<PAGE>
EXHIBIT 99.1
ZOOM TELEPHONICS, INC.
1998 EMPLOYEE EQUITY INCENTIVE PLAN
AS AMENDED ON JUNE 16, 2000
Section 1. NAME AND PURPOSE
This plan shall be known as the Zoom Telephonics, Inc. 1998 Employee
Equity Incentive Plan, as amended (the "Plan"). The purpose of the Plan is to
attract and retain employees and provide an incentive for them to assist Zoom
Telephonics, Inc. (the "Company") to achieve long-range performance goals, and
to enable them to participate in the long-term growth of the Company.
Section 2. DEFINITIONS
(a) "Award" means any Option awarded under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(d) "Committee" means the Stock Option Committee of the Board, or such other
committee of not less than three members of the Board appointed by the
Board to administer the Plan.
(e) "Common Stock" or "Stock" means the Common Stock, no par value, of the
Company.
(f) "Company" means Zoom Telephonics, Inc. and any business entity in which
Zoom Telephonics, Inc. owns directly or indirectly 50% or more of the
total combined voting power or has a significant financial interest as
determined by the Committee.
(g) "Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Board, to receive amounts due
or exercise rights of the Participant in the event of the Participant's
death. In the absence of an effective designation by a Participant,
Designated Beneficiary shall mean the Participant's estate.
(h) "Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the
Board in good faith or in the manner established by the Board from time to
time.
(i) "Nonqualified Stock Option" means an option to purchase shares of Common
Stock, awarded to a Participant under Section 6, which is not intended to
comply as an incentive stock option under Section 422 of the Code or any
successor provision.
(j) "Option" means a Nonqualified Stock Option.
(k) "Officer" means any individual who is a designated corporate officer of
the Company or is deemed an officer of the Company under Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (or any
successor or supplementary law, rule or regulation), or is deemed an
officer under Rule 4310 of the Marketplace Rules of The Nasdaq Stock
Market, Inc (or any successor or supplementary law, rule or regulation).
(l) "Participant" means a person eligible pursuant to Section 4 hereof and
selected by the Board to receive an Award under the Plan.
<PAGE>
Section 3. ADMINISTRATION
The Plan shall be administered by the Committee. The Board shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Board's
decisions shall be final and binding. To the extent permitted by applicable law,
the Board may delegate to the Committee the power to make Awards to Participants
and all determinations under the Plan with respect thereto.
Section 4. ELIGIBILITY
All employees of the Company, other than Officers and directors of the
Company, are eligible to be Participants in the Plan.
Section 5. STOCK AVAILABLE FOR AWARDS
(a) Subject to adjustment under subsection (b), Awards may be made under the
Plan of Options to acquire not in excess of 950,000 shares of Common Stock.
If any Award in respect of shares of Common Stock expires or is terminated
unexercised or is forfeited for any reason or settled in a manner that
results in fewer shares outstanding than were initially awarded, including
without limitation the surrender of shares in payment for the Award or any
tax obligation thereon, the shares subject to such Award or so surrendered,
as the case may be, to the extent of such expiration, termination,
forfeiture or decrease, shall again be available for award under the Plan.
Common Stock issued through the assumption or substitution of outstanding
grants from an acquired Company shall not reduce the shares available for
Awards under the Plan. Shares of Common Stock issued under the Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares.
(b) In the event that the Board determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock at a price substantially below fair market value, or
other similar transaction affects the Common Stock such that an adjustment
is required in order to preserve the benefits or potential benefits
intended to be made available under the Plan, then the Board, shall
equitably adjust any or all of (i) the number and kind of shares in respect
of which Awards may be made under the Plan, (ii) the number and kind of
shares subject to outstanding Awards, and (iii) the award, exercise or
conversion price with respect to any of the foregoing, and if considered
appropriate, the Board may make provision for a cash payment with respect
to an outstanding Award, provided that the number of shares subject to any
Award shall always be a whole number.
Section 6. STOCK OPTIONS
(a) Subject to the provisions of the Plan, the Board may award Nonqualified
Stock Options and determine the number of shares to be covered by each
Option, the Option Price therefor and the conditions and limitations
applicable to the exercise of the Option.
(b) The Board shall establish the Option Price at the time each Option is
awarded.
<PAGE>
(c) Each Option shall be exercisable at such times and subject to such terms
and conditions as the Board may specify in the applicable Award or
thereafter. The Board may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option until
payment in full of the Option Price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent
permitted by the Board at or after the award of the Option, by delivery of
a note or shares of Common Stock owned by the optionholder, including
restricted stock, valued at their Fair Market Value on the date of
delivery, by the reduction of the shares of Common Stock that the
optionholder would be entitled to receive upon exercise of the Option, such
shares to be valued at their Fair Market Value on the date of exercise,
less their Option Price (a so-called "cashless exercise"), or such other
lawful consideration as the Board may determine. In addition, an
optionholder may engage in a successive exchange (or series of exchanges)
in which the shares of Common Stock that such optionholder is entitled to
receive upon the exercise of an Option may be simultaneously utilized as
payment for the exercise of an additional Option or Options.
(e) The Board may provide for the automatic award of an Option upon the
delivery of shares to the Company in payment of an Option for up to the
number of shares so delivered.
Section 7. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) DOCUMENTATION. Each Award under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Board considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and
regulatory laws and accounting principles.
(b) BOARD DISCRETION. The terms of each Award need not be identical, and the
Board need not treat Participants uniformly. Except as otherwise provided
by the Plan or a particular Award, any determination with respect to an
Award may be made by the Board at the time of award or at any time
thereafter. Without limiting the foregoing, an Award may be made by the
Board, in its discretion, to any 401(k), savings, pension, profit sharing
or other similar plan of the Company in lieu of or in addition to any cash
or other property contributed or to be contributed to such plan.
(c) SETTLEMENT. The Board shall determine whether Awards are settled in whole
or in part in cash, Common Stock, other securities of the Company, Awards
or other property. The Board may permit a Participant to defer all or any
portion of a payment under the Plan, including the crediting of interest on
deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.
(d) TERMINATION OF EMPLOYMENT. The Board shall determine the effect on an Award
of the disability, death, retirement or other termination of employment of
a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.
(e) CHANGE IN CONTROL. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Company, the Board in its
discretion may, at the time an Award is made or at any time thereafter,
take one or more of the following actions: (i) provide for the acceleration
of any time period relating to the exercise of the Award, (ii) provide for
the purchase of the Award upon the Participant's request for an amount of
cash or other property that could have been received upon the exercise of
the Award had the Award been currently exercisable, (iii) adjust the terms
of the Award in a manner determined by the Board to reflect the change in
control, (iv) cause the Award to be assumed, or new rights substituted
therefor, by another entity, or (v) make such other provision as the Board
may consider equitable and in the best interests of the Company.
<PAGE>
(f) WITHHOLDING. The Participant shall pay to the Company, or make provision
satisfactory to the Board for payment of, any taxes required by law to be
withheld in respect of Awards under the Plan no later than the date of the
event creating the tax liability. In the Board's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation,
valued at their Fair Market Value on the date of delivery. The Company and
its affiliates may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the Participant.
(g) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the
same or a different type, changing the date of exercise, provided that the
Participant's consent to such action shall be required unless the Board
determines that the action, taking into account any related action, would
not materially and adversely affect the Participant.
Section 8. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to continued employment. The Company
expressly reserves the right at any time to dismiss a Participant free from
any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) NO RIGHTS AS SHAREHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof.
(c) GOVERNING LAW. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of
Massachusetts.
(d) INDEMNITY. Neither the Board nor the Committee, nor any members of either,
nor any employees of the Company or any parent, subsidiary, or other
affiliate, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with their
responsibilities with respect to this Plan, and the Company hereby agrees
to indemnify the members of the Board, the members of the Committee, and
the employees of the Company and its parent or subsidiaries in respect of
any claim, loss, damage, or expense (including reasonable counsel fees)
arising from any such act, omission, interpretation, construction or
determination to the full extent permitted by law.