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):
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5) Total fee paid:
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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:
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<PAGE>
ZOOM TELEPHONICS, INC.
207 South Street
Boston, MA 02111
May 12, 2000
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 16th day of June, 2000 at The Conference Center located on the second floor
of One Financial Center, 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 16, 2000 at 9:00 a.m. Eastern time at The
Conference Center located on the second floor of the One Financial Center,
Boston, Massachusetts 02111, 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, 1999, 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 27, 2000
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 15, 2000.
Boston, Massachusetts
May 12, 2000
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>
-9-
ZOOM TELEPHONICS, INC.
PROXY CIRCULAR FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 16, 2000
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 16, 2000, 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 12,
2000.
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 Form of 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 15, 2000.
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 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 THE APPOINTMENT OF ZOOM'S
INDEPENDENT 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 27, 2000. As of that date, 7,744,547 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 27, 2000
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, 1999; 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, 1999, which includes financial statements
audited by KPMG 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>
<S> <C> <C> <C>
Name Age Principal Occupation Director Since
- ------------------------- --------- --------------------------------------- -------------------
Frank B. Manning 51 Chief Executive Officer, President 1977
and Chairman of the Board of Zoom
Telephonics, Inc.
Peter R. Kramer 48 Executive Vice President and Director 1977
of Zoom Telephonics, Inc.
Bernard Furman (1)(2) 70 Consultant 1991
L. Lamont Gordon 67 Chairman of Sprott Securities Limited 1992
J. Ronald Woods (1)(2) 64 Vice President of Jascan, Inc. 1991
</TABLE>
- ----------------------
(1) Member of the Audit Committee
(2) Member of the Stock Option Committee
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 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 Mr. Manning has been a director
of Microtouch Systems, Inc., a Nasdaq-listed leader in touchscreen technology.
Since 1998 Mr. Manning has served as a director of the Massachusetts Technology
Development Corporation, a public purpose venture capital firm that invests in
seed and early-stage technology companies in Massachusetts. Frank Manning is
the brother of Terry Manning, vice president of sales and marketing of 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., Jascan
Inc., Key West Energy Corp., Place Resources Ltd. and ARC International Corp.
Committees and Meetings of the Board of Directors
The Board of Directors has an Audit Committee and a Stock Option
Committee. The Board of Directors does not have a nominating or compensation
committee.
The Stock Option Committee consists of Messrs. Furman and Woods. The
primary function of the Stock Option Committee is to administer and award
options under the Zoom Telephonics, Inc. stock option plans.
The Audit Committee consists of Messrs. Furman and Woods. The primary
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. At the
end of 1999, both the SEC and Nasdaq adopted new rules relating to Audit
Committees. In response to the SEC and Nasdaq rules, the Board of Directors is
currently reviewing an Audit Committee Charter which will specifically define
the responsibilities and obligations of the Audit Committee. The Board of
Directors expects to adopt an Audit Committee Charter prior to June 14, 2000,
which will be in compliance with the new SEC and Nasdaq rules.
During the year ending December 31, 1999, the Board of Directors held two
(2) meetings and acted by unanimous written consent on one (1) occasion, the
Audit Committee held one (1) meeting 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
Each non-employee director of Zoom receives a fee of $500 per quarter plus
a fee of $500 for each meeting at which the director is personally present.
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 1999 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 $4.9531 per share.
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 7, 2000, 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. On April 7, 2000, there were
7,744,547 issued and outstanding shares of Zoom's Common Stock.
Number of Shares
Name Beneficially Owned % of Common Stock
Frank B. Manning1,2 737,996 9.4%
c/o Zoom Telephonics, Inc.
207 South Street
Boston, MA 02111
T. Pat Manning2 450,033 5.8%
1821 Sherman Drive
St. Charles, MO 63303
Peter R. Kramer3 574,949 7.3%
c/o Zoom Telephonics, Inc.
207 South Street
Boston, MA 02111
Bernard Furman 1,000 *
J. Ronald Woods4 20,000 *
L. Lamont Gordon5 7,000 *
Dana B. Whitney6 28,000 *
Robert A. Crist7 10,250 *
Deena Randall8 17,250 *
All Directors and Current 1,547,780 19.1%
Executive Officers
as a group (10 persons) 1,3,4,5,6,7,8,9
- ---------------------------------------
*Less than one percent of shares outstanding.
(1) Includes 141,750 shares that Mr. Manning has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
7, 2000.
(2) T. Pat Manning and Frank Manning are brothers.
(3) Includes 94,500 shares that Mr. Kramer has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
7, 2000.
(4) Includes 18,000 shares that Mr. Woods has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
7, 2000.
(5) Includes 6,000 shares that Mr. Gordon has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
7, 2000.
(6) Includes 28,000 shares that Mr. Whitney has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
7, 2000.
(7) Includes 10,250 shares that Mr. Crist has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
7, 2000.
(8) Includes 17,250 shares that Ms. Randall has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
7, 2000.
(9) Includes 55,625 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 7, 2000.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows, for the fiscal years
ending December 31, 1999, 1998, and 1997, the compensation of each person who
served as Chief Executive Officer and the four most highly compensated
executive officers of Zoom whose total annual salary and bonus exceeded
$100,000 for all services rendered in all capacities to Zoom during the last
completed fiscal year (the "Named Executives").
NOTE: Bonus payments 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
Compensation
Awards
Number of
Annual Securities
Name and Compensation Underlying All Other
Principal Position Year Salary Bonus Stock Options Compensation
<S> <C> <C> <C> <C> <C>
Frank B. Manning, 12/31/99 $120,371 $10,000 -0- $300(1)
Chief Executive Officer, 12/31/98 $100,305 $10,000 103,500 $460
President and Chairman of 12/31/97 $101,500 -0- -0- $420
the Board
Peter R. Kramer, 12/31/99 $120,196 $10,000 -0- $11,188(2)
Executive Vice President 12/31/98 $100,305 $10,000 69,000 $370
and Director 12/31/97 $101,500 -0- -0- $340
Robert A. Crist 12/31/99 $139,217 $10,000 15,000 $4,141(3)
Vice President of Finance 12/31/98 $130,304 -0- 34,500 -0-
And Chief Financial Officer 12/31/97 $69,325 -0- 30,000 -0-
Deena Randall 12/31/99 $113,174 $10,000 10,000 $8,862(4)
Vice President-Operations 12/31/98 $95,537 $9,000 34,500 -0-
12/31/97 $94,988 $7,000 -0- -0-
Dana B. Whitney 12/31/99 $127,593 $18,500 20,000
Vice President-Engineering 12/31/98 $110,796 $6,000 24,000 -0-
and Network Products 12/31/97 $107,324 -0- -0- -0-
- --------------------------
(1) Consists of the insurance premiums paid by Zoom for the term life insurance policy
for the benefit of Mr. Manning.
(2) Includes $10,988 paid to Mr. Kramer as a cash-out of accrued and unused
vacation time and $200 of the insurance premiums paid by Zoom for the
term life insurance policy for the benefit of Mr. Kramer.
(3) Includes $3,525 paid by Zoom for parking expenses and $616 for the term life
insurance policy for the benefit of Mr. Crist.
(4) Includes $8,703 paid to Ms. Randall as a cash-out of accrued and unused
vacation time and $159 of the insurance premiums paid by Zoom for the
term life insurance policy for the benefit of Ms. Randall.
</TABLE>
For the fiscal year ending December 31, 1999, all of Zoom's executive
officers as a group (7 persons) received, in the aggregate, cash compensation
of $829,645 (which excludes an aggregate of $78,500 paid to Zoom's executive
officers for bonuses earned in 1999).
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, 1999.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Potential Realizable
Number of % of Total Value at Assumed
Securities Options Exercise Annual Rates of Stock
Underlying Granted to or Base Price Appreciation for
Options Employees in Price Per Expiration Option Term(2)
Name Granted (1) Fiscal Year Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Frank B. Manning -- -- -- -- -- --
Peter R. Kramer -- -- -- -- -- --
Robert A. Crist 15,000 3.41% $4.375 08/05/02 $10,344 $21,722
Deena Randall 10,000 2.28% $4.375 08/05/02 $6,896 $14,481
Dana B. Whitney 20,000 4.55% $4.281 06/02/02 $13,496 $28,340
(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.
</TABLE>
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
The following table sets forth information with respect to the Named
Executives concerning the exercise of options during the fiscal year ending
December 31, 1999 and unexercised options held as of December 31, 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options/SARs
Acquired Value Options/SARs at FY-End(#) at FY-End (6)
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Frank B. Manning(1) -0- -0- 204,750 78,750 $224,589 $213,339
Peter R. Kramer(2) -0- -0- 76,500 52,500 $149,726 $142,226
Robert A. Crist(3) 10,000 $26,015 28,250 41,250 $52,913 $139,386
Deena M. Randall(4) 10,000 $35,315 28,250 36,250 $35,798 $111,738
Dana B. Whitney(5) -0- -0- 26,000 38,000 $52,065 $132,695
-------------------
</TABLE>
(1) Of the 283,500 options to purchase shares of Common Stock held by Mr.
Manning, 90,000 options have an exercise price of $17.50 per share,
90,000 options have an exercise price of $8.125 per share, 90,000
options have an exercise price of $4.531 per share, and 13,500 options
have an exercise price of $4.125 per share.
(2) Of the 129,000 options to purchase shares of Common Stock held by Mr.
Kramer, 60,000 options have an exercise price of $8.125 per share,
60,000 options, have an exercise price of $4.531 per share, and 9,000
options have an exercise price of $4.125 per share.
(3) Of the 69,500 options to purchase shares of Common Stock held by Mr.
Crist, 30,000 options have an exercise price of $7.3125 per share,
20,000 options have an exercise price of $4.531 per share, 4,500
options have an exercise price of $4.125 per share, and 15,000 options
have an exercise price of $4.375 per share.
(4) Of the 64,500 options to purchase shares of Common Stock held by Ms.
Randall, 30,000 options have an exercise price of $8.125 per share,
20,000 options have an exercise price of $4.531 per share, 4,500
options have an exercise price of $4.125 per share, and 10,000 have an
exercise price of $4.375 per share.
(5) Of the 64,000 options to purchase shares of Common Stock held by Mr.
Whitney, 20,000 options have an exercise price of $8.125 per share,
20,000 options have an exercise price of $4.125 per share, and 20,000
options have an exercise price of $4.281 per share.
(6) Based upon the closing price of Zoom's Common Stock on December 31, 1999
on the Nasdaq National Market ($8.437).
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, 1999, Zoom's executive officers
as a group (7 persons) were granted in the aggregate options to purchase a
total of 60,000 shares of Zoom's Common Stock, net of cancellations, at an
average exercise price per share of $4.34. During the year, executive officers
exercised an aggregate of twenty thousand (20,000) 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, 1999, in the amount of $120,371. 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 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 cash compensation in favor of stock
options. If not for this request, the Board of Directors would have set Mr.
Manning's cash compensation at a higher level to better reflect his importance
and contributions to Zoom.
During fiscal 1999, Mr. Manning was not granted any options to purchase
shares of Common Stock. Other executive officers as a group were granted an
aggregate of 60,000 options to purchase shares of Common Stock at an average
exercise price of $4.34 per share. In determining the number of options to be
granted to the executive officers, the Stock Option Committee reviews
recommendations provided by Mr. Manning, the Chief Executive Officer, and makes
a subjective determination regarding that recommendation based upon the
following criteria: (i) the level of cash compensation; (ii) the compensation
paid by companies that might compete with Zoom for the employee's services;
(iii) the individual performance of the executive officer; and (iv) the number
of shares subject to options already 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
<PAGE>
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, 1994 through
December 31, 1999, 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.
<TABLE>
<CAPTION>
Comparison of Cumulative Total
Return Among: 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
High Tech Composite Index 100.00 144.21 207.54 253.40 437.38 762.35
S&P 500 Index 100.00 134.05 161.14 211.05 267.33 318.50
Zoom Telephonics, Inc. 100.00 250.79 128.63 85.71 50.79 107.14
</TABLE>
Assume $100 Invested on 12/31/94
The Performance Graph assumes the investment of $100 on December 31, 1994
in Zoom's Common Stock, 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 1999.
<PAGE>
PROPOSAL NO. 2
APPOINTMENT OF AUDITOR
Management of Zoom proposes to nominate the accounting firm of KPMG 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 LLP also
served as Zoom's independent auditors during the fiscal year ended December 31,
1999. KPMG 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 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 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 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 12, 2001, 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 March 28, 2001. 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, 1999, 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.
<PAGE>
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>
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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 TO BE
HELD ON JUNE 16, 2000.
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 16, 2000, 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 LLP as auditor of the Corporation for the ensuing year at a
remuneration to be fixed by the directors.
| | FOR |X| 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 15, 2000.
Signature Name (Please Print)
------------------------ -------------------------
Address
-------------------------------------------------------------------------
Date , 2000 Number of Shares to be voted
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(IF LEFT BLANK, ALL SHARES REGISTERED IN YOUR NAME WILL BE DEEMED TO BE
REPRESENTED BY THIS PROXY.)
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