SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(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 under Rule 14a-12
Zoom Technologies, 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:
---------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------------------
ZOOM TECHNOLOGIES, INC.
207 South Street
Boston, MA 02111
May 2, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Zoom Technologies, Inc. to be held at 10:00 a.m., Eastern time, on Friday, June
13, 2003 at the principal executive offices of Zoom Technologies, 207 South
Street, Boston, Massachusetts, 02111. The location is near South Station in
downtown Boston.
A buffet breakfast will be available starting at 9:30 a.m. and the meeting
will begin at 10:00 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 business 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 at the meeting. 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
ZOOM TECHNOLOGIES, INC.
207 South Street
Boston, MA 02111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Zoom Technologies, Inc. will be held on Friday, June 13, 2003 at
10:00 a.m., Eastern time, at Zoom's principal executive offices, located at 207
South Street, Boston, Massachusetts 02111, for the following purposes:
1. To elect five (5) directors to serve for the ensuing year and until their
successors are duly elected.
2. To consider and act upon a proposal to amend the Zoom Technologies, Inc.
1991 Directors Stock Option.
3. To transact any other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 18, 2003 as
the record date for determining the stockholders entitled to receive notice of
and to vote at the Annual Meeting and any continuation or adjournment thereof.
All stockholders are cordially invited to attend the Annual Meeting.
However, to assure your representation at the Annual Meeting, you are urged to
mark, sign, date and return the enclosed proxy as promptly as possible in the
enclosed postage-prepaid envelope. Any stockholder attending the Annual Meeting
may vote in person even if he or she returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Frank B. Manning
President
Boston, Massachusetts
May 2, 2003
--------------------------------------------------------------------------------
IMPORTANT: YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING
PROXY CARD IN THE ENVELOPE PROVIDED, SO THAT IF YOU ARE UNABLE TO ATTEND THE
MEETING YOUR SHARES MAY NEVERTHELESS BE VOTED. EVEN IF YOU HAVE GIVEN YOUR
PROXY, YOUR PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE BY FILING WITH
THE SECRETARY OF ZOOM A WRITTEN REVOCATION, BY EXECUTING A PROXY AT A LATER
DATE, OR BY ATTENDING AND VOTING AT THE MEETING.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THANK YOU FOR ACTING PROMPTLY.
--------------------------------------------------------------------------------
ZOOM TECHNOLOGIES, INC.
PROXY STATEMENT FOR THE 2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 13, 2003
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of Zoom
Technologies, Inc. ("Zoom"), for use at the Annual Meeting of Stockholders to be
held on Friday, June 13, 2003, at 10:00 a.m., local time (the "Annual Meeting"),
or at any continuation or adjournment thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held at the principal executive offices of Zoom located at 207
South Street, Boston, Massachusetts 02111. This proxy statement, the
accompanying Notice of the Annual Meeting, proxy card and the annual report on
Form 10-K are first being mailed to stockholders on or about May 2, 2003.
RECORD DATE, STOCK OWNERSHIP AND VOTING
Only stockholders of record at the close of business on April 18, 2003, are
entitled to receive notice of and to vote at the Annual Meeting. At the close of
business on April 18, 2003 there were outstanding and entitled to vote 7,852,466
shares of common stock, par value $.01 per share ("Common Stock"). Each
stockholder is entitled to one vote for each share of Common Stock. One-third of
the shares of Common Stock outstanding and entitled to vote is required to be
present or represented by proxy at the Annual Meeting in order to constitute the
quorum necessary to take action at the Annual Meeting.
The five (5) nominees for the Board of Directors who receive the greatest
number of votes cast by stockholders present in person or represented by proxy
and entitled to vote thereon will be elected directors of Zoom. The affirmative
vote of the holders of a majority of shares of Common Stock present in person or
represented by proxy and entitled to vote thereon is required to approve
Proposal No. 2 relating to the amendments to the 1991 Directors Stock Option
Plan.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspector of elections appointed for the Annual Meeting. The inspector of
elections will treat abstentions as shares of Common Stock that are present and
entitled to vote for purposes of determining a quorum. Abstentions will have no
effect on the outcome of the vote for the election of directors, but will have
the effect of being cast against the proposal to amend the 1991 Directors Stock
Option Plan, even though the stockholder so abstaining may intend a different
interpretation. Shares of Common Stock held of record by brokers who do not
return a signed and dated proxy or do not comply with the voting instructions
will not be considered present at the Annual Meeting, will not be counted
towards a quorum, and will not be voted in the election of directors or on the
proposal to amend the 1991 Directors Stock Option Plan. Shares of Common Stock
held of record by brokers who return a signed and dated proxy or comply with the
voting instructions but who fail to vote (a "broker nonvote") on the election of
directors or the proposal to amend the 1991 Directors Stock Option Plan will
count toward the quorum but will have no effect on those proposals not voted.
REVOCABILITY OF PROXIES
Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before it is voted. It may be revoked by
filing with the Secretary of Zoom at Zoom's principal executive office, 207
South Street, Boston, Massachusetts 02111, written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
Annual Meeting and voting in person.
SOLICITATION
All costs of this solicitation of proxies will be borne by Zoom. Zoom may
reimburse banks, brokerage firms and other persons representing beneficial
owners of shares for their reasonable expenses incurred in forwarding
solicitation materials to such beneficial owners. Solicitation of proxies by
mail may be supplemented by telephone, fax, electronic mail, or personal
solicitations by directors, officers, or employees of Zoom. No additional
compensation will be paid for any such services.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A board of five directors is to be elected at the Annual Meeting. The
persons named in the following table are nominated 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 Annual 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 Annual Meeting or until
his successor is duly elected or appointed and qualified, unless his office is
earlier vacated in accordance with the Certificate of Incorporation of Zoom or
he becomes disqualified to act as a director. The five (5) nominees who receive
the greatest number of votes cast by stockholders present, in person or by
proxy, and entitled to vote at the Meeting, will be elected directors of Zoom.
Name Age Principal Director
Occupation Since
--------------------------------------------------------------------------
Frank B. Manning 54 Chief Executive Officer, 1977
President and Chairman of the
Board of Zoom Technologies, Inc.
Peter R. Kramer 51 Executive Vice President and 1977
Director of Zoom Technologies, Inc.
Bernard Furman (1)(2) 73 Consultant 1991
L. Lamont Gordon(1) 70 Consultant 1992
J. Ronald Woods(1)(2) 67 President of Rowood Capital Corp. 1991
--------------------------------------------------------------------------
(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. Mr. Manning was a director of Microtouch
Systems, Inc., a former Nasdaq-listed leader in touchscreen technology, from
1993 until its acquisition by 3M in 2001. 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 B. 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,
currently retired, 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. From 1987 through
December 2002, Mr. Gordon 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. Mr. Gordon currently serves as an independent
consultant.
J. Ronald Woods has been a Director of Zoom since 1991. Since November
2000, Mr. Woods has served as President of Rowood Capital Corp., a private
investment company. From June 1996 to November 2000, Mr. Woods served as Vice
President-Investments of Jascan, Inc., a private investment holding company.
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.,
Canadian Superior Energy Corp, Luke Energy Ltd., and Virtus Energy Ltd.
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 currently have a nominating or compensation
committee.
The Stock Option Committee consists of Messrs. Furman and Woods. The
primary functions of the Stock Option Committee are to administer and award
options under Zoom's stock option plans.
The members of and a description of the functions of the Audit Committee
are described in the "Audit Committee Report" set forth below.
During the year ending December 31, 2002, the Board of Directors held seven
(7) meetings, the Audit Committee held six (6) meetings and the Stock Option
Committee held one meeting. 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, except for Mr. Gordon who attended two-thirds of
the meetings of the Board and committees on which he served.
AUDIT COMMITTEE REPORT
During 2002, the Audit Committee of the Board of Directors consisted of
three of Zoom's directors: Messrs. Furman, Gordon and Woods. All members of
Zoom's Audit Committee are "independent" as such term is defined under the
listing standards of the Nasdaq National Market. The Audit Committee operates
pursuant to a written charter (the "Audit Committee Charter") which was approved
and adopted by the Board of Directors . Under the provisions of the Audit
Committee Charter, the Audit Committee's primary functions are to, among other
things: oversee the performance of Zoom's independent auditors; review Zoom's
financial disclosure documents; monitor Zoom's financial reporting process and
internal control systems; monitor potential conflicts of interest among Zoom and
its executive officers and directors; and provide a liaison between the
independent auditors and the Board of Directors. The Audit Committee is also
directly responsible for the appointment and engagement of Zoom's independent
auditors. Zoom intends to amend its Audit Committee Charter, if necessary, to
comply with the final rules or regulations promulgated by the SEC or the Nasdaq
Stock Market in response to the mandates of the Sarbanes-Oxley Act of 2002.
The Audit Committee has reviewed and discussed with management Zoom's
audited consolidated financial statements for the year ending December 31, 2002.
The Audit Committee has also discussed with KPMG LLP, Zoom's independent
auditors, the matters required to be discussed by the Auditing Standards Board
Statement on Auditing Standards No. 61 (Communications with Audit Committees),
as amended. As required by Independence Standards Board Standard No. 1, as
amended, "Independence Discussion with Audit Committees," the Audit Committee
has received and reviewed the required written disclosures and a confirming
letter from KPMG LLP regarding their independence, and has discussed the matter
with the auditors.
Based on its review and discussions of the foregoing, the Audit Committee
recommended to the Board of Directors that Zoom's audited consolidated financial
statements for 2002 be included in Zoom's Annual Report on Form 10-K for the
year ending December 31, 2002.
Audit Committee:
Bernard Furman
L. Lamont Gordon
J. Ronald 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
Zoom's 1991 Directors Stock Option Plan, as amended (the "Directors Plan").
Currently, the non-employee directors of Zoom are Bernard Furman, L. Lamont
Gordon and J. Ronald Woods.
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. During 2002, 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 $1.165 per
share.
The Board of Directors has approved an amendment to the Directors Plan,
subject to the approval of Zoom's stockholders, which would increase the number
of shares of Common Stock reserved for issuance under the Directors Plan from
198,000 to 450,000 and would increase the number of options automatically
granted to the non-employee directors on January 10th and July 10th of each year
commencing July 10, 2003 from options to purchase 6,000 shares to options to
purchase 12,000 shares. For a description of the amendment and the material
terms of the Directors Plan, please see Proposal No. 2 below.
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 18, 2003, by (i) each person who is
known by Zoom to own beneficially more than five percent (5%) of Zoom's Common
Stock, (ii) each of Zoom's directors and nominees for director and each Named
Executive Officer listed below in the Summary Compensation Table under the
heading "Executive Compensation", and (iii) all of Zoom's directors and
executive officers as a group. On April 18, 2003, there were 7,852,466 issued
and outstanding shares of Zoom's Common Stock. Unless otherwise noted, each
person identified below possesses sole voting and investment power with respect
to the shares listed. The information contained in this table is based upon
information received from or on behalf of the named individuals or from publicly
available information and filings by or on behalf of those persons with the SEC.
Name Number of Shares % of Common Stock
Beneficially Owned
--------------------------------------------------------------------------------
Frank B. Manning(1)(2) 816,246 10.1%
c/o Zoom Technologies, Inc.
207 South Street
Boston, MA 02111
T. Pat Manning(2) 440,033 5.6%
1821 Sherman Drive
St. Charles, MO 63303
Peter R. Kramer(3) 645,449 8.1%
c/o Zoom Technologies, Inc.
207 South Street
Boston, MA 02111
Eliot Rose Asset Management, LLC 603,845 7.7%
and Gary S. Siperstein(4)
10 Weybosset Street, Suite
401 Providence, Rhode Island 02903
Bernard Furman(5) 46,000 *
L. Lamont Gordon(6) 19,000 *
J. Ronald Woods(7) 20,000 *
Robert A. Crist(8) 98,000 1.2%
Deena Randall(9) 70,500 *
Terry Manning (2)(10) 159,210 2.0%
All Directors and Current 1,946,905 22.7%
Executive Officers as a group
(9 persons) (11)
--------------------------------------------------------------------------------
*Less than one percent of shares outstanding.
(1) Includes 220,000 shares that Mr. Frank Manning has the right to acquire
upon exercise of outstanding stock options exercisable within sixty (60)
days after April 18, 2003. Includes 3,368 shares held by Mr. Frank
Manning's daughter, as to which he disclaims beneficial ownership.
(2) T. Pat Manning, Terry Manning and Frank B. Manning are brothers.
(3) Includes 165,000 shares that Mr. Kramer has the right to acquire upon
exercise of outstanding stock options exercisable within sixty (60) days
after April 18, 2003.
(4) According to a Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2003 by Eliot Rose Asset Management, LLC, an
investment adviser, and Gary S. Siperstein, Eliot Rose Asset Management
acts as an investment adviser to certain persons pursuant to separate
agreements with such persons. Eliot Rose Asset Management has sole
dispositive power over the shares of Zoom Common Stock it beneficially
owns. Mr. Siperstein, the managing member of Eliot Rose Asset Management,
is also deemed the beneficial owner of these shares of Zoom Stock because
of his ownership interest in Eliot Rose Asset Management, LLC.
(5) Includes 18,000 shares the Mr. Furman has the right to acquire upon
exercise of outstanding stock options exercisable within sixty (60) days
after April 18, 2003.
(6) Includes 18,000 shares that Mr. Gordon has the right to acquire upon
exercise of outstanding stock options exercisable within sixty (60) days
after April 18, 2003.
(7) Includes 18,000 shares that Mr. Woods has the right to acquire upon
exercise of outstanding stock options exercisable within sixty (60) days
after April 18, 2003.
(8) Includes 98,000 shares that Mr. Crist has the right to acquire upon
exercise of outstanding stock options exercisable within sixty (60) days
after April 18, 2003.
(9) Includes 70,500 shares that Ms. Randall has the right to acquire upon
exercise of outstanding stock options exercisable within sixty (60) days
after April 18, 2003.
(10) Includes 62,500 shares that Mr. Terry Manning has the right to acquire upon
exercise of outstanding stock options exercisable within sixty (60) days
after April 18, 2003.
(11) Includes an aggregate of 670,000 shares that the directors and Named
Executive Officers listed above have the right to acquire upon exercise of
outstanding stock options exercisable within sixty (60) days after April
18, 2003. Also includes an additional 72,500 shares that executive officers
not listed above have the right to acquire upon exercise of outstanding
stock options exercisable within sixty (60) days after April 18, 2003.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows, for the years ending
December 31, 2002, 2001 and 2000, 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 year (the "Named
Executive Officers").
Long Term
Compensation
Annual Compensation Awards
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options (#) Compensation(3)
--------------------------------------------------------------------------------------------------------
Frank B. Manning, 12/31/02 $131,758 -0- -0- 100,000 $218
Chief Executive Officer, 12/31/01 $131,352 -0- $ 6,333(1) 200,000 $218
President and Chairman 12/31/00 $126,040 $12,000 $11,771(1) 110,000 $210
of the Board
Peter R. Kramer, 12/31/02 $131,758 -0- -0- 80,000 $218
Executive Vice President 12/31/01 $131,352 -0- $ 3,424(1) 150,000 $218
and Director 12/31/00 $126,168 $12,000 $ 866(1) 80,000 $137
Robert A. Crist, 12/31/02 $150,096 -0- $ 4,080(2) 40,000 $501
Vice President of Finance 12/31/01 $149,456 -0- $ 4,533(2) 88,000 $501
and Chief Financial 12/31/00 $144,715 $12,000 $ 3,585(2) 32,000 $491
Officer
Deena Randall, 12/31/02 $130,804 -0- -0- 40,000 $141
Vice President - 12/31/01 $133,224 -0- $ 511(1) 68,000 $140
Operations 12/31/00 $128,263 $14,000 -0- 30,000 $135
Terry Manning, 12/31/02 $125,875 -0- -0- 35,000 $202
Vice President of 12/31/01 $125,250 -0- $ 3,600(1) 60,000 $204
Sales and Marketing 12/31/00 $117,199 $10,000 $13,478(1) 30,000 $121
--------------------------------------------------------------------------------------------------------
(1) Consists of amounts paid as a cash-out of accrued and unused vacation time.
(2) Consists solely of amounts paid for parking expenses for the years ending
December 31, 2000 and December 31, 2002. For the year ending December 31,
2001, amounts included $4,080 paid for parking expenses and $453 for a
cash-out of accrued and unused vacation time.
(3) Consists of insurance premiums paid by Zoom for the term life insurance
policy for the benefit of the Named Executive Officer.
Option Grants in Last Year
The following table sets forth certain information with respect to stock
options granted to the Named Executive Officers during the year ending December
31, 2002.
OPTION GRANTS IN LAST YEAR
Individual Grants
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of
Securities Options Exercise Stock Price
Underlying Granted to or Base Appreciation for
Options Employees in Price Per Expiration Option Term(2)
Name Granted(1) Year Share Date 5% 10%
------------------------------------------------------------------------------------------
Frank B. Manning 100,000 13.80% $1.00 06/11/05 $5,344 $21,121
Peter R. Kramer 80,000 11.04% $1.00 06/11/05 $4,275 $16,897
Robert A. Crist 40,000 5.52% $1.00 06/11/05 $2,138 $8,448
Deena Randall 40,000 5.52% $1.00 06/11/05 $2,138 $8,448
Terry Manning 35,000 4.83% $1.00 06/11/05 $1,870 $7,392
------------------------------------------------------------------------------------------
(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 Zoom. 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
and do not represent Zoom's estimate or projection of future Common Stock
prices.
Aggregated Option Exercises in Last Year and Year End Option Values
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the year ending
December 31, 2002 and unexercised options held as of December 31, 2002.
AGGREGATED OPTION EXERCISES IN LAST YEAR
AND YEAR END OPTION VALUES
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options
On Value Options at FY-End (#) at FY-End (6)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
-----------------------------------------------------------------------------------------------
Frank B. Manning(1) -0- -0- 210,000 200,000 -0- -0-
Peter R. Kramer(2) -0- -0- 155,000 155,000 -0- -0-
Robert A. Crist(3) -0- -0- 76,000 84,000 -0- -0-
Deena M. Randall(4) -0- -0- 64,000 74,000 -0- -0-
Terry Manning(5) -0- -0- 60,000 65,000 -0- -0-
----------------------------------------------------------------------------------------------
(1) Of the 410,000 options to purchase shares of Common Stock held by Mr. Frank
Manning, 80,000 options have an exercise price of $8.00 per share, 30,000
options have an exercise price of $6.625 per share, 80,000 options have an
exercise price of $3.625 per share, 120,000 options have an exercise price
of $2.20 per share, and $100,000 options have an exercise price of $1.00
per share.
(2) Of the 310,000 options to purchase shares of Common Stock held by Mr.
Kramer, 60,000 options have an exercise price of $8.00 per share, 20,000
options have an exercise price of $6.625 per share, 60,000 options have an
exercise price of $3.625 per share, 90,000 options have an exercise price
of $2.20 per share, and 80,000 options have an exercise price of $1.00 per
share.
(3) Of the 160,000 options to purchase shares of Common Stock held by Mr.
Crist, 12,000 options have an exercise price of $8.00 per share, 10,000
options have an exercise price of $5.3125 per share, 10,000 options have an
exercise price of $6.625 per share, 28,000 options have an exercise price
of $3.625 per share, 60,000 options have an exercise price of $2.20 per
share, and 40,000 options have an exercise price of $1.00. In the event
that Mr. Crist is terminated by Zoom for any reason other than for cause or
a change of control, options to purchase up to 20,000 shares of Common
Stock will become automatically vested.
(4) Of the 138,000 options to purchase shares of Common Stock held by Ms.
Randall, 30,000 options have an exercise price of $8.00 per share, 33,000
options have an exercise price of $3.625 per share, 35,000 options have an
exercise price of $2.20 per share and 40,000 options have an exercise price
of $1.00
(5) Of the 125,000 options to purchase shares of Common Stock held by Mr. Terry
Manning, 30,000 options have an exercise price of $8.00 per share, 30,000
options have an exercise price of $3.625 per share, 30,000 options have an
exercise price of $2.20 per share, and 35,000 options have an exercise
price of $1.00.
(6) Based upon the closing price of Zoom's Common Stock on December 31, 2002 on
the Nasdaq National Market ($.71). As of December 31, 2002, no Named
Executive Officer held options, exercisable or unexercisable, with an
exercise price of less than $1.00.
Options to purchase Zoom's Common Stock have been granted to executive
officers and other employees of Zoom under Zoom's 1990 Stock Option Plan, as
amended (the "1990 Plan"). Options to purchase Zoom's Common Stock may also be
granted to employees who are neither officers nor directors of Zoom under Zoom's
1998 Employee Equity Incentive Plan (the "1998 Plan"). The 1990 Plan and the
1998 Plan are each administered by the Stock Option Committee of the Board of
Directors. In addition, from time to time, the Board of Directors has authorized
Mr. Manning to award a limited number of options under the 1998 Plan throughout
the year.
Insider Participation in Compensation Decisions
Decisions regarding executive compensation, exclusive of the administration
of the 1990 Plan, are made by the 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, 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 performance of Zoom by closely aligning
the financial interests of Zoom's executive officers with those of its
stockholders 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. None of Zoom's
executive officers received a bonus for 2002. Any future bonuses will be
determined by the independent directors of Zoom, based on their subjective
determination and the future performance of Zoom.
Frank B. Manning, Zoom's Chief Executive Officer, received cash
compensation for the year ending December 31, 2002, in the amount of $131,758.
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.
During 2002, Mr. Manning was granted options to purchase 100,000 shares of
Common Stock at an exercise price of $1.00 per share. Other executive officers
as a group were granted options to purchase 225,000 shares of Common Stock at an
exercise price of $1.00 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
--------------------------------------------------------------------------
Performance Graph
The following graph compares the annual change in Zoom's cumulative total
stockholder return for the five (5) year period from December 31, 1997 through
December 31, 2002, 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 Information Technology Composite Index for that period.
Total Return Comparison
Return Among: 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
---------------------------------------------------------------------------------------
Information Technology 100.00 177.64 316.95 187.38 138.66 86.56
S&P 100.00 126.67 151.40 136.05 118.31 90.66
ZOOM 100.00 59.26 125.00 46.53 19.26 10.52
---------------------------------------------------------------------------------------
The Performance Graph assumes the investment of $100 on December 31, 1997
in Zoom's Common Stock, the Standard & Poor's 500 Stock Index and the Standard &
Poor's Information Technology Composite Index, and the reinvestment of any and
all dividends.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2001, Zoom entered into an agreement to purchase the ground lease
for a manufacturing facility located on Drydock Avenue in Boston, Massachusetts
(the "Drydock Building"). In connection with the proposed purchase of the
Drydock Building, Zoom paid $513,500 to be held in escrow as a deposit pending
the closing of the transaction. Of this deposit, $25,000 was nonrefundable. When
Zoom was unable to obtain a commitment for financing on terms consistent with
the purchase agreement, it terminated the purchase and sale agreement, but the
Seller retained the deposit pending resolution of a dispute over Zoom's right to
terminate. While Zoom believed that it was entitled to a return of the $488,500
refundable portion of the deposit plus interest, the funds were retained by the
escrow agent.
As an alternative to pursuing legal remedies to obtain a return of the
deposit, Zoom pursued an arrangement to reinstate the Drydock purchase agreement
in partnership with the following individuals: Frank B. Manning, President and a
director of Zoom; Peter R. Kramer, Executive Vice President and a director of
Zoom; Bruce M. Kramer, Peter Kramer's brother; and a third party. Under this
arrangement, these individuals, either directly or through entities controlled
by them, joined together with Zoom as of March 29, 2002 to form the Zoom Group
LLC, a Delaware limited liability company ("Zoom Group") to purchase the
leasehold interest in the Drydock ground lease. Zoom and each of the investors
owned a 20% interest in the Zoom Group. The managers of the Zoom Group are Peter
Kramer and the third party. There were no special allocations among the members
of the Zoom Group, and each member was required to contribute a proportionate
amount of capital in return for its 20% interest.
Effective as of March 29, 2002, Zoom entered into an Assignment Agreement
with the Zoom Group LLC and also entered into a Reinstatement Agreement and
Second Amendment to Agreement of Purchase and Sale with the holder of the Dry
Dock ground lease. Under the Assignment Agreement, Zoom assigned its rights
under the purchase agreement to the Zoom Group, together with rights to the
$488,500 refundable portion of the deposit. In connection with this transaction,
under a separate letter agreement, the other members of the Zoom Group paid Zoom
$390,800 ($97,700 each), representing their proportionate share of the deposit
assigned to the Zoom Group. As a result, Zoom's remaining interest in the
deposit was $97,700. As part of the Reinstatement Agreement and Second
Amendment, the members of Zoom Group LLC agreed that an additional $25,000 of
the $488,500 deposit would be nonrefundable, $5,000 of which was allocated to
each investor.
In August, 2002 the Zoom Group purchased the Drydock Building for a
purchase price of $6.1 million. The Zoom Group obtained a mortgage of $4.2
million, less closing costs and legal fees. Each member of the Zoom Group
contributed approximately $482,500 for their share of the purchase plus working
capital reserve. These initial capital contributions included each member's
share of the deposit, which was credited at closing.
Under the Zoom Group Operating Agreement, Zoom had both the right to sell
its interest in the Zoom Group to the other members of the Zoom Group by January
5, 2003, and the right to purchase the other members' entire interests in the
Zoom Group through December 31, 2005, both in accordance with a predetermined
formula. In December 2002 a special committee of Zoom's board of directors,
appointed to review the Drydock transactions, determined that it was advisable
and in the best interest of Zoom to exercise its right to sell its interest in
the Zoom Group to the remaining Zoom Group LLC members. Accordingly, effective
January 5, 2003, Zoom exercised its right to sell and assign its interest in the
Zoom Group to the remaining members of the Zoom Group for approximately
$482,000. In March 2003, Zoom received the proceeds from the sale of its
interest from the remaining members of the Zoom Group.
The transactions described above between Zoom, the Zoom Group and members
of the Zoom Group were reviewed and approved by a special committee of
independent members of the Board of Directors of Zoom, who determined the
transactions to be advisable and in the best interest of Zoom.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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. Specific filing deadlines of these
reports have been established and Zoom is required to disclose in this proxy
statement any failure to file by these dates during the year ended December 31,
2002. To Zoom's knowledge, all of the required reports were filed by such
persons during 2002.
PROPOSAL NO. 2
PROPOSAL TO AMEND THE ZOOM TECHNOLOGIES, INC.
1991 DIRECTORS STOCK OPTION PLAN
In April 2003, the Board of Directors approved, subject to stockholder
approval, an amendment to the Zoom Technologies, Inc. 1991 Directors Stock
Option Plan, as amended (the "Directors Plan"). As set forth in further detail
below, the proposed amendment to the Directors Plan, if approved by the
stockholders, would increase the number of shares reserved for issuance under
the Directors Plan from 198,000 to 450,000 and would increase the number of
options automatically granted to each non-employee director on January 10th and
July 10th of each year commencing July 10, 2003 from options to purchase 6,000
shares to options to purchase 12,000 shares.
If the amendment is approved by the stockholders, the second sentence of
Article 4, Stock, of the Directors Plan would be deleted in its entirety and
replaced with the following:
"The maximum number of shares which are hereby reserved for issuance
and may be issued pursuant to this Plan is 450,000, subject to
adjustment as provided in Article 13."
In addition, the first sentence of Article 5, Grant of Option, of the
Directors Plan would be deleted in its entirety and replaced with the following:
Article 5 - Grant of Option
"Each eligible Director shall automatically be granted an option to
purchase 12,000 shares of Common Stock on each July 10 and January 10
of each year beginning July 10, 2003, at a price per share determined
in accordance with Article 6 hereof."
The purposes of the Directors Plan are to attract and retain the services
of experienced and knowledgeable independent directors and to provide these
directors with the opportunity to purchase shares of Common Stock in Zoom
pursuant to the exercise of options.
Each director who is not an employee of Zoom is eligible to receive options
to purchase shares of Common Stock under the Directors Plan. Of the current
directors, Messrs. Furman, Woods and Gordon are eligible directors. During the
year ending December 31, 2002, 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 $1.165 per share.
The Directors Plan currently provides that an aggregate of 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. The Directors Plan
also currently provides that each eligible director shall receive an option to
purchase 6,000 shares of Common Stock on January 10th and July 10th of each
year, provided such person is then a director. All options become exercisable in
full six months after the date of grant and terminate on the last day of the
second year following the date of grant. Under the proposed amendment to the
Directors Plan, the number of shares that may be issued upon exercise of options
granted under the Directors Plan would be increased from 198,000 to 450,000. In
addition, the amendment would increase the number of options granted to each
eligible director on January 10th and July 10th of each year commencing July 10,
2003 from options to purchase 6,000 shares to options to purchase 12,000 shares.
The timing of the grants and the termination dates under the Directors Plan
would remain unchanged.
The exercise price for all options granted under the Directors Plan is the
fair market value of the Common Stock at the time the option is granted. The
exercise price may be paid in cash, with Common Stock (valued at fair market
value on the date of purchase), or by a combination of cash and Common Stock.
Shares issued under the Directors Plan may include treasury shares,
authorized but unissued shares and shares previously reserved for issuance upon
exercise of options which have expired or terminated. Shares subject to an
option that ceases to be exercisable for any reason will be available for
subsequent option grants. The Directors Plan terminates on April 30, 2011 and no
further options may be issued under the Plan after that date.
No option under the Directors Plan may be exercised subsequent to two years
from the date of grant. If an eligible director ceases to be a director of Zoom
for any reason other than as a result of death or disability, all options held
by that director will remain exercisable for a period of one month following
such termination (but not later than their specified expiration date). If such
termination is a result of permanent disability, options will be exercisable for
a period of one year from the date of termination (but not later than their
specified expiration date). If such termination is a result of death, or if an
option holder dies within the one month period referred to above or during the
first year after such holder becomes disabled, then vested options will be
exercisable for a period of one year from the date of death (but not later than
their specified expiration date). Options granted under the Directors Plan may
not be assigned or transferred except by will or the laws of descent and
distribution.
The Directors Plan is administered by the Board of Directors. The Board of
Directors may from time to time adopt such rules and regulations for carrying
out the Directors Plan as it may determine in its sole discretion. The Board of
Directors has no discretion with respect to the selection of recipients of
grants, or the timing, pricing or the amount of stock option grants under the
Directors Plan.
The Directors Plan may be amended or terminated by the Board of Directors,
subject to certain limitations (i) with respect to certain matters for which
stockholder approval may be required, and (ii) regarding the number of
amendments which may be made in any six month period. No amendment, suspension
or termination of the Directors Plan, except as described in the Directors Plan,
may adversely affect the rights of an option holder under the Directors Plan
without the holder's consent.
Since the adoption of the Directors Plan, options to purchase an aggregate
of 114,000 shares of Common Stock (net of terminations) have been granted
thereunder to all directors who were not executive officers as a group, with all
those options granted to current directors who were not executive officers,
including options to purchase 48,000 shares to Mr. Furman, options to purchase
30,000 shares to Mr. Woods and options to purchase 36,000 shares to Mr. Gordon,
in each case net of terminations. Of the options to purchase 114,000 shares
granted (net of terminations), 42,000 shares of Common Stock have been issued
upon exercise of such options.
No options have been or will be granted under the Directors Plan to the
Named Executive Officers. No options have been or will be granted under the
Directors Plan to all current executive officers as a group or any associates of
such executive officers. No options have been or will be granted under the
Directors Plan to employees (including current officers who are not executive
officers) as a group.
At April 18, 2003, the market value of the Common Stock underlying the
outstanding options under the Directors Plan was $48,960, based upon the last
reported sale price per share of the Common Stock ($.68) on the Nasdaq SmallCap
Market on April 17, 2003.
Federal Tax Consequences of Directors Plan
The following general discussion of the federal income tax consequences of
the issuance and exercise of options granted under the Directors Plan is based
upon the provisions of the Internal Revenue Code as in effect on the date
hereof, current, promulgated and proposed regulations thereunder, existing
administrative rulings and pronouncements of the Internal Revenue Service, and
judicial decisions, all of which are subject to change (perhaps with retroactive
effect). This discussion is not intended to be a complete discussion of all of
the federal income tax consequences of the Directors Plan or of all of the
requirements that must be met in order to qualify for the tax treatment
described herein. In addition, because tax consequences may vary, and certain
exceptions to the general rules discussed herein may be applicable, depending
upon the personal circumstances of individual holders of securities, each option
holder should consider his personal situation and consult with his own tax
advisor with respect to the specific tax consequences applicable to him. No
information is provided as to state tax laws. The Directors Plan is not
qualified under Section 401 of the Code, nor is it subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended.
The recipient of a stock option under the Directors Plan will not recognize
any taxable income upon the grant of an option under the Directors Plan.
Generally, an option holder recognizes ordinary taxable income at the time an
option is exercised in an amount equal to the excess of the fair market value of
the shares of Common Stock on the date of exercise over the exercise price.
However, participants in the Directors Plan, generally will be subject to
Section 16(b) of the Securities Exchange Act of 1934 ("Section 16(b)") upon the
sale of their shares of Common Stock and this may affect their tax liability. In
the case of exercise of an option by someone whose sale of shares of Common
Stock would subject him to liability under Section 16(b), recognition of income
by the option holder may be postponed. The rules under Section 16(b) were
revised after the Treasury Regulations promulgated under the Code were adopted,
and the regulations have not yet been amended to conform with the revised rules
under Section 16(b). However, it is generally anticipated that the date of
recognition (the "Recognition Date") will be postponed to the earlier of (i) six
months after the date the option was granted, or (ii) the first day on which the
sale of the shares would not subject the individual to liability under Section
16(b). It is possible that the six month period will instead run from the option
holder's most recent grant or purchase of Common Stock prior to the exercise of
his option. The option holder will generally recognize ordinary taxable income
on the Recognition Date in an amount equal to the excess of the fair market
value of the shares of Common Stock at that time over the option exercise price.
Despite the general rule, in the case of recipients subject to Section 16(b) (if
the Recognition Date is after the date of exercise), the option holder may make
an election pursuant to Section 83(b) of the Code, in which case the option
holder will recognize ordinary taxable income at the time the stock option is
exercised and not on the later date. In order to be effective, the Section 83(b)
election must be made and filed with Zoom and the IRS within 30 days after
exercise.
Zoom will generally be entitled to a compensation deduction for federal
income tax purposes in an amount equal to the taxable income recognized by the
option holder, provided it reports the income on a W-2 or Form 1099, whichever
is applicable, that is timely provided to the option holder and filed with the
IRS.
When an option holder subsequently disposes of the shares of Common Stock
received upon exercise of an option, he will recognize capital gain or loss
equal to the difference between the amount realized and the fair market value on
the date on which the option holder recognized ordinary taxable income as a
result of the exercise of the option. Any such capital gain or loss would be
long term if the holding period for the shares is more than twelve months. The
holding period for the shares generally would begin on the date the shares were
acquired and would not include the period of time during which the option was
held.
An option holder who pays the exercise price, in whole or in part, by
delivering shares of Common Stock already owned by him will recognize no gain or
loss for federal income tax purposes on the shares surrendered, but otherwise
will be taxed according to the rules described above. To the extent the shares
acquired upon exercise are equal in number to the shares surrendered, the basis
of the shares received will be equal to the basis of the shares surrendered. The
basis of shares received in excess of the shares surrendered upon exercise will
be equal to the fair market value of the shares on the date of exercise, and the
holding period for the shares received will commence on that date.
Vote Required to Approve the Amendment to the 1991 Directors Stock Option Plan
The affirmative vote of the holders of a majority of shares of Common Stock
present, in person or by proxy, and entitled to vote at the meeting, is required
to approve the proposal to amend the Directors Plan. Proxies will be voted in
favor of the action unless otherwise instructed by the stockholders.
The Board of Directors recommends a vote FOR the approval of the
Amendment to the Zoom Technologies, Inc. 1991 Directors Stock Option Plan.
Equity Compensation Plan Information
Zoom maintains a number of equity compensation plans for employees,
officers, directors and others whose efforts contribute to Zoom's success. The
table below sets forth certain information as of Zoom's year ended December 31,
2002 regarding the shares of its Common Stock available for grant or granted
under stock option plans that (i) were approved by Zoom's stockholders, and (ii)
were not approved by Zoom's stockholders.
Equity Compensation Plan Information
-----------------------------------------------------------------------------------------------------------
Number Of Number Of Securities
Securities To Weighted-Average Remaining Available
Be Issued Upon Exercise Price Of For Future Issuance
Exercise Of Under Equity Compensation Plans
Outstanding Options, Outstanding Options, (excluding securities
Warrants And Rights Warrants And Rights reflected in column (a))
Plan Category (a) (b) (c)
-----------------------------------------------------------------------------------------------------------
Equity compensation plans 1,320,000 $3.47 472,646
approved by security holders(1)
Equity compensation plans 780,500 $3.16 372,800
not approved by
security holders(2)
-----------------------------------------------------------------------------------------------------------
Total 2,100,500 $3.35 845,466
-----------------------------------------------------------------------------------------------------------
(1) Includes the following plans: 1990 Stock Option Plan and 1991 Directors
Stock Option Plan, each as amended.
1990 Stock Option Plan. The purpose of the 1990 Stock Option Plan ("1990
Plan") is to establish a plan to advance the interests of Zoom by encouraging
equity participation in Zoom by directors (excluding non-employee directors),
officers and employees of Zoom through the acquisition of shares of Common Stock
upon the exercise of options granted under the 1990 Plan. The 1990 Plan is for
officers and certain full-time and part-time employees of the Company.
Non-employee directors are not eligible to participate in the 1990 Plan. A total
of 2,800,000 shares of Zoom's Common Stock have been authorized for issuance
under the 1990 Plan. The 1990 Plan is administered by the Stock Option Committee
of Zoom's Board of Directors. Participants in the 1990 Plan are eligible to
receive non-qualified stock options at an option price not less than the fair
market value of the stock on the date of grant. The options are exercisable in
accordance with terms specified by the Stock Option Committee not to exceed ten
years from the date of grant. The 1990 Plan provides that the number of shares
of Common Stock of Zoom that may be subject, from time to time, to outstanding
options granted to any one employee shall not exceed five percent (5%) of the
outstanding shares of Zoom. The expiration date of the 1990 Plan is March 31,
2008.
1991 Directors Stock Option Plan. The information contained in the table
does not reflect the proposed amendments to the Directors Plan. For a
description of the 1991 Directors Plan and the proposed amendments to such plan,
please see Proposal No. 2.
(2) Includes the 1998 Employee Equity Incentive Plan, as amended.
1998 Employee Equity Incentive Plan. The purposes of the 1998 Employee
Equity Incentive Plan (the "1998 Plan"), adopted by the Board of Directors in
1998, are to attract and retain employees and provide an incentive for them to
assist Zoom in achieving its long-range goals, and to enable such employees to
participate in Zoom's long-term growth. In general, under the 1998 Plan, all
employees who are not officers or directors are eligible to participate in the
1998 Plan. A total of 1,200,000 shares of Zoom's Common Stock have been
authorized and reserved for issuance under the 1998 Plan. The 1998 Plan is
currently administered by the Stock Option Committee of the Board of Directors.
The Board of Directors authorized Frank B. Manning, Zoom's Chief Executive
Officer, to grant stock options to purchase up to 100,000 shares in any quarter,
not to exceed options to purchase 350,000 shares in any year to eligible
employees under the 1998 Plan. Participants in the 1998 Plan are eligible to
receive non-qualified stock options at an option price determined by the Stock
Option Committee or Mr. Manning, as applicable. All stock options granted under
the 1998 Plan have been granted for at least the fair market value on the date
of grant.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has appointed KPMG LLP, as independent public
accountants, to audit the consolidated financial statements of Zoom for the year
ending December 31, 2003. A representative of KPMG LLP will be present at the
meeting to make a statement if such representative desires to do so and to
respond to appropriate questions.
INDEPENDENT AUDITOR FEES
Audit Fees. KPMG LLP billed Zoom an aggregate of $145,292 for professional
services rendered by KPMG in connection with its audit of Zoom's consolidated
financial statements and its review of Zoom's quarterly reports on Form 10-Q
during 2002.
Financial Information Systems Design and Implementation. KPMG did not
render any services to Zoom for financial information systems design and
implementation during 2002.
All Other Fees. KPMG billed Zoom an additional $52,175 for professional
services rendered during 2002 for services not otherwise described above. These
fees include fees for tax-related services, including tax advice and research
and assistance with the preparation and filing of tax returns, miscellaneous
advice regarding the completion of the domestication of Zoom from Canada to the
State of Delaware, and advice relating to Zoom's investment in the Dry Dock
property.
The Audit Committee has considered whether KPMG's provision of services
other than services rendered in connection with the audit of Zoom's annual
financial statements is compatible with maintaining KPMG's independence. The
Audit Committee determined such services did not affect their independence.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS; DISCRETIONARY AUTHORITY
OF PROXIES
Stockholder proposals for inclusion in Zoom's proxy materials for Zoom's
2004 Annual Meeting of Stockholders must be received by Zoom no later than
January 3, 2004. These proposals must also meet the other requirements of the
rules of the Securities and Exchange Commission relating to stockholder
proposals.
Stockholders who wish to make a proposal at Zoom's 2004 Annual Meeting -
other than one that will be included in Zoom's proxy materials - should notify
Zoom no later than March 18, 2004. If a stockholder who wishes to present such a
proposal fails to notify Zoom by this date, the proxies that management solicits
for the meeting will have discretionary authority to vote on the stockholder's
proposal if it is properly brought before the meeting. If a stockholder makes a
timely notification, the proxies may still exercise discretionary voting
authority under circumstances consistent with the proxy rules of the Securities
and Exchange Commission.
OTHER MATTERS
The Board of Directors knows of no other business to be presented for
consideration at the Annual Meeting other than described in this proxy
statement. However, if any other business should come before the Annual Meeting,
it is intention of the persons named in the proxy to vote, or otherwise act, in
accordance with their best judgment on such matters.
INCORPORATION BY REFERENCE
To the extent that this proxy statement 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 Statement entitled "Board of Directors Report on Executive
Compensation," "Audit Committee Report," and "Performance Graph" shall not be
deemed to be so incorporated, unless specifically otherwise provided in any such
filing. ANNUAL REPORT ON FORM 10-K
Copies of Zoom's Annual Report on Form 10-K for the year ending December
31, 2002, as filed with the Securities and Exchange Commission, are provided
herewith and available to stockholders without charge upon written request
addressed to Zoom Technologies, Inc., 207 South Street, Boston, Massachusetts
02111, Attention: Investor Relations.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
By order of the Board of Directors
Frank B. Manning, President
Boston, Massachusetts
May 2, 2003.
ZOOM TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 2003
The undersigned stockholder of ZOOM TECHNOLOGIES, INC., a Delaware corporation
(the "Company"), acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, dated May 2, 2003, and hereby appoints Frank
B. Manning and Robert A. Crist, and each of them acting singly, with full power
of substitution, attorneys and proxies to represent the undersigned at the
Annual Meeting of Stockholders of the Company to be held at the offices of the
Company, 207 South Street, Boston, Massachusetts 02111, on Friday, June 13,
2003, at 10:00 A.M. Eastern Time, and at any adjournment or adjournments
thereof, with all power which the undersigned would possess if personally
present, and to vote all shares of stock which the undersigned may be entitled
to vote at said meeting upon the matters set forth in the Notice of Meeting in
accordance with the following instructions and with discretionary authority upon
such other matters as may come before the meeting. All previous proxies are
hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED AS
DIRECTED BY THE UNDERSIGNED AND IF NO DIRECTION IS INDICATED, IT WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES AS DIRECTORS AND FOR THE PROPOSAL TO AMEND THE
1991 DIRECTORS STOCK OPTION PLAN.
---------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AS DIRECTORS AND FOR
THE PROPOSAL TO AMEND THE 1991 DIRECTORS STOCK OPTION PLAN.
1. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY (to vote for all nominees)
Nominees: FRANK B. MANNING, PETER R. KRAMER, BERNARD FURMAN, LAMONT
GORDON AND J. RONALD WOODS
Vote withheld from the following Nominee(s):
--------------------------------
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED ABOVE.
2. TO AMEND THE COMPANY'S 1991 DIRECTORS STOCK OPTION PLAN AS DESCRIBED IN THE
PROXY STATEMENT.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
Mark here for [ ]
address change and
note at left
SIGNATURES SHOULD BE THE SAME AS THE NAME PRINTED HEREON. EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS, ATTORNEYS, AND OFFICERS OF CORPORATIONS
SHOULD ADD THEIR TITLES WHEN SIGNING.
SIGNATURE: DATE:
------------------------- -------------------
SIGNATURE: DATE:
------------------------- -------------------