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-12
Zoom Technologies, Inc.
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(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.
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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4) Proposed maximum aggregate value of transaction:
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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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ZOOM TECHNOLOGIES, INC.
207 South Street
Boston, MA 02111
May 3, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Zoom Technologies, Inc. to be held at 10:30 a.m., local time, on Tuesday, June
11, 2002 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 10:00 a.m. and the meeting
will begin at 10:30 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 Tuesday, June 11, 2002 at
10:30 a.m., local 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; and
2. 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 19, 2002 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 3, 2002
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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.
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THANK YOU FOR ACTING PROMPTLY.
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ZOOM TECHNOLOGIES, INC.
PROXY STATEMENT FOR THE 2002 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 11, 2002
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 Tuesday, June 11, 2002, at 10:30 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
to stockholders are first being mailed to stockholders on or about May 3, 2002.
Record Date, Stock Ownership and Voting
Only stockholders of record at the close of business on April 19, 2002, are
entitled to receive notice of and to vote at the Annual Meeting. At the close of
business on April 19, 2002 there were outstanding and entitled to vote 7,860,866
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.
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 count shares represented in person or by proxy that withhold
authority to vote for a nominee for election as a director or that reflect
abstentions and "broker non-votes" (i.e., shares represented at the Annual
Meeting held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote, and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) as shares that are present and entitled to vote on the matters for
purposes of determining the presence of a quorum; but neither proxies that
withhold authority to vote for any nominee (without naming an alternative
nominee), abstentions nor broker non-votes will be counted as votes cast at the
Annual Meeting. As a result, such proxies will not be a factor for the election
of directors at the Annual Meeting.
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 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, telegram, 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 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 Occupation Director Since
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Frank B. Manning 53 Chief Executive Officer, 1977
President and Chairman of the
Board of Zoom Technologies, Inc.
Peter R. Kramer 50 Executive Vice President and 1977
Director of Zoom Technologies, Inc.
Bernard Furman (1)(2) 72 Consultant 1991
L. Lamont Gordon(1) 69 Consultant 1992
J. Ronald Woods(1)(2) 66 President of Rowood Capital Corp 1991
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(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 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 2001, 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.
J. Ronald Woods has been a Director of Zoom since 1991. Since November
2000, Mr. Woods has served as President of Rowood Capital Corp. From June 1996
to November 2000, Mr. Woods 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., and
Key West Energy 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 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, 2001, the Board of Directors and the
Audit Committee each held six (6) meetings 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.
AUDIT COMMITTEE REPORT
During fiscal 2001, 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 on May 23, 2000. Under the provisions of
the Audit Committee Charter, the Audit Committee's primary functions are to,
among other things: recommend the engagement and 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 has reviewed and discussed with management Zoom's
audited consolidated financial statements for the fiscal year ending December
31, 2001. 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, 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 fiscal 2001 be included in Zoom's Annual Report on Form 10-K for
the fiscal year ending December 31, 2001.
Audit Committee:
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Bernard Furman
L. Lamont Gordon
J. Ronald Woods
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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 fiscal 2001, 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 $3.26 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 19, 2002, 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 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 19, 2002, there were 7,860,866 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.
Number of Shares
Name Beneficially Owned % of Common Stock
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Frank B. Manning(1) (2) 731,246 9.15%
c/o Zoom Technologies, Inc.
207 South Street
Boston, MA 02111
T. Pat Manning(2) 440,033 5.60%
1821 Sherman Drive
St. Charles, MO 63303
Peter R. Kramer(3) 580,449 7.29%
c/o Zoom Technologies, Inc.
207 South Street
Boston, MA 02111
Bernard Furman(4) 46,000 *
L. Lamont Gordon(5) 19,000 *
J. Ronald Woods(6) 20,000 *
Robert A. Crist(7) 56,000 *
Richard Kumpf(8) 40,339 *
Deena Randall(9) 56,500 *
All Directors and Current 1,751,244 20.88%
Executive Officers
As a group (10 persons)
(1)(3)(4)(5)(6)(7)(8)(9)(10)
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*Less than one percent of shares outstanding.
(1) Includes 135,000 shares that Mr. Manning has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
19, 2002. Includes 3,368 shares held by Mr. Manning's daughter, as to which
he disclaims beneficial ownership.
(2) T. Pat Manning and Frank B. Manning are brothers.
(3) Includes 100,000 shares that Mr. Kramer has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
19, 2002.
(4) Includes 18,000 shares the Mr. Furman has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
19, 2002.
(5) Includes 18,000 shares that Mr. Gordon has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
19, 2002.
(6) Includes 18,000 shares that Mr. Woods has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
19, 2002.
(7) Includes 56,000 shares that Mr. Crist has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
19, 2002.
(8) Includes 20,000 shares that Mr. Kumpf has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
19, 2002.
(9) Includes 56,500 shares that Ms. Randall has the right to acquire under
outstanding stock options exercisable within sixty (60) days after April
19, 2002.
(10) Includes 105,000 shares that the executive officers of Zoom, who are not
named above, have the right to acquire under outstanding stock options
exercisable within sixty (60) days after April 19, 2002.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows, for the fiscal years ending
December 31, 2001, 2000 and 1999, 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 Executive Officers").
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.
Long Term
Compensation
Annual Compensation Awards
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options (#) Compensation(3)
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Frank B. Manning, 12/31/01 $131,352 -0- $ 6,333(1) 200,000 $218
Chief Executive Officer, 12/31/00 $126,040 $12,000 $11,771(1) 110,000 $210
President and Chairman 12/31/99 $120,371 $10,000 -0- -0- $300
of the Board
Peter R. Kramer, 12/31/01 $131,352 -0- $ 3,424(1) 150,000 $218
Executive Vice 12/31/00 $126,168 $12,000 $ 866(1) 80,000 $137
President and Director 12/31/99 $120,196 $10,000 $10,988(1) -0- $200
Robert A. Crist 12/31/01 $149,456 -0- $ 453(1) 88,000 $501
Vice President of $ 4,090(2)
Finance and Chief Financial 12/31/00 $144,715 $12,000 $ 3,585(2) 32,000 $491
Officer 12/31/99 $139,217 $10,000 $ 3,525(2) 15,000 $616
Richard Kumpf(4) 12/31/01 $144,836 -0- -0- 30,000 $257
Vice President of 12/31/00 $ 63,544 $60,000 -0- 40,000 $115
Engineering 12/31/99 -0- -0- -0- -0- -0-
Deena Randall 12/31/01 $133,224 -0- $ 511(1) 68,000 $140
Vice President-Operations 12/31/00 $128,263 $14,000 -0- 30,000 $135
12/31/99 $113,174 $10,000 $ 8,703(1) 10,000 $159
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(1) Consists of amounts paid as a cash-out of accrued and unused vacation time.
(2) Consists of amounts paid for parking expenses.
(3) Consists of insurance premiums paid by Zoom for the term life insurance
policy for the benefit of the Named Executive Officer.
(4) Mr. Kumpf became an executive officer in July, 2000.
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, 2001.
OPTION/SAR GRANTS IN LAST FISCAL 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
Name Options Employees in Price Per Expiration Option Term(2)
Granted(1) Fiscal Year Share Date 5% 10%
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Frank B. Manning 80,000 8.74% $3.625 01/08/04 $45,711 $95,990
120,000 13.10% $2.200 07/24/04 $41,613 $87,384
Peter R. Kramer 60,000 6.55% $3.625 01/08/04 $34,283 $71,993
90,000 9.83% $2.200 07/24/04 $31,210 $65,538
Robert A. Crist 28,000 3.06% $3.625 01/08/04 $15,999 $33,597
60,000 6.55% $2.200 07/24/04 $20,807 $43,692
Richard Kumpf 30,000 3.28% $2.200 07/24/04 $10,403 $21,846
Deena Randall 33,000 3.60% $3.625 01/08/04 $18,856 $39,596
35,000 3.82% $2.200 07/24/04 $12,137 $25,487
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(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 Fiscal Year and Fiscal Year End Option
Values
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the fiscal year
ending December 31, 2001 and unexercised options held as of December 31, 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-MoneyOptions/SARs
On Value Options/SARs at FY-End (#) at FY-End (6)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
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Frank B. Manning(1) -0- -0- 55,000 255,000 -0- -0-
Peter R. Kramer(2) -0- -0- 40,000 190,000 -0- -0-
Robert A. Crist(3) -0- -0- 31,000 104,000 -0- -0-
Richard Kumpf(4) -0- -0- 20,000 50,000 -0- -0-
Deena M. Randall(5) -0- -0- 25,000 83,000 -0- -0-
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(1) Of the 310,000 options to purchase shares of Common Stock held by Mr.
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, and 120,000 options have an exercise
price of $2.20 per share.
(2) Of the 230,000 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, and 90,000 options have an exercise
price of $2.20 per share.
(3) Of the 135,000 options to purchase shares of Common Stock held by Mr.
Crist, 15,000 options have an exercise price of $4.375 per share, 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, and 60,000 options have an exercise price of $2.20 per share. 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 70,000 options to purchase shares of Common Stock held by Mr.
Kumpf, 40,000 options have an exercise price of $7.375 per share, and
30,000 options have an exercise price of $2.20. Mr. Kumpf was hired in
July, 2000. In connection with Mr. Kumpf's offer letter, Zoom agreed to
grant him options so that he will have at least 20,000 options vesting per
year during his first four years of employment. In addition, if Zoom is
acquired, Mr. Kumpf's unvested options will vest automatically. There is
no specified term of employment in Mr. Kumpf's offer letter.
(5) Of the 108,000 options to purchase shares of Common Stock held by Ms.
Randall, 10,000 options have an exercise price of $4.375 per share, 30,000
options have an exercise price of $8.00 per share, 33,000 have an exercise
price of $3.625 per share, and 35,000 options have an exercise price of
$2.20 per share.
(6) Based upon the closing price of Zoom's Common Stock on December 31, 2001
on the Nasdaq National Market ($1.30). As of December 31, 2001, no Named
Executive Officer held options, exercisable or unexercisable, with an
exercise price of less than $2.20.
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 fiscal 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, 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
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.
Frank B. Manning, Zoom's Chief Executive Officer, received cash
compensation for the fiscal year ending December 31, 2001, in the amount of
$137,685. 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 2001 Mr. Manning was granted 200,000 options to purchase
shares of Common Stock at a weighted average exercise price of $2.77 per share.
Other executive officers as a group were granted an aggregate of 431,000 options
to purchase shares of Common Stock at a weighted average exercise price of
$2.765 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:
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Frank B. Manning Bernard Furman
Peter R. Kramer J. Ronald Woods
Bernard Furman
J. Ronald Woods
L. Lamont Gordon
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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, 1996 through
December 31, 2001, 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
Comparison of Cumulative Total
Return Among: 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
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Info Tech Composite Index 100.00 128.13 227.61 406.10 240.09 177.66
S&P 500 Index 100.00 130.97 165.90 198.29 178.19 154.95
Zoom Technologies, Inc. 100.00 66.63 39.49 83.29 31.00 12.83
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The Performance Graph assumes the investment of $100 on December 31, 1996
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 Dry Dock Avenue in Boston, Massachusetts
(the "Dry Dock Building"). In connection with the proposed purchase of the Dry
Dock Building, Zoom paid $500,000 to be held in escrow as a deposit pending the
closing of the transaction. Of this deposit, $25,000 was nonrefundable.
Subsequently, negotiations stalled and the property-owner of the Dry Dock
Building retained the deposit pending resolution of some disputed facts
concerning the purchase. While Zoom believed that it was entitled to a return of
the $488,500 refundable portion of the deposit plus interest, the property-owner
objected, and the funds were retained in escrow pending resolution of the
dispute.
As an alternative to pursing legal remedies to obtain a return of the
deposit, Zoom pursued an arrangement to acquire the Dry Dock Building 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 Dry Dock Building. Zoom
and each of the investors owns a 20% interest in the Zoom Group. The managers of
the Zoom Group are Peter Kramer and the third party. There are no special
allocations among the members of the Zoom Group, and each member is required to
contribute his or its proportionate amount of capital in return for its 20%
interest.
Effective as of March 29, 2002, Zoom also entered into a Reinstatement
Agreement, Assignment Agreement and Second Amendment to Agreement of Purchase
and Sale with the Zoom Group and the owner of the Dry Dock ground lease. Under
this Reinstatement Agreement, the original purchase agreement for the Dry Dock
Building was amended and reinstated, and Zoom assigned its rights under the
purchase agreement to the Zoom Group, together with rights to the $488,500
refundable portion of the deposit plus interest. 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 is $97,700. As part of the reinstatement of the purchase
agreement, the members of the Zoom Group agreed that an additional $25,000 of
the $488,500 deposit would be nonrefundable, of which $5,000 has been allocated
to each investor.
Under the Reinstatement Agreement, the Zoom Group agreed to purchase the
Dry Dock Building, subject to financing and other contingencies, for a purchase
price of $6.1 million, subject to adjustment. Under this arrangement, the Zoom
Group is required to seek nonrecourse financing that meets specified criteria in
the amount of between $3.8 and $4.0 million, depending upon whether there are
purchase price adjustments. If the closing takes place, each member of the Zoom
Group has initially agreed to contribute up to $540,000 to fund the cash portion
of the purchase price plus initial working capital. These initial capital
contributions include each member's share of the deposit. If the purchase does
not close and the nonrefundable portion of the deposit is returned, each member
will receive $92,700 plus interest. If the purchase does not close and the
seller is permitted to retain the deposit, each member will lose the entire
amount of its $97,700 deposit and Zoom will have no obligation to reimburse the
other members for any of the $390,800 paid to Zoom to cover their share of the
total deposit.
Under the Zoom Group Operating Agreement, following the closing of the
purchase of the Dry Dock Building, Zoom will have both the right to sell its
interest in the Zoom Group to the other members of the Zoom Group, and the right
to purchase the other members' entire interests in the Zoom Group. Zoom's right
of sale expires on January 5, 2003. Should Zoom exercise its sale right, Zoom
would be entitled to recover the full amount of the $97,700 remaining deposit
with the property-owner and any additional investment it makes in the Zoom
Group. For example, if the Zoom Group contributed $540,000, including its
deposit, toward the purchase of the Dry Dock Building and initial working
capital, Zoom would have the right to sell its interest to the other Zoom
members for that amount. If Zoom exercises this right, the other members will be
jointly and severally liable to pay this amount within ninety (90) days. Zoom's
right to purchase the interests of the other members of the Zoom Group expires
on December 31, 2005. Under Zoom's right to purchase, Zoom has the option to
purchase all the interests of the other members of the Zoom Group for a purchase
price determined in accordance with a prearranged formula based upon the initial
purchase price of the Dry Dock Building plus 20% a year. There is no obligation
of Zoom to exercise either its purchase or sale right, including any right of
any member of the Zoom Group to require Zoom to do so. Any decision by Zoom of
whether or not to exercise any of these rights will be made by the independent
directors of Zoom.
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 the Zoom.
OTHER MATTERS
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 2001.
Independent Public Accountants
Based upon the recommendation of the Audit Committee, the Board of
Directors appointed KPMG LLP, independent public accountants, to audit the
consolidated financial statements of Zoom for the fiscal year ending December
31, 2002. 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 $105,000 for professional
services rendered by KPMG in connection with its audit of Zoom's financial
statements for the fiscal year ending December 31, 2001 and its review of Zoom's
quarterly reports on Form 10-Q during fiscal 2001.
Financial Information Systems Design and Implementation. KPMG did not
render any services to Zoom for financial information systems design and
implementation during fiscal 2001.
All Other Fees. KPMG billed Zoom an additional $76,800 for professional
services rendered during fiscal 2001 for services not otherwise described above.
These fees include fees for tax-related services, including tax advice and
research and the assistance with the preparation and filing of tax returns and
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.
Deadline for Receipt of Stockholder Proposals; Discretionary Authority of
Proxies
Stockholder proposals for inclusion in Zoom's proxy materials for Zoom's
2003 Annual Meeting of Stockholders must be received by Zoom no later than
January 3, 2003. 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 2003 Annual Meeting -
other than one that will be included in Zoom's proxy materials - should notify
Zoom no later than March 19, 2003. 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.
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/A for the fiscal year ending
December 31, 2001, as filed with the Securities and Exchange Commission, are
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
/s/ Frank B.Manning
----------------------------------
Frank B. Manning, President
Boston, Massachusetts
May 3, 2002
ZOOM TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 11, 2002
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 3, 2002, and hereby appoints Frank
B. Manning and Peter R. Kramer, 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 Tuesday, June 11,
2002, at 10:30 A.M. local 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AS DIRECTORS.
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.
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:
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SIGNATURE: DATE:
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