SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[ X ] Definitive Proxy Statement Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Zoom Telephonics
-----------------------------------------------
(Name of Registrant as Specified in Its Charter)
Zoom Telephonics
-----------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(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>
ZOOM TELEPHONICS, INC.
207 South Street
Boston, MA 02111
May 23, 1997
Dear Shareholder:
You are invited to attend the Annual General Meeting of Shareholders of
Zoom Telephonics, Inc. to be held at 9:00 a.m. Eastern time in downtown Boston
on the 25th day of June 1997 at the Harvard Club of Boston, One Federal Street,
38th Floor, Boston, Massachusetts 02110.
A buffet breakfast will be available starting at 8:30 a.m. and the Meeting
will begin at 9:00 a.m. Officers and directors will be available for discussion
before and after the Meeting. After the short formal part of the Meeting, there
will be a Zoom presentation and a question-and-answer period.
Whether or not you plan to attend, we urge you to sign and return the
enclosed proxy so that your shares will be represented. If you change your mind
about your proxy at the Meeting, you can withdraw your proxy and vote in person.
I look forward to seeing those of you who will be able to attend.
Frank Manning
President
<PAGE>
ZOOM TELEPHONICS, INC.
207 South Street
Boston, MA 02111
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders
(the "Meeting") will be held on June 25, 1997 at 9:00 a.m. Eastern time at the
Harvard Club of Boston, One Federal Street, 38th Floor, Boston, Massachusetts
02110, and simultaneously (linked by telephone) at Suite 680, One Bentall
Centre, 505 Burrard Street, Vancouver, B.C. V7X 1M4 for the following purposes:
1. To place before the Meeting the Report of the Directors, the financial
statements of Zoom for the year ending December 31, 1996, and the Report of
the Auditor on the financial statements.
2. To elect directors for the ensuing year;
3. To appoint an auditor for the ensuing year at a remuneration to be fixed by
the directors; and
4. To transact such other business as may properly come before the Meeting or
any adjournments of the Meeting.
The Board of Directors has fixed the close of business on May 7, 1997 as
the record date for determining Shareholders entitled to receive notice of the
Meeting and, subject to subsequent transferees taking steps to be added to the
voting list in the manner set forth under "Voting Shares and Record Date" in the
Proxy Circular, to vote at the Meeting.
Shareholders who are unable to attend the Meeting in person are requested
to complete, sign, date and return the enclosed Form of Proxy. A proxy will not
be valid unless it is deposited at the office of The R-M Trust Company,
Corporate Financial Services, Mall Level, 1177 West Hastings Street, Vancouver,
British Columbia, V6E 2K3 before the close of business on June 24, 1997.
Boston, Massachusetts
May 23, 1997
BY ORDER OF THE BOARD OF DIRECTORS
Frank Manning
President
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE. IF YOU ATTEND THE MEETING AND SO DESIRE, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY.
<PAGE>
ZOOM TELEPHONICS, INC.
PROXY CIRCULAR FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 25, 1997
SOLICITATION OF PROXIES
THIS PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY THE BOARD OF DIRECTORS OF ZOOM TELEPHONICS, INC. ("ZOOM") FOR USE AT
THE ANNUAL GENERAL MEETING AND ANY ADJOURNMENTS OF THE ANNUAL GENERAL MEETING
(THE "MEETING") OF THE SHAREHOLDERS OF ZOOM TO BE HELD ON JUNE 25, 1997, AT THE
TIME AND PLACE AND FOR THE PURPOSES SET FORTH IN THE NOTICE OF MEETING. It is
expected that the solicitation will be primarily by mail. Zoom has retained The
R-M Trust Company and Corporate Investor Communications, Inc. to assist in the
solicitation of proxies from brokerage firms, banks and other institutional
nominees. Zoom may reimburse brokerage firms and other persons representing
beneficial owners of shares for their reasonable expenses incurred in forwarding
solicitation materials. Proxies may also be solicited personally or by telephone
by directors, officers or employees of Zoom at nominal cost. THE COST OF THIS
SOLICITATION WILL BE BORNE BY ZOOM.
This Proxy Circular, Notice of Meeting and accompanying proxy card are
first being mailed to Shareholders on or about May 23, 1997.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named as proxy holders in the accompanying Form of Proxy are
nominees of Zoom's management. A SHAREHOLDER DESIRING TO APPOINT SOME OTHER
PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT SUCH SHAREHOLDER AT THE
MEETING MAY DO SO, EITHER BY:
(a) STRIKING OUT THE PRINTED NAMES AND INSERTING THE DESIRED PERSON'S
NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY;
OR
(b) BY COMPLETING ANOTHER PROPER FORM OF PROXY.
The completed proxy must be deposited at the office of The R-M Trust
Company, Corporate Financial Services, Mall Level, 1177 West Hastings Street,
Vancouver, British Columbia V6E 2K3 before the close of business on June 24,
1997.
A Shareholder who has given a proxy may revoke it by an instrument in
writing delivered to the office of The R-M Trust Company, Corporate Financial
Services, Mall Level, 1177 West Hastings Street, Vancouver, British Columbia V6E
2K3, or to the registered office of Zoom, at Suite 680, One Bentall Centre, 505
Burrard Street, Vancouver, British Columbia V7X 1M4 at any time up to and
including the last business day preceding the day of the Meeting or any
adjournments thereof, or to the chairman of the Meeting or any adjournments
thereof, or in any other manner permitted by law.
<PAGE>
VOTING OF PROXIES
If a choice with respect to any matter to be acted upon has been specified
in a proxy, the shares represented by that proxy will be voted in accordance
with the specification so made. IF A CHOICE IS NOT SPECIFIED, IT IS INTENDED
THAT THE PERSON DESIGNATED BY MANAGEMENT IN THE ACCOMPANYING FORM OF PROXY WILL
VOTE THE SHARES REPRESENTED BY THE PROXY IN FAVOR OF EACH MATTER IDENTIFIED ON
THE FORM OF PROXY, AND FOR THE NOMINEES OF MANAGEMENT FOR DIRECTORS AND AUDITOR.
The Form of Proxy accompanying this Proxy Circular confers discretionary
authority upon the named proxy holders with respect to amendments or variations
to the matters identified in the accompanying Notice of Meeting and with respect
to any other matters which may properly come before the Meeting. As of the date
of this Proxy Circular, the management of Zoom knows of no such amendment or
variation or matters to come before the Meeting other than those referred to in
the accompanying Notice of Meeting.
VOTING SHARES AND RECORD DATE
The record date as of which Shareholders are entitled to receive notice of
and to vote at the Meeting is May 7, 1997. As of that date, 7,472,371 shares of
Common Stock, without par value, of Zoom were issued and outstanding. Each share
carries the right to one vote on each matter to be voted upon at the Meeting.
Each holder of record of shares of Common Stock of Zoom on May 7, 1997 is
entitled to vote such holder's shares at the Meeting except to the extent that
the holder transfers any shares and the transferee produces properly endorsed
share certificates or otherwise establishes that such transferee owns the shares
and demands not later than ten days before the Meeting to be included in the
list of Shareholders entitled to vote at the Meeting, in which case the
transferee (and not the transferor) is entitled to vote such shares at the
Meeting.
REPORTS
At the Meeting, Zoom will submit to the Shareholders the Report of the
Directors, the financial statements of Zoom for the year ending December 31,
1996 and the Report of the Auditor on the financial statements. Zoom's Annual
Report to Shareholders for the fiscal year ending December 31, 1996, including
financial statements audited by KPMG Peat Marwick LLP and management's
discussion and analysis of those financial statements, is being mailed to
Shareholders simultaneously with this Proxy Circular. No action will be required
from the Shareholders with respect to these reports.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A board of five (5) directors is to be elected at the Meeting. The persons
named in the following table are proposed by management for election as
directors of Zoom. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the nominees named below. All nominees are
currently directors of Zoom. In the event that any nominee is unable or declines
to serve as a director at the time of the Meeting, the proxies will be voted for
the nominee, if any, who shall be designated by the present Board of Directors
to fill the vacancy. It is not expected that any nominee will be unable or will
decline to serve as a director. The proposed nominees are not being nominated
pursuant to any arrangement or understanding with any person. Each director
elected will hold office until the next Meeting or until his successor is duly
elected or appointed, unless his office is earlier vacated in accordance with
the Articles of Continuance of Zoom or he becomes disqualified to act as a
director. The five nominees who receive the greatest number of votes cast by
Shareholders present, in person or by proxy, and entitled to vote at the
Meeting, will be elected directors of Zoom.
<TABLE>
<CAPTION>
Name Age Principal Director
Occupation Since
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Frank B. Manning 48 Chief Executive Officer, President 1977
and Director of Zoom Telephonics, Inc.
Peter R. Kramer 45 Executive Vice President 1977
and Director of Zoom Telephonics, Inc.
Bernard Furman (1)(2) 67 Consultant 1991
L. Lamont Gordon (1) 64 Chairman of Sprott Securities Limited 1992
J. Ronald Woods (1)(2) 61 Vice President of Jascan, Inc. 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Member of the Audit Committee
(2) Member of the Stock Option Committee
</FN>
</TABLE>
Background of Nominees
Frank B. Manning is a co-founder of Zoom and has been President, Chief
Executive Officer and a Director of Zoom since May 1977, and Chairman of the
Board since 1986. He earned his BS, MS and Ph.D degrees in Electrical
Engineering from the Massachusetts Institute of Technology, where he was a
National Science Foundation Fellow. Mr. Manning has been a director of
Microtouch Systems, Inc since 1993.
Peter R. Kramer is a co-founder of Zoom and has been Executive Vice
President and a Director of Zoom since May 1977. He earned his BA degree in 1973
from SUNY Stony Brook and his MFA degree from C.W. Post College in 1975.
Bernard Furman has been a Director of Zoom since 1991. Mr. Furman has
served as a consultant to various companies, including Timeplex, Inc. (formerly
listed on the New York Stock Exchange), a world leader in large capacity
multiplexer and network management products. He was a co-founder of Timeplex and
served as its General Counsel and as member of its Board of Directors from its
inception in 1969, and in 1984 also became Vice Chairman, Chief Administrative
Officer and a member of the Executive Committee of the Board, holding all such
positions until Timeplex was acquired by Unisys Corporation in 1988.
L. Lamont Gordon has been a Director of Zoom since 1992. Since 1987, Mr.
Gordon has served as the Chairman of Sprott Securities Limited, a Canadian
institutional stock brokerage firm, and a member of the Toronto Stock Exchange.
He co-founded Gordon Securities Limited in 1969 and served as President until
1978 and as Chairman until 1979. He then founded Gordon Lloyd-Price Investments
Limited, a private investment holding company and has served as its Chairman
since 1979.
J. Ronald Woods has been a Director of Zoom since 1991. Since June 1996,
Mr. Woods has served as Vice President-Investments of Jascan, Inc.,an investment
company based in Toronto. Prior to that, Mr. Woods served as Vice
President-Investments of Conwest Exploration Corporation Ltd., a resource
holding company based in Toronto from 1987 to June 1996. He also served as a
director, major shareholder and head of research and corporate finance for Merit
Investment Corporation, a stock brokerage firm, from 1972 through 1987, and
served as the President of Merit from 1984 through 1987. He is a former Governor
of the Toronto Stock Exchange and is currently a director of Upton Resources,
Inc., Jordan Petroleum Ltd., Jascan Inc., Highridge Exploration Ltd., Place
Resources Ltd.
and ARC International Corp.
Committees and Meetings of the Board of Directors
The Board of Directors has an Audit Committee consisting of Messrs.
Furman, Woods and Gordon, and a Stock Option Committee consisting of Messrs.
Furman and Woods. The functions of the Audit Committee are to review the
engagement of auditors, including the fee, scope and timing of the audit and
other services rendered, and to review policies and procedures with respect to
internal controls. The function of the Stock Option Committee is to administer
and award options under the Zoom Telephonics, Inc. Stock Option Plan. The Board
of Directors does not have a nominating or compensation committee.
During the year ending December 31, 1996, the Board of Directors held two
meetings and acted by unanimous written consent four times, the Audit Committee
met one time with Zoom's independent auditors, and the Stock Option Committee
acted by unanimous written consent three times. In addition, management
consulted with members of the Board of Directors throughout the year on an
informal basis. Each Director attended at least 75% of the total number of
meetings of the Board and the committees on which he served.
Directors Compensation
Each non-employee director of Zoom receives $250 for each meeting of the
Board of Directors attended, exclusive of meetings held by means of a telephone
conference. Travel and lodging expenses are also reimbursed.
Each non-employee director of Zoom is also granted stock options under the
Zoom Telephonics, Inc. 1991 Directors Stock Option Plan, as amended (the
"Directors Plan"). Currently, the non-employee Directors of Zoom are Bernard
Furman, J. Ronald Woods and L.
Lamont Gordon.
The Directors Plan provides in the aggregate that 198,000 Common Shares
(subject to adjustment for capital changes) may be issued upon the exercise of
options granted under the Directors Plan. Under the Plan, each non-employee
director is automatically granted an option to purchase 6,000 Common Shares on
January 10 and July 10 of each year. The exerise price for the options is the
fair market value of the Common Shares on the date the option is granted.
Options granted under the Directors Plan may be exercised at any time
commencing six months after the date of grant and ending two years from the date
of grant; provided, however, that in the event the participants ceases to be a
director of Zoom, the option must be exercised upon the earlier to occur of (I)
two years from the date of grant, (ii) one month from the date of termination in
the event of termination for any reason other than death or disability, or (iii)
one year from the date of termination as a result of death or disability of the
director. Generally, options granted under the Directors Plan are non-assignable
and non-transferable except in the event of the optionholder's death or
permanent disability.
During the fiscal year ending December 31, 1996, Messrs. Furman, Woods and
Gordon each received options to purchase 12,000 common shares under the
Director's Plan at an average exercise price of $13.97 per share.
<PAGE>
PROPOSAL NO. 2
APPOINTMENT OF AUDITOR
The management of Zoom proposes to nominate the accounting firm of KPMG
Peat Marwick LLP to serve as Zoom's independent auditors until the next Annual
General Meeting of Shareholders. KPMG Peat Marwick LLP also served as Zoom's
independent auditors during the fiscal year ended December 31, 1996. KPMG Peat
Marwick LLP has acted as auditors for Zoom since 1986, and the Board of
Directors believes it is desirable and in the best interests of Zoom to continue
employment of that firm. Representatives of KPMG Peat Marwick are expected to be
present at the Annual Meeting. They will have an opportunity to make a statement
if they desire to do so and are expected to be available to respond to
appropriate questions.
Vote Required to Approve the Proposal to Appoint KPMG Peat Marwick LLP as Zoom's
Independent Auditors
The affirmative vote of the holders of a majority of the Common Stock
present, in person or by proxy, and entitled to vote at the Meeting, is required
to approve the appointment of KPMG Peat Marwick LLP as auditor. Proxies will be
voted in favor of the action unless otherwise instructed by the Shareholders.
The Board of Directors recommends a vote FOR the appointment of KPMG Peat
Marwick LLP as auditor of Zoom.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Zoom's Common Stock as of April 29, 1997, by (i) each person who is
known by Zoom to own beneficially more than five percent of Zoom's Common Stock,
(ii) each of Zoom's directors, and (iii) all of Zoom's directors and executive
officers as a group.
<TABLE>
<CAPTION>
Name Number of Shares Beneficially Owned % of Common Stock
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Frank B. Manning(1) 688,640 9.2
c/o Zoom Telephonics, Inc.
207 South Street
Boston, MA 02111
T. Pat Manning 450,033 6.0
1821 Sherman Drive
St. Charles, MO 63303
Peter R. Kramer 435,449 5.8
c/o Zoom Telephonics, Inc.
207 South Street
Boston, MA 02111
Bernard Furman(2) 48,000 *
L. Lamont Gordon(3) 23,000 *
J. Ronald Woods(4) 20,000 *
All Directors and Current 1,235,589 16.5
Executive Officers
as a group (11 persons) (1,2,3,4)
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
*Less than one percent of shares outstanding.
(1) Includes 31,500 shares that Mr. Manning has the right to acquire under outstanding currently exercisable stock options.
(2) Includes 12,000 shares that Mr. Furman has the right to acquire under outstanding stock options exercisable within 60 days
after April 29, 1997.
(3) Includes 18,000 shares that Mr. Gordon has the right to acquire under outstanding stock options exercisable within 60
days after April 29, 1997.
(4) Includes 18,000 shares that Mr. Woods has the right to acquire under outstanding stock options exercisable within 60 days
after April 29, 1997.
- -----------------------------------------------------------------------------------------------------------------------------------
</FN>
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table sets forth the compensation of
the Chief Executive Officer of Zoom for services in all capacities to Zoom
during the last three fiscal years. No executive officer of Zoom received an
annual salary and bonus from Zoom in excess of $100,000 for the fiscal year
ending December 31, 1996.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
- -----------------------------------------------------------------------------------------------------------------------------------
Fiscal Securities Underlying All Other
Name and Year Salary Bonus Stock Options Compensation
Principal Position Ending ($) ($) (#) ($) (1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Frank B. Manning, 12/31/96 $78,000 $ 0 180,000 416
Chairman of the Board 12/31/95 $88,750 $ 0 0 766
President and Director 12/31/94 $57,500 $10,000 90,000 766
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Consisting of the insurance premium paid by Zoom for a term life insurance policy for the benefit of Mr. Manning.
- -----------------------------------------------------------------------------------------------------------------------------------
</FN>
</TABLE>
For the fiscal year ending December 31, 1996, all of Zoom's executive
officers as a group (8 persons) received, in the aggregate, cash compensation of
$661,494.
Option Grants in Last Fiscal Year; Aggregate Option Exercises in Last Fiscal
Year and Fiscal Year End Option Values
The following tables set forth certain information with respect to (i) option
grants to the Chief Executive Officer during the fiscal year ending December 31,
1996, and (ii) the aggregated option exercises by the Chief Executive Officer
during the fiscal year ending December 31, 1996 along with value of his
unexercised options as of December 31, 1996.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Potential Realizable
Number of Percent Value at Assumed
Securities of Total Annual Rates of Stock
Underlying Options Exercise Price Appreciation for
Options Granted to or Base Option Term (2)
Granted Employees in Price Expiration
Name (#) (1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frank B. Manning 90,000 14.4% $17.50 4/19/00 339,422 730,958
90,000 14.4% $ 8.125 9/12/00 157,589 339,373
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The options were granted under the Zoom Telephonics, Inc. Stock Option Plan,
as amended, and are subject to a vesting schedule pursuant to which 35% of the
shares vest 12 months after the date of grant, another 35% of the shares vest 24
months after the date of grant and the remaining 30% vest 42 months after the
date of grant provided the holder of the option remains employed by Zoom.
Options generally may not be exercised later than 48 months after the date of
grant.
(2) The assumed rates are compounded annually for the full term of the options
(48 months).
</FN>
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Number of Value of Unexercised
Securities Underlying in-the-Money
Unexercised Options at
Options at 12/31/96
12/31/96 ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized($) Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frank B. Manning 90,000 1,372,500 0/180,000 0/180,000(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Based upon the closing price of Zoom's Common Stock on December 31, 1996 on
the Nasdaq National Market ($10.125), minus the respective option exercise
price.
</FN>
</TABLE>
Options to purchase Zoom's Common Stock have been granted to executive
officers and other employees of Zoom under the Zoom Telephonics, Inc. Stock
Option Plan, as amended (the "1990 Plan"). The 1990 Plan is administered by the
Stock Option Committee of the Board of Directors.
During the fiscal year ending December 31, 1996, Zoom's executive officers
as a group (8 persons) were granted in the aggregate options to purchase a total
of 377,500 shares of Zoom's Common Stock, net of cancellations, at an average
exercise price per share of $9.17. During the year, executive officers exercised
an aggregate of 200,000 options and realized an aggregate of $3,025,000 in
connection therewith.
The 1990 Plan provides in the aggregate that 1,500,000 shares of Common
Stock (subject to adjustment for capital changes) may be issued upon the
exercise of options granted under the 1990 Plan. Under the 1990 Plan any
individual in the full-time or part-time employment of Zoom or an affiliate of
Zoom, including employee board members, consultants and any other individuals
the Stock Option Committee deems to be an employee is eligible for grants of
options.
The exercise price for options granted under the 1990 Plan is the fair
market value of the Common Stock on the date the option is granted.
Subject to the earlier termination of an option upon the termination,
death or disability of an optionee, options granted under the 1990 Plan may be
exercised after the time and in the amounts specified by the Stock Option
Committee at the time the option was granted until such time, as specified by
the Stock Option Committee, as the option expires; provided, however, that no
option may expire later than ten (10) years from the date the option was
granted.
Subject to the limitation that an option may not be exercised later than
its specified expiration date, if an option holder ceases to be an eligible
employee of Zoom for any reason other than death or disability, the holder's
options will terminate on the date one month following the date of such
cessation. If an option holder ceases to be an eligible employee of Zoom as a
result of disability or death, the holder's options will terminate upon the
earlier to occur of (i) the passage of sixty (60) days after the grant of
probate of the holder's will or letters of administration in the case of the
death of the holder or (ii) one year after the date of the holder's death or
disability.
Insider Participation in Compensation Decisions
Decisions regarding executive compensation, exclusive of the
administration of the 1990 Plan, are made by the entire Board of Directors. The
Board of Directors has no Compensation Committee. The Stock Option Committee,
consisting of Messrs. Furman and Woods, is responsible for administering the
1990 Plan, including determining the individuals to whom stock options are
awarded, certain of the terms upon which option grants are made, and the number
of shares subject to each option granted under the 1990 Plan. No member of the
Stock Option Committee is a former or current officer or employee of Zoom. Mr.
Manning and Mr. Kramer, who are executive officers and directors of Zoom, made
recommendations to the Stock Option Committee regarding the granting of stock
options and participated in deliberations of the Board of Directors concerning
executive officer compensation. Neither Mr. Manning nor Mr. Kramer participated
in any vote establishing their compensation.
<PAGE>
Board of Directors Report on Executive Compensation
The primary objectives of the Board of Directors in developing executive
compensation policies are to enhance the profitability of Zoom by closely
aligning the financial interests of Zoom's executive officers with those of its
Shareholders and to attract and retain key executives important to the long-term
success of Zoom. To effect these objectives, the Board of Directors pays Zoom's
executive officers what the Board believes to be relatively low cash
compensation while providing those officers with significant performance-based
long-term incentive compensation and the opportunity to build a substantial
ownership interest in Zoom through the granting of stock options.
Frank Manning, Zoom's Chief Executive Officer, received cash compensation
for the fiscal year ending December 31, 1996, in the amount of $78,000. Five
other executive officers received cash compensation in excess of this amount.
The Board of Directors has not conducted any surveys of salaries of executive
officers, but based upon its experience believes that this cash compensation is
low as compared to the cash compensation of executive officers in similarly
situated companies. This low level of compensation reflects Mr. Manning's
request to limit his compensation. If not for this request, the Board of
Directors would have set Mr. Manning's compensation at a higher level to better
reflect his importance and contributions to Zoom.
During fiscal 1996 the Stock Option Committee granted 180,000 options to
Mr. Manning. Other executive officers as a group were granted options to
purchase 197,500 shares of Common Stock, net of cancellations, at an average
exercise price of $8.13 per share. In determining the number of options to be
granted to Mr. Manning and the other executive officers, the Stock Option
Committee reviews recommendations provided by the Chief Executive Officer and
makes a subject determination regarding that recommendation based upon the
following criteria: (i) the relatively low level of cash compensation and the
corresponding need to provide significant alternative incentives for its
executive officers, (ii) the financial performance of Zoom and (iii) the
individual performance of the executive officer. No particular weight is given
to any of these factors, rather each executive officer's total compensation
package is reviewed as a whole, and recommendations from the Chief Executive
Officer are given deference absent countervailing concerns.
Board of Directors Stock Option Committee
- -------------------------------------------------------------------------------
Frank B. Manning Bernard Furman
Peter R. Kramer J. Ronald Woods
Bernard Furman
J. Ronald Woods
L. Lamont Gordon
- -------------------------------------------------------------------------------
<PAGE>
Performance Graph
The following graph compares the annual change in Zoom's cumulative total
Shareholder return for the period from December 31, 1991 through December 31,
1996 based upon the market price of Zoom's Common Stock, with the cumulative
total return on the Standard & Poor's 500 Stock Index and the Standard & Poor's
High Technology Composite Index for that period.
Total Return Comparison
Assume $100 invested on 12/31/91
<TABLE>
<CAPTION>
Comparison of Cumulative Total
Return Among: 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
<S> <C> <C> <C> <C> <C> <C>
High Tech Composite Index 100.00 110.43 134.63 153.87 221.89 319.34
S&P 500 Index 100.00 107.62 118.45 120.01 165.05 202.95
Zoom Telephonics, Inc. 100.00 109.52 71.43 50.00 125.40 64.29
</TABLE>
The Performance Group assumes the investment of $100 on December 31, 1991
in Zoom's Common Shares, the Standard & Poor's 500 Stock Index and the Standard
& Poor's High Technology Composite Index, and the reinvestment of any and all
dividends.
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, Zoom
directors and executive officers, as well as any person holding more than ten
percent (10%) of Zoom's Common Stock, are required to report initial statements
of ownership of Zoom's securities and any subsequent changes in such ownership
to the Securities and Exchange Commission. To Zoom's knowledge, all of the
required reports were filed by such persons during 1996, except that Mr. Kramer
failed to timely file a Statement of Changes in Beneficial Ownership on Form 4
relating to the sale by Mr. Kramer of certain common shares. Mr. Kramer
subsequently reported the sale on an Annual Statement of Changes in Beneficial
Ownership on Form 5.
Voting Procedures
The votes of Shareholders present, in person or represented by proxy, at
the Meeting will be tabulated by a scrutineer appointed by Zoom. The five
nominees for directors of Zoom who receive the greatest number of votes cast by
Shareholders present in person or represented by proxy at the Meeting and
entitled to vote will be elected directors of Zoom. The affirmative vote of the
holders of a majority of the Common Stock present, in person or by proxy, and
entitled to vote at the Meeting, is required to approve Proposal No. 2.
Abstentions will be counted towards a quorum but will have no effect on
the outcome of the vote for the election of directors or for Proposal No. 2.
Common Stock held of record by brokers who do not return a signed and dated
proxy will not be considered present at the Meeting, will not be counted towards
a quorum and will not be voted in the election of directors, or on Proposals 2.
Broker non-votes on Proposals No. 2 will be counted towards a quorum but will
have no effect on the outcome of the vote on those Proposals.
Members Proposals
Any Shareholder's proposal intended to be presented by a Shareholder at
the Annual General Meeting to be held in 1998 must be received by Zoom no later
than January 23, 1998.
Incorporation By Reference
To the extent that this Proxy Circular has been or will be specifically
incorporated by reference into any filing by Zoom under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of the Proxy Circular entitled "Board of Directors Report on Executive
Compensation" and "Performance Graph" shall not be deemed to be so incorporated,
unless specifically otherwise provided in any such filing.
Board Approval
The Board of Directors has approved the contents of this Proxy Circular
and its issue to Shareholders.
ANNUAL REPORT ON FORM 10-K
Copies of Zoom's Annual Report on Form 10-K for the fiscal year ending
December 31, 1996 as filed with the Securities and Exchange Commission are
available to shareholders without charge upon written request addressed to Zoom
Telephonics, Inc., 207 South Street, Boston, Massachusetts 02111, attention
Investor Relations.
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IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
THEREFORE, SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND RETURN
THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE.
CERTIFIED
By:
Frank Manning, President
