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
| | Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Zoom Telephonics, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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:
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2) Aggregate number of securities to which transaction applies:
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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.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
ZOOM TELEPHONICS, INC.
207 South Street
Boston, MA 02111
May 21, 1999
Dear Shareholder:
You are cordially invited to attend the Annual General Meeting of
Shareholders of Zoom Telephonics, Inc. to be held at 9:00 a.m. Eastern time on
the 25th day of June, 1999 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, 1999 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 (including
management's discussion and analysis of financial condition and
results of operation), the financial statements of Zoom Telephonics,
Inc. for the year ending December 31, 1998, and the Report of the
Auditor on the financial statements;
2. To elect five (5) 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 April 29, 1999
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 in the envelope
provided. A proxy will not be valid unless it is deposited and received at the
office of Corporate Investor Communications, Inc., 111 Commerce Road, Carlstadt,
NJ 07072 before 6:00 p.m. Eastern time on June 24, 1999.
Boston, Massachusetts
May 21, 1999
BY ORDER OF THE BOARD OF DIRECTORS
Frank Manning
President
IMPORTANT: YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING
FORM OF PROXY IN THE ENVELOPE PROVIDED, SO THAT IF YOU ARE UNABLE TO ATTEND
THE MEETING YOUR SHARES MAY NEVERTHELESS BE VOTED. HOWEVER, THE PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO EXERCISE BY WRITTEN REVOCATION, BY EXECUTING A
PROXY AT A LATER DATE, OR BY ATTENDING AND VOTING AT THE MEETING.
THANK YOU FOR ACTING PROMPTLY.
<PAGE>
ZOOM TELEPHONICS, INC.
PROXY CIRCULAR FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 25, 1999
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 OF
THE SHAREHOLDERS OF ZOOM (THE "MEETING") TO BE HELD ON JUNE 25, 1999, 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 CIBC Mellon 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.
The approximate date on which this Proxy Circular, Notice of Meeting and
accompanying Form of Proxy are first being mailed to Shareholders is May 21,
1999.
Zoom's principal executive offices are located at 207 South Street,
Boston, Massachusetts 02111 and its telephone number is (617) 423-1072.
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 and received at the office of
Corporate Investor Communications, Inc., 111 Commerce Road, Carlstadt, NJ 07072
before 6:00 p.m. Eastern time on June 24, 1999.
A Shareholder who has given a proxy in the form accompanying this proxy
circular may revoke it at any time before it is voted. It may be revoked by an
instrument in writing delivered to the office of Corporate Investor
Communications, Inc., 111 Commerce Road, Carlstadt, NJ 07072, 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 to the Chairman of the Meeting
on the day of the Meeting or any adjournments thereof, or it may be revoked by
written notice of revocation or a duly executed proxy bearing a later date, or
it may be revoked by attending the Meeting and voting in person.
VOTING OF PROXIES
The votes of Shareholders present in person or by proxy at the Meeting will
be tabulated by a scrutineer appointed by Zoom. The presence, in person or by
proxy, of at least one-third of the outstanding shares of Common Stock of Zoom
is necessary to constitute a quorum at the Meeting. The five nominees for
directors of Zoom who receive the greatest number of votes cast by the
Shareholders present in person or by proxy at the Meeting and entitled to vote
thereon will be elected directors of Zoom. The affirmative vote of a majority of
the votes of the holders of the Common Stock present in person or by proxy at
the Meeting will be required for the approval of Proposal No. 2, the appointment
of KPMG Peat Marwick LLP as Zoom's independent auditor.
In the case of abstentions from or withholding of the voting of shares of
Common Stock on any matter, the shares of Common Stock which are the subject of
abstention or withholding ("non-voted shares") will be counted for determination
of a quorum, but will not be counted as affirmative or negative votes on the
matter to be voted upon. Brokers may not vote shares of Common Stock held in
street name on behalf of customers on a proposal without specific instructions
from their customers. If a customer has not given any instructions on the
proposals, then the votes attaching to such customer's shares of Common Stock
are not counted for purposes of a quorum. If a customer has given instruction on
some but not all of the proposals, then the votes attaching to the customer's
shares of Common Stock are counted for the determination of a quorum for all
purposes. On any given proposal, where no instructions are received from the
customer, the votes attaching to such customer's shares of Common Stock ("broker
non-votes") will not be counted as affirmative or negative votes on the matter
to be voted upon.
In voting by proxy with regard to the election of directors, Shareholders
may vote in favor of all nominees, withhold their votes as to all nominees or
withhold their votes as to specific nominees. 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 APPOINTMENT OF 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, 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 April 29, 1999. As of that date, 7,474,871 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 April 29, 1999
is entitled to vote such holder's shares at the Meeting except to the extent
that the holder transfers any shares and the transferee of such shares produces
properly endorsed share certificates or otherwise establishes that such
transferee owns the shares and demands not later than ten (10) 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 following: (i)
the Report of the Board of Directors; (ii) the financial statements of Zoom for
the year ending December 31, 1998; and (iii) the Report of the Independent
Auditor on the financial statements. Zoom's Annual Report to Shareholders for
the fiscal year ending December 31, 1998, 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 and qualified, 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 (5) 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 Occupation Director Since
- ------------------------------ ------------ ----------------------------------------------- ------------------------
<S> <C> <C> <C>
Frank B. Manning 50 Chief Executive Officer, President and 1977
Chairman of the Board of Zoom Telephonics,
Inc.
Peter R. Kramer 47 Executive Vice President and Director of Zoom 1977
Telephonics, Inc.
Bernard Furman (1)(2) 69 Consultant 1991
L. Lamont Gordon (1) 66 Chairman of Sprott Securities Limited 1992
J. Ronald Woods (1)(2) 63 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 President, Chief Executive Officer, and a co-founder of
Zoom Telephonics, a Boston-based publicly held manufacturer of modems, wireless
networking products, and other data communication products. Mr. Manning received
his B.S., M.S., and Ph.D. degrees in Electrical Engineering from the
Massachusetts Institute of Technology, where he was a National Science
Foundation fellow. Since 1993 he has also been a Director of MicroTouch, the
world leader in touchscreens for personal computers. In 1998 Mr. Manning became
a Director of the Massachusetts Technology Development Corporation, which
invests in seed and early-stage technology companies in Massachusetts.Frank
Manning is the brother of Terry Manning, Vice President of Sales and Marketing
at Zoom.
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 B.A. degree in
1973 from SUNY Stony Brook and his M.F.A. 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. 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 Investment Corporation
from 1984 through 1987. He is a former Governor of the Toronto Stock Exchange
and is currently a director of Upton Resources, Inc., Cryptologic Inc., 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 Plans. The Board
of Directors does not have a nominating or compensation committee.
During the year ending December 31, 1998, the Board of Directors held three
(3) meetings and acted by unanimous written consent on one (1) occasion, and the
Stock Option Committee acted by unanimous written consent two (2) 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, with the
exception of Mr. Gordon and Mr. Woods.
Directors' Compensation
Commencing January 1, 1999, each non-employee director of Zoom receives
$2,000 per year, payable quarterly. In addition, each non-employee director of
Zoom also receives $500 for each meeting of the Board of Directors of Zoom
personally 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 shares
of Common Stock (subject to adjustment for capital changes) may be issued upon
the exercise of options granted under the Directors' Plan. Under the Directors'
Plan, each non-employee director automatically receives an option to purchase
6,000 shares of Common Stock on January 10 and July 10 of each year. The
exercise price for the options granted under the Directors' Plan is the fair
market value of the Common Stock on the date the option is granted. Options
granted under the Directors' Plan may be exercised at any time commencing six
(6) months after the date of grant and ending two (2) years from the date of
grant; provided, however, that in the event the participant ceases to be a
director of Zoom, the option must be exercised upon the earlier to occur of (i)
two (2) years from the date of grant, (ii) one (1) month from the date of
termination in the event of termination for any reason other than death or
disability, or (iii) one (1) 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 option holder's death or permanent disability. During fiscal 1998, Messrs.
Furman, Woods and Gordon each received options to purchase 12,000 shares of
Common Stock under the Directors' Plan at an average exercise price of $6.91 per
share.
<PAGE>
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, 1998, by (i) each person who is
known by Zoom to own beneficially more than five (5) percent of Zoom's Common
Stock, (ii) each of Zoom's directors and each Named Executive in the Summary
Compensation Table under "Executive Compensation", and (iii) all of Zoom's
directors and executive officers as a group.
<TABLE>
<CAPTION>
Number of Shares
Name Beneficially Owned % of Common Stock
<S> <C> <C>
Frank B. Manning 1,2 722,246 9.5%
c/o Zoom Telephonics, Inc.
207 South Street
Boston, MA 02111
T. Pat Manning 2 450,033 6.0%
1821 Sherman Drive
St. Charles, MO 63303
Peter R. Kramer 3 522,449 7.0%
c/o Zoom Telephonics, Inc.
207 South Street
Boston, MA 02111
Bernard Furman 4 116,500 1.6%
J. Ronald Woods 5 20,000 *
L. Lamont Gordon 6 18,000 *
Dana B. Whitney 7 14,800 *
Robert A. Crist 8 12,200 *
Deena M. Randall 9 10,500 *
All Directors and Current 1,558,783 20.8%
Executive Officers
as a group (10 persons) 1,3,4,5,6,7,8,
9,10
- ----------------------------
<FN>
*Less than one percent of shares outstanding.
(1) Includes 126,000 shares that Mr. Manning has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
29, 1999.
(2) T. Pat Manning and Frank Manning are brothers.
(3) Includes 42,000 shares that Mr. Kramer has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
29, 1999.
(4) Includes 18,000 shares that Mr. Furman has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
29, 1999.
(5) Includes 18,000 shares that Mr. Woods has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
29, 1999.
(6) Includes 18,000 shares that Mr. Gordon has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
29, 1999.
(7) Includes 14,000 shares that Mr. Whitney has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
29, 1999.
(8) Includes 10,500 shares that Mr. Crist has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
29, 1999.
(9) Includes 10,500 shares that Ms. Randall has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
29, 1999.
(10) Includes 42,000 shares that the executive officers of Zoom, who are not
named above, have the right to acquire under outstanding stock options
exercisable within sixty (60) days after April 29, 1999.
</FN>
</TABLE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows, for the fiscal years ending
December 31, 1998, 1997 and 1996, the compensation of each person who served as
Chief Executive Officer and each of Zoom's executive officers whose total annual
salary and bonus exceeded $100,000 for all services rendered in all capacities
to Zoom during the last three (3) fiscal years (the "Named Executives").
Bonus payment amounts do not reflect the performance or value of an
executive. Zoom focuses on the total compensation of each executive, including
base salary, bonus, and stock options.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
------------------- -------------------
Securities
Underlying All Other
Name and Year Salary Bonus Stock Options Compensation
Principal Position ($) ($) (#) ($) (1)
- --------------------------------- ------------ ------------- ------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Frank B. Manning, 12/31/98 100,305 10,000 103,500 460
Chief Executive Officer, 12/31/97 101,500 0 0 420
President and Chairman of 12/31/96 100,000 0 180,000 416
the Board
Peter R. Kramer, 12/31/98 100,305 10,000 69,000 370
Executive Vice President 12/31/97 101,500 0 0 340
and Director 12/31/96 100,000 0 60,000 346
Robert A. Crist,(2) 12/31/98 130,304 0 34,500 0
Vice President of Finance 12/31/97 65,325 0 30,000 0
and Chief Financial Officer 12/31/96 --- --- --- ---
Deena M. Randall, 12/31/98 95,537 9,000 34,500 0
Vice President-Operations 12/31/97 94,988 7,000 0 0
12/31/96 93,137 0 30,000 0
Dana B. Whitney, 12/31/98 110,796 6,000 24,000 0
Vice President-Engineering 12/31/97 107,324 0 0 0
12/31/96 90,252 0 20,000 0
- ----------------------
<FN>
(1) Consisting of the insurance premiums paid by Zoom for term life
insurance policies for the benefit of Mr. Manning and Mr. Kramer.
(2) Mr. Crist became an executive officer of Zoom on July 1, 1997.
For the fiscal year ending December 31, 1998, all of Zoom's executive
officers as a group (7 persons) received, in the aggregate, cash compensation of
$763,740.
</FN>
</TABLE>
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth certain information with respect to stock
options granted to the Named Executive Officers during the fiscal year ended
December 31, 1998.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
Number of % of Total At Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise or for Option Term (2)
Options Granted Employees in Base Price Expiration -------------------------------
Name (#)(1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- --------------------- --------------- -------------- -------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank B. Manning 90,000 17.59% 4.531 08/06/01 64,278 134,978
13,500 2.64% 4.125 11/20/01 10,777 18,432
Peter R. Kramer 60,000 11.72% 4.531 08/06/01 42,852 89,986
9,000 1.76% 4.125 11/20/01 5,852 12,288
Robert A. Crist 30,000 5.86% 4.531 08/06/01 21,426 44,993
4,500 .88% 4.125 11/20/01 2,925 6,144
Deena M.Randall 30,000 5.86% 4.531 08/06/01 21,426 44,993
4,500 .88% 4.125 11/20/01 2,925 6,144
Dana B. Whitney 20,000 3.91% 4.531 08/06/01 14,284 29,876
4,000 .78% 4.125 11/20/01 19,101 2,861
------------------
<FN>
(1) The options were granted under the 1990 Stock Option Plan, as amended, and
are subject to a vesting schedule pursuant to which, in general, the
options become exercisable at a rate of 50% per year commencing one year
after the date of grant provided the holder of the option remains employed
by the Company. Options generally may not be exercised later than 36 months
after the date of grant.
(2) The assumed rates are compounded annually for the full term of the options.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Value of Unexercised
Number of Securities In-the-Money Options/SARs
Underlying Unexercised at FY-End ($) (2)
Options/SARs at FY-End (#)(1)
------------------------------- -----------------------------
Shares
Acquired Value
on Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- --------------- -------------- ---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank B. Manning 0 0 126,000 157,000 0 0
Peter R. Kramer 0 0 42,000 87,000 0 0
Robert A. Crist 0 0 10,500 54,000 0 0
Deena M. Randall 0 0 10,500 54,000 0 0
Dana B. Whitney 0 0 14,000 30,000 0 0
------------------
<FN>
(1) Based upon the closing price of Zoom's Common Stock on December 31,
1998 on the Nasdaq National Market ($4.00). As of December 31, 1998, no
options held by a Named Executive had an exercise price of less than
$4.00.
</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, 1998, Zoom's executive officers
as a group (7 persons) were granted in the aggregate options to purchase a total
of 317,250 shares of Zoom's Common Stock, net of cancellations, at an average
exercise price per share of $4.48. During the year, executive officers exercised
an aggregate of zero options.
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.
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, 1998, in the amount of $110,305. The
Board of Directors has not conducted any surveys of salaries of executive
officers, but based upon its experience believes that the cash compensation of
its executive officers, including the compensation received by Mr. Manning, is
low as compared to the cash compensation of comparable executive officers in
similarly situated companies. The low level of compensation of Mr. Manning
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 1998, Mr. Manning was granted 103,500 options to purchase
shares of Common Stock at an average exercise price of $4.48 per share. Other
executive officers as a group were granted 213,750 options to purchase shares of
Common Stock at an average exercise price of $4.48 per share. In determining the
number of options to be granted to the executive officers, the Stock Option
Committee reviews recommendations provided by the Chief Executive Officer and
makes a subjective 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, (iii) the individual
performance of the executive officer and (iv) the number of shares subject to
options held by each 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
Performance Graph
The following graph compares the annual change in Zoom's cumulative total
Shareholder return for the five (5) year period from December 31, 1993 through
December 31, 1998, 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 12/31/93
<TABLE>
<CAPTION>
Comparison of Cumulative Total
Return Among: 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C>
High Tech Composite Index 100.00 114.29 164.81 237.20 289.62 349.48
S&P 500 Index 100.00 101.32 139.34 171.34 224.47 235.14
Zoom Telephonics, Inc. 100.00 70.00 175.56 90.04 60.00 35.56
</TABLE>
The Performance Group assumes the investment of $100 on December 31, 1993
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.
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 fiscal 1998.
PROPOSAL NO. 2
APPOINTMENT OF AUDITOR
Management of Zoom proposes to nominate the accounting firm of KPMG Peat
Marwick LLP to serve as Zoom's independent auditors, at a remuneration to be
fixed by the directors, 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, 1998. 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 LLP 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 shares of Common Stock present, in person or by proxy, and entitled to vote
at the Meeting and voting on the proposal, 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 approval of Proposal No. 2.
SHAREHOLDER PROPOSALS
Shareholder proposals which comply with Rule 14a-8 promulgated under the
Securities Exchange Act of 1934, as amended, and which are intended to be
presented by such Shareholder at Zoom's 2000 Annual General Meeting, must be
received by Zoom no later than January 22, 2000, in order to be considered for
inclusion in the Proxy Circular relating to that meeting.
Notice of Shareholder proposals intended to be presented at Zoom's 2000
Annual General Meeting which are submitted outside the processes of Rule 14a-8
will be considered untimely if received by Zoom after April 6, 2000. The proxy
solicited by the Board of Directors with respect to that meeting may confer
discretionary authority to vote on matters submitted in an untimely proposal.
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, 1998, 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.
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
<PAGE>
ZOOM TELEPHONICS, INC.
FORM OF PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT OF ZOOM
TELEPHONICS, INC. (THE "CORPORATION") FOR THE ANNUAL GENERAL MEETING OF
SHAREHOLDERS ON JUNE 25, 1999.
The undersigned shareholder appoints Frank B. Manning or, failing him, Peter R.
Kramer or, failing him, Craig D. Thomas or, instead of any of them
__________________ as proxyholder, with power of substitution, to attend, act
and vote in respect of all shares registered in the name of the undersigned at
the Annual General Meeting of Shareholders of the Corporation to be held on June
24, 1998, and at any adjournments thereof on the matters indicated below which
are described in the Proxy Circular and, at the proxyholder's discretion, on
amendments or variations to such matters and on such other matters as may
properly come before the Meeting. The undersigned revokes any instrument or
proxy heretofore given with respect to the Meeting or any adjournments thereof
with respect only to the shares identified below.
VOTE:
1. To elect the following persons as directors of the Corporation for the
ensuing year:
Nominees: Frank B. Manning, Peter R. Kramer, Bernard Furman,
J. Ronald Woods, L. Lamont Gordon
| | FOR | | WITHHOLD
all nominees from all nominees
| | FOR, except vote withheld from the following nominee(s):
------------------------------------------------------------
2. To appoint KPMG Peat Marwick LLP as auditor of the Corporation for the
ensuing year at a remuneration to be fixed by the directors.
| | FOR | | WITHHOLD
ON ANY BALLOT THAT MAY BE CALLED FOR, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED FOR OR WITHHELD FROM VOTING IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN
BY THE SHAREHOLDER. IF NO CHOICE IS SPECIFIED, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR EACH OF THE MATTERS LISTED ABOVE.
NOTES:
1. SHAREHOLDERS HAVE THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER) TO REPRESENT THEM AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS,
OTHER THAN THE MANAGEMENT NOMINEES. To exercise this right, you should either
strike out the names of Messrs. Manning, Kramer and Thomas and insert in the
space provided the name of the person you desire to designate as proxyholder, or
complete another proper form of proxy.
2. A proxy, to be valid, must be dated and signed by the shareholder. Executors,
administrators, trustees, guardians, attorneys and officers of corporations
should add their titles when signing. If this form of proxy is not dated, it
shall be deemed to bear the date on which it was mailed by the Corporation.
3. A proxy to be effective must be deposited and received at the office of
Corporate Investor Communications, Inc., 111 Commerce Road, Carlstadt, NJ 07072
before 6:00 p.m. Eastern time on June 23, 1998.
Signature Name (Please Print)
------------------------------- --------------------
Address
-------------------------------------------------------------------------
Date , 1999 Number of Shares to be voted
------------- ---------------------------
(IF LEFT BLANK, ALL SHARES REGISTERED IN YOUR NAME WILL BE DEEMED TO BE
REPRESENTED BY THIS PROXY.)
