actual
value, if any, an optionee will realize upon exercise of an option will
depend on the excess of the market value of the Common Stock on the date the
option is exercised over the exercise price.
Aggregated Stock Option Exercises in Fiscal 1997 and Stock Option Values.
The following table contains information concerning the value of unexercised
stock options held by each executive officer of the Company listed below on
December 31, 1997. On December 31, 1997, the last trading day in Fiscal 1997,
the last sales price of the Common Stock on the NASDAQ National Market System
was $11.56 per share.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL
YEAR-END 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL OPTIONS AT FISCAL
ACQUIRED YEAR-END(#) YEAR-END(#)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISED UNEXERCISABLE(1)
---- ----------- ----------- ----------------- -----------------
<S> <C> <C> <C> <C>
Eric R. Giler................... 10,000 $ 93,000.00 239,754/84,375 $1,105,637/$26,156
David W. Duehren................ 10,000 $118,800.00 125,169/56,250 $ 489,127/$17,438
Stephen A. Ide.................. -- -- 121,103/56,250 $ 410,369/$17,438
Robert C. Leahy................. 2,000 $ 18,600.00 166,450/56,250 $ 863,310/$17,438
Jonathan J. Sirota.............. -- -- 118,750/56,250 $ 390,413/$17,438
</TABLE>
- ---------------
(1) Market value of underlying Common Stock at year-end, minus the exercise
price of the options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Robert G.
Barrett, David L. Chapman and Eric R. Giler. Mr. Giler is the President of the
Company. Mr. Giler does not participate in
7
<PAGE> 10
actions or consideration by the Committee with respect to his own compensation,
and is not a part of the committee (comprising the other members of the
Compensation Committee) which administers the 1992 Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's executive compensation philosophy (which is
intended to apply to all senior management, including Mr. Giler) is to provide a
balanced compensation package while recognizing the Company's particular needs.
The Compensation Committee seeks to establish competitive levels of
compensation, integrate management's pay with the achievement of the Company's
performance goals, and assist the Company in attracting and retaining qualified
management. With this philosophy in mind, the Company has developed and
implemented compensation policies, plans and programs that seek to align closely
the financial interests of senior management of the Company with those of the
stockholders of the Company and to provide management additional incentive to
enhance the sales growth and profitability of the Company, and thus stockholder
value.
Members of senior management of the Company are being compensated
substantially in accordance with the terms of the Management Compensation Plan
(the "Compensation Plan"), which was established in 1991 and has been updated
annually thereafter. The three components of the Compensation Plan are base
salary, cash bonuses and incentive stock.
Base Salary. The Company sets base salary levels for senior management
each year based on a number of factors, including the status of the competitive
marketplace for such positions (including a comparison of base salaries for
comparable positions at comparable companies within the Company's industry), the
responsibilities of the position, the experience, and the required knowledge of
the individual. Base salary comparisons are based on a number of industry
compensation surveys which are available to the Compensation Committee.
Companies included in these surveys include a number of companies which are
included in the indices shown in the performance comparison on page 10, but also
include some companies which are private or are traded in markets other than
"the over the counter market" or NASDAQ. The Compensation Committee selected the
surveys used in the base salary comparison on the basis of availability and
general comparability of the included companies to the Company. The Compensation
Committee has attempted to fix base salaries on a basis generally in line with
base salary levels for comparable companies.
Variable Compensation -- Cash Bonuses. The Compensation Plan establishes
criteria for awarding cash bonuses to the Company's executive officers based on
a percentage of each such officer's base salary and consists of up to three
components, weighted differently for different executives: the achievement of
Company sales goals, Company profit goals and departmental/organizational goals
(collectively, the "Bonus Goals"). In the case of Mr. Ide, his cash bonus during
1995 and 1996 was also based on a percentage of the Company's gross sales. The
Compensation Plan bonus levels for 1997 were established by the Compensation
Committee at levels that would make available bonuses a significant part of the
total compensation package if Bonus Goals were met, in order that the cash bonus
component may act as a substantial performance incentive. The
departmental/organizational components of the cash bonuses are paid on a
semiannual basis. The sales and profit components of the cash bonuses are
proportionally accrued upon achievement of 60% of such goals and are paid
quarterly. An additional bonus (based on a percentage of the available bonus) is
paid for each percentage point by which sales and profits exceed 100% of the
Bonus Goals.
Incentive Stock. During each fiscal year the non-employee directors who
are members of the Compensation Committee may consider granting senior
executives of the Company awards under the Company's 1992 Plan. Such awards are
based on various factors, including both corporate and individual performance
during the preceding year and incentives to reach certain goals during future
years. In Fiscal 1997, the Compensation
8
<PAGE> 11
Committee awarded certain stock options to Named Executives, which options have
an exercise price equal to $10.63 per share, the closing price of the Common
Stock as reported by the NASDAQ National Market System on August 26, 1997. The
vesting of these shares will occur equally over a four year period.
The non-employee directors who are members of the Compensation Committee
also administer the 1992 Stock Purchase Plan (the "Purchase Plan"). During
Fiscal 1997, Jonathan J. Sirota was the only Named Executive who purchased
Common Stock under the 1992 Stock Purchase Plan.
Compensation of the President. In January 1997, the Compensation Committee
(without the participation of Mr. Giler) determined the compensation of Mr
Giler, the President of the Company (the "President"), for Fiscal 1997
substantially in accordance with the Compensation Plan, which is more
particularly described in the foregoing section of this report. The President's
base salary was fixed at a level designed to be comparable to the salary of the
presidents at similarly situated companies. The cash bonus available to be paid
to the President under the Compensation Plan was based upon and determined by
Company sales goals, profit goals and organizational goals, and consideration of
the actual financial performance of the Company relative to the Compensation
Plan and to historical performance in accordance with the rules and procedures
described above.
Compensation Committee
Robert G. Barrett
David L. Chapman
Eric R. Giler
COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission (the "Commission") requires the
Company to present a chart comparing the cumulative total shareholder return on
its Common Stock with the cumulative total shareholder return of (i) a broad
equity market index and (ii) a published industry index or peer group. Such
chart compares the Common Stock with (i) the CRSP Total Return Index for The
NASDAQ National Market System (the "NASDAQ Index") and (ii) the NASDAQ Computer
& Data Processing Services Stocks Total Return Industry Index (the "NASDAQ
Computer Index"). The total return for each of the Company Common Stock, the
NASDAQ Index and the NASDAQ Computer Index assumes the reinvestment of
dividends, although dividends have not been declared on the Company's Common
Stock. This chart assumes an investment of $100 on December 31, 1993 in each of
the Common Stock, the stocks comprising the NASDAQ Index and the stocks
comprising the NASDAQ Computer Index. The NASDAQ Index tracks the aggregate
price performance of all domestic equity securities traded on the NASDAQ
National Market and the NASDAQ Small-Cap Market. The Company's Common Stock is
traded on the NASDAQ National Market System.
9
<PAGE> 12
Comparison of Cumulative Total Return among Brooktrout Technology, Inc.
Common Stock, the CRSP Total Return Index for The NASDAQ National Market System
and the NASDAQ Computer & Data Processing Services Stocks Total Return Industry
Index.
<TABLE>
<CAPTION>
Computer &
Brooktrout Data
Measurement Period Technology, NASDAQ Processing
(Fiscal Year Covered) Inc. Index Index
<S> <C> <C> <C>
12/31/93 $100.00 $100.00 $100.00
12/31/94 $ 80.00 $ 98.00 $121.00
12/31/95 $133.00 $138.00 $185.00
12/31/96 $442.00 $170.00 $228.00
12/31/97 $183.00 $209.00 $280.00
</TABLE>
INCREASE IN STOCK INCENTIVE PLAN
(ITEM 2 OF THE PROXY CARD)
The Board of Directors believes that the availability of an adequate number
of shares under the 1992 Plan has been, and in the future will be, an important
factor in attracting and retaining the highest caliber directors, executives and
employees of the Company. The Board of Directors believes that, in light of the
plans of the Company to continue the expansion of the business, the number of
shares available for issuance is insufficient and should be increased by 850,000
shares from 2,325,000 shares to 3,175,000 shares. The foregoing share numbers
and all share numbers in the following summary have been adjusted to reflect two
3-for-2 stock splits effected by the Company in February, 1996 and June, 1996.
On February 19, 1998, the Board of Directors adopted, subject to the approval of
the stockholders, an amendment to the Company's 1992 Plan to increase by 850,000
the number of shares of Common Stock reserved for issuance under the 1992 Plan.
SUMMARY OF THE PLAN
Number of Shares Subject to the Plan. A total of 2,325,000 shares of
Common Stock have been reserved for issuance pursuant to options under the 1992
Plan. To date, options to purchase a total 2,153,439 shares have been granted,
of which options to purchase 49,325 shares have expired without being exercised.
Purpose of the Plan. The purpose of the 1992 Plan is to provide a
performance incentive to, and encourage the continued employment and service of
directors, executives and employees of the Company by encouraging them to
acquire a proprietary interest in the Company through stock ownership.
10
<PAGE> 13
Awards Under the Plan. The 1992 Plan authorizes (i) the grant of options
to purchase Common Stock intended to qualify as incentive stock options under
Section 422 of the Code ("Incentive Options"), (ii) the grant of options that do
not so qualify ("Non-Qualified Options"), (iii) direct grants or sales of Common
Stock not subject to any transfer or other restrictions or conditions
("Unrestricted Stock"), (iv) direct grants or sales of Common Stock subject to
transfer or other restrictions or conditions determined by the Board of
Directors at the date of grant ("Restricted Stock") and (v) grants of Common
Stock subject to the attainment of certain performance goals ("Performance Share
Awards").
Plan Administration. The 1992 Plan is administered by a committee of the
Board of Directors (the "Committee") consisting of the non-employee directors
who are members of the Compensation Committee. The Committee has full power to
select the individuals to whom awards will be granted, to make any combination
of awards to such individuals and to determine the specific terms of each award,
subject, to the provisions of the 1992 Plan. Persons eligible to participate in
the 1992 Plan are officers and other employees of the Company. Non-employee
directors of the Company are eligible to participate in the 1992 Plan only on a
limited basis as described below.
Incentive Options and Non-Qualified Options. Under the 1992 Plan, both
Incentive Options and Non Qualified Options may be granted to employees, and
Non-Qualified Options may be granted to non-employee Directors. The option
exercise price of each option shall be determined by the Committee, but shall
not be less than 100% of the fair market value of the shares on the date of
grant in the case of Incentive Options and not less than 85% of the fair market
value of the shares on the date of grant in the case of Non-Qualified Options.
No Incentive Option may be granted to any employee who owns at the date of grant
stock representing in excess of 10% of the combined voting power of all classes
of stock of the Company or a parent or a subsidiary unless the exercise price
for stock subject to such option is at least 110% of the fair market value of
such stock at the time of grant and the option term does not exceed five years.
Other Option Terms. The term of each option shall be fixed by the
Committee and may not exceed ten years from the date of grant in the case of an
Incentive Option. The Committee determines at what time or times each option may
be exercised and, subject to the provisions of the 1992 Plan, the period of
time, if any, after death, disability or termination of employment during which
options may be exercised. Options may be made exercisable in installments and
the exercisability of options may be accelerated by the Committee.
Under the 1992 Plan, each non-employee director who is not a stockholder,
or an affiliate of a stockholder, with beneficial ownership of 10% or more of
the outstanding Common Stock (an "Eligible Director"), will automatically
receive Non-Qualified Options according to a formula upon his or her election or
re-election as a director. Options for an Eligible Director are exercisable at
the fair market value of the Common Stock at the date of issuance and vest
generally in monthly installments at a rate of 5,625 per year of service as a
Director.
Restricted Stock. The Committee also may award shares of Restricted Stock
to employees, subject to such conditions and restrictions as the Committee may
determine. The purchase price, if any, of shares of Restricted Stock is
determined by the Committee. If a participant who holds shares of Restricted
Stock terminates employment for any reason (including death) prior to the
vesting of such Restricted Stock, the Company has the right to repurchase the
shares or to acquire their forfeiture in exchange for the amount, if any, which
the participant paid for them. Prior to the vesting of Restricted Stock, the
participant will have all the rights of a stockholder with respect to the
shares, including voting and dividend rights, subject only to the conditions and
restrictions set forth in the 1992 Plan or in the Restricted Stock award
agreement.
Unrestricted Stock. The Committee also may grant shares, at a purchase
price, if any, determined by the Committee, which are free from any restrictions
under the 1992 Plan ("Unrestricted Stock"). Unrestricted Stock may be issued to
employees in recognition of past services or other valid consideration and
11
<PAGE> 14
may be issued in lieu of cash bonuses to be paid to employees pursuant to other
bonus plans of the Company. Non-employee Directors of the Company may elect to
receive all or a portion of the directors' meeting fees in shares of
Unrestricted Stock by entering into an irrevocable agreement with the Company
regarding such election at least six months prior to the beginning of the next
calendar year. Employees, with the permission of the Committee, may make similar
irrevocable elections to receive a portion of their compensation in Unrestricted
Stock.
Performance Share Awards. The Committee also may grant Performance Share
Awards to employees entitling the recipient to receive shares of Common Stock
upon the achievement of individual or Company performance goals and such other
conditions as the Committee may determine. Except as otherwise determined by the
Committee, rights under a Performance Share Award will terminate upon a
participant's termination of employment.
Tax Withholding. Participants under the 1992 Plan are responsible to pay
to the Company, or make arrangements satisfactory to the Compensation Committee
of the Board of Directors regarding payment of any Federal, state, or local
taxes of any kind required by law to be withheld with respect to income from the
value of an award or of any stock or amounts received thereunder. Participants
may elect to have such tax withholding obligations satisfied either by
authorizing the Company to withhold from shares of Common Stock to be issued
pursuant to any award a number of shares with an aggregate fair market value
that would satisfy the withholding amount due, or transferring to the Company
shares of Common Stock owned by the participant with an aggregate fair market
value that would satisfy the withholding amount due.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a description of the federal income tax consequences
under the Internal Revenue Code (the "Code") of the grant and exercise of the
awards under the 1992 Plan.
The optionee will recognize no income upon the grant of an Incentive Option
and incur no tax on its exercise (unless the optionee is subject to alternative
minimum tax). If the optionee holds the Incentive Option for two years after the
date the options were granted and the stock acquired upon exercise of an
Incentive Option (the "ISO Shares") for one year after the option was exercised,
the optionee generally will realize mid- term or long term capital gain or loss
(rather than ordinary income or loss) upon disposition of the ISO Shares and the
Company will not be entitled to any deduction. This mid-term or long term
capital gain or loss will be equal to the difference between the amount realized
upon such disposition and the amount paid for the ISO Shares.
If the optionee disposes of ISO Shares prior to the expiration of either
required holding period (a "disqualifying disposition"), the gain realized upon
such disposition, up to the difference between the fair market value of the ISO
Shares on the date of exercise (or, if less, the amount realized on a sale of
such shares) and the option exercise price, will be treated as ordinary income
and the Company will receive a corresponding deduction for federal income tax
purposes. Any additional gain will be long-term, mid-term or short-term capital
gain, depending upon the amount of time the ISO Shares were held by the
optionee.
An optionee will not recognize any taxable income at the time a
Non-Qualified Option is granted. However, upon exercise of a Non-Qualified
Option the optionee will include in income as compensation an amount equal to
the difference between the fair market value of the shares received on the date
of exercise (in most cases) and the optionee's exercise price. The included
amount will be treated as ordinary income by the optionee and may be subject to
tax withholding by the Company (either by payment in cash or withholding out of
the optionee's salary). The Company will be entitled to a deduction for federal
income tax purposes of the same amount provided the Company complies with
applicable withholding rules. Upon resale of the shares
12
<PAGE> 15
by the optionee, any subsequent appreciation or depreciation in the value of the
shares will be treated as a capital gain or loss.
Section 83 of the Code and the regulations thereunder provide that the date
for reporting and determining the amount of ordinary income (and the Company's
equivalent deduction) upon exercise of a Non-Qualified Option by a person who is
subject to Section 16 of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act")will be delayed until the date that is the earlier of (i) six
months after the date of exercise and (ii) such time as the shares received upon
exercise could be sold for a gain without the person being subject to potential
liability under Section 16 of the Exchange Act.
For transactions occurring after July 28, 1997, the Taxpayer Relief Act of
1997 has created three different types of capital gains for individuals:
short-term gains (on assets held for one year or less) which are taxed at
ordinary income rates; mid-term capital gains (from the sale of assets held more
than a year but not more than 18 months) which are taxed at a maximum rate of
28%; and long-term capital gains (from the sale of assets held more than 18
months) which are taxed at a maximum rate of 20%.
GRANTS UNDER THE PLAN
All employees and all non-employee directors are currently eligible to
participate in the 1992 Plan. Because option grants under the 1992 Plan are
discretionary (other than grants to Eligible Directors), the Company cannot now
determine the number of options to be received by any particular current
executive officer, by all current executive officers as a group or by
non-executive officer employees as a group that will be granted under the 1992
Plan in 1998. The number of such options shall be determined by the Committee
pursuant to the terms of the 1992 Plan. The following table sets forth
information regarding Non-Qualified Options to be granted to the Eligible
Director upon re-election under the 1992 Plan during 1998. Each Non-Qualified
Option granted to an Eligible Director will have an exercise price equal to the
fair market value of the Common Stock on the date of the grant.
<TABLE>
<CAPTION>
NUMBER OF
OPTION SHARES TO
NAME AND POSITION BE GRANTED IN 1998
----------------- ------------------
<S> <C>
Eligible Director Group (1 person).......................... 16,875
</TABLE>
The approval of the amendment to the 1992 Plan requires the affirmative
vote by holders of a majority of the shares of Common Stock represented at the
Annual Meeting and entitled to vote. For this purpose, broker non-votes are
treated as not entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL.
INCREASE IN STOCK PURCHASE PLAN
(ITEM 3 OF THE PROXY CARD)
A total of 112,500 shares of Common Stock have been reserved for the
Purchase Plan. As of January 1, 1998, only 39,614 shares remained available for
purchase under the Purchase Plan. The Board of Directors believes that it is
desirable for the Company to continue to provide the opportunity for employees
to acquire Common Stock through the Purchase Plan. Accordingly, subject to
shareholder approval, the Board of Directors has adopted an amendment to the
Purchase Plan reserving an additional 100,000 shares for issuance under the
Purchase Plan. The foregoing share numbers and all share numbers in the
following summary have been adjusted to reflect two 3-for-2 stock splits
effected by the Company in February, 1996 and June, 1996. The following is a
summary of the basic provisions of the Purchase Plan.
13
<PAGE> 16
SUMMARY OF THE PURCHASE PLAN
Purpose of the Plan. The Purchase Plan's purpose is to provide eligible
employees with opportunities to purchase shares of the Company's Common Stock.
The Board of Directors believes that the opportunity to acquire a proprietary
interest in the success of the Company through the acquisition of shares of
Common Stock pursuant to the Purchase Plan is an important aspect of the
Company's ability to attract and retain highly qualified and motivated
employees.
Plan Administration. The Purchase Plan is administered by the Board of
Directors. The Board of Directors has the authority to make rules and
regulations to administer the Purchase Plan and its interpretations and
decisions with regard thereto shall be final and conclusive.
Eligibility for Participation in the Plan. All employees of the Company
and its subsidiaries, who are regularly employed by the Company a minimum of 20
hours per week, including directors who are employees, are eligible to
participate in the Purchase Plan. Eligible employees may elect to contribute
from $6 for each weekly pay period or $25 for each monthly pay period up to 10%
of their cash compensation during each pay period. However, no employee may be
granted an option under the Purchase Plan if such employee, immediately after
the option is granted, owns 5% or more of the total combined voting power or
value of the stock of the Company.
Material Terms of the Plan. The Company has made a series of offerings
("Offerings") to employees to purchase Common Stock under this Purchase Plan.
The Initial Offering began on the effective date of the Purchase Plan and ended
on the following December 31 (the "Initial Offering"). All subsequent Offerings
began on each January 1 or July 1, or the first business day thereafter. The
first day of each Offering is the "Offering Date." Except for the Initial
Offering, each Offering Date will begin a six-month period (a "Plan Period").
The purchase price per share is equal to 85% of the lower of (a) the fair market
value of the Common Stock on the Offering Date or (b) the fair market value on
the last day of each Plan Period.
Rights under the Purchase Plan are not transferable by a participating
employee other than by will or the laws of descent and distribution, and are
exercisable during the employee's lifetime only by the employee. In the event of
a participating employee's termination of employment prior to the last business
day of a Plan Period, no payroll deduction shall be taken from any pay due and
owing to the employee and the balance in the employee's account shall be paid to
the employee or, in the event of the employee's death, to the employee's
designated beneficiary. If, prior to the last business day of the Plan Period,
the subsidiary by which an employee is employed shall cease to be a designated
subsidiary of the Company, or if the employee is transferred to a subsidiary of
the Company that is not a designated subsidiary, it shall be deemed that the
employee has terminated employment for the purposes of the Purchase Plan.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. Under the Code, no taxable
income is recognized by the participant with respect to shares purchased under
the Purchase Plan. However, participants will be liable for tax at varying rates
on the sale of any shares purchased pursuant to the Purchase Plan.
The approval of the amendment to the Purchase Plan requires the affirmative
vote by holders of a majority of the shares of Common Stock represented at the
Annual Meeting and entitled to vote. For this purpose, broker non-votes are
treated as not entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL.
14
<PAGE> 17
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(ITEM 4 OF THE PROXY CARD)
The Board of Directors has selected, subject to ratification by the
stockholders of the Company at the Annual Meeting, the firm of Deloitte & Touche
LLP to serve as the independent auditors for the Company for the fiscal year
ending December 31, 1998. Deloitte & Touche LLP has served as the Company's
independent auditors since 1984. A representative of Deloitte & Touche LLP will
be present at the Annual Meeting, will be given the opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions.
A majority of the votes properly cast at the meeting is required to ratify
and approve the selection of Deloitte & Touche LLP as the Company's independent
auditors for the fiscal year ending December 31, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without special compensation for such activities. The
Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
The Company also may retain a proxy solicitation firm to assist in soliciting
proxies. The costs of retaining such a firm would depend upon the amount and
type of services rendered, but the Company does not expect the cost to exceed
$7,500.
STOCKHOLDER PROPOSALS
For a proposal of a stockholder to be brought before the Annual Meeting, it
must be received in writing at the principal executive offices of the Company
not earlier than January 15, 1999 or later than March 16, 1999.
A stockholder proposal submitted pursuant to Exchange Act Rule 14a-8 for
inclusion in the Company's proxy statement and form of proxy for the 1999 annual
meeting of stockholders must be received by December 2, 1998. Such a proposal
must also comply with the requirements as to form and substance established by
the Commission for such a proposal to be included in the proxy statement and
form of proxy. Any such proposal should be mailed to: Brooktrout Technology,
Inc., 410 First Avenue, Needham, Massachusetts 02194, Attn: Clerk.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 previously filed with the Commission pursuant to the Exchange Act, and
all other reports filed pursuant to Section 13(a)
15
<PAGE> 18
or 15(d) of the Exchange Act since December 31, 1997, are incorporated into this
Proxy Statement by reference. The description of the Company's Common Stock
contained in the Company's Registration Statement on Form 8-A dated September
30, 1992 previously filed with the Commission pursuant to the Exchange Act is
also incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Proxy Statement and
prior to the Shareholder Meeting to which this Proxy Statement relates shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any subsequent filed document which also is or is deemed to be
incorporated by reference herein or in any accompanying supplement to this Proxy
Statement modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed to constitute a part of this Proxy Statement
or any supplement thereto, except as so modified or superseded.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED HEREIN BY
REFERENCE, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY BENEFICIAL
OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED UPON REQUEST MADE TO INVESTOR
RELATIONS, BROOKTROUT TECHNOLOGY, INC., 410 FIRST AVENUE, NEEDHAM, MASSACHUSETTS
02194, ATTENTION: ROBERT C. LEAHY, VICE PRESIDENT OF FINANCE AND OPERATIONS,
(TELEPHONE: 781-449-4100).
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
16
<PAGE> 19
PROXY
BROOKTROUT TECHNOLOGY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- MAY 14, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Eric R. Giler and Robert
C. Leahy, and each of them, as Proxies of the undersigned, with full power of
substitution, and authorizes each of them to represent and to vote all shares
of Common Stock of Brooktrout Technology, Inc. (the "Company") held by the
undersigned as of the close of business on March 20, 1998, at the Annual
Meeting of Stockholders to be held at Fleet National Bank, 75 State Street,
Eighth Floor Conference Center, Boston, Massachusetts on Thursday, May 14,
1998, at 9:30 a.m., local time, and at any adjournments or postponements
thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNERS DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S) AND IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL THE NOMINEES LISTED IN PROPOSAL 1
AND FOR THE ITEMS DESCRIBED IN PROPOSALS 2, 3 AND 4 AND AT THE PROXIES'
DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES AND "FOR" PROPOSALS
2, 3 AND 4. A STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENVELOPE PROVIDED.
[SEE REVERSE SIDE] CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE SIDE]
[X] Please mark votes as in this example.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders, the Proxy Statement with respect
thereto and the Company's 1997 Annual Report to Stockholders, and hereby
revoke(s) any proxy or proxies heretofore given. This proxy may be revoked at
any time before it is executed.
1. Proposal to elect the following persons as Class III Directors:
Nominees: Eric R. Giler and Robert G. Barrett
[ ] FOR BOTH NOMINEES [ ] WITHHELD FROM BOTH NOMINEES
[ ]
-------------------------------------------
For both nominees except as noted above
[ ]
-------------------------------------------
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
2. Proposal to approve an amendment to the Company's 1992 Stock Incentive
Plan, as amended, to increase the number of shares of the Company's Common
Stock subject to issuance under such plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to approve an amendment to the Company's Amended and Restated 1992
Stock Purchase Plan to increase the number of shares of the Company's
Common Stock subject to issuance under such plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Proposal to ratify and approve the selection of Deloite & Touche LLP as
the independent auditors of the Company for the fiscal year ending
December 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(Please sign name exactly as shown. Where there is more than one holder, each
should sign the proxy. When signing as an attorney, administrator, executor,
guardian or trustee, please add your title as such. If executed by a
corporation, the proxy should be signed by a duly authorized person, stating
his or her title or authority.)
Signature: Date:
------------------------- ---------------------
Signature: Date:
------------------------- ---------------------
