UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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
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Check
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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| o |
Definitive
Additional Materials
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Soliciting
Material Pursuant to Rule
240.14a-12
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ZOOM
TECHNOLOGIES, INC.
(Name
of
Registrant as Specified in Its Charter)
Not
Applicable
(Name
of
Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required
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Fee
computed on table below per Exchange Act Rules 14a- 6(i)(1) and
0-11.
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(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.
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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.
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(1)
Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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(3)
Filing Party:
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Date Filed:
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ZOOM
TECHNOLOGIES, INC.
207
South
Street
Boston,
MA 02111
May
7,
2008
Dear
Stockholder:
You
are
cordially invited to attend the Annual Meeting of Stockholders of Zoom
Technologies, Inc. to be held on Thursday, June 26, 2008 at the headquarters
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 9:15 a.m. Eastern time, 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.
 |
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Frank
B. Manning
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President
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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 Thursday, June 26, 2008 at 10:00 a.m.
Eastern time at Zoom's headquarters located at 207 South Street, Boston,
Massachusetts 02111. The meeting will be held for the following
purposes:
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1.
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To
elect five (5) Directors to serve for the ensuing year and until
their
successors are duly elected.
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2.
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To
consider and act upon a proposed plan to authorize, but not require,
Zoom
Technologies to effect a reverse stock split of Zoom Technologies’ Common
Stock at a ratio to be determined by the Board of Directors in
their
discretion and calculated in their judgment to achieve the minimum
bid
price requirements of the Nasdaq Capital Market for Zoom Technologies’
Common Stock while allowing Zoom Technologies to continue to meet
the
other listing requirements for the Nasdaq Capital
Market.
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3.
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To
adjourn the annual meeting if necessary to permit further solicitation
of
proxies if there are not sufficient votes at the time of the annual
meeting to approve Proposal No. 2.
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4.
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To
transact any other business that may properly come before the Annual
Meeting or any adjournments
thereof.
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The
Board
of Directors has fixed the close of business on May 2, 2008 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. To ensure
your
representation at the Annual Meeting, you are urged to mark, sign, and 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.
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BY
ORDER OF THE BOARD OF DIRECTORS
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Frank
B. Manning
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President
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Boston,
Massachusetts
May
7,
2008
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 2008 ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON JUNE 26, 2008
INFORMATION
CONCERNING SOLICITATION AND VOTING
General
The
enclosed proxy is solicited on behalf of the Board of Directors of Zoom
Technologies, Inc., for use at the Annual Meeting of Stockholders to be held
on
Thursday, June 26, 2008 at 10:00 a.m. Eastern 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 headquarters of Zoom located at 207 South Street, Boston,
Massachusetts 02111. This proxy statement, the accompanying Notice of the Annual
Meeting, proxy card, and Zoom's Annual Report on Form 10-K for the year ending
December 31, 2007 are first being mailed to stockholders on or about May 7,
2008. In this proxy statement we refer to Zoom Technologies, Inc. as “Zoom,”
“we,” or “us.”
Record
Date, Stock Ownership and Voting
Only
stockholders of record at the close of business on May 2, 2008 are entitled
to
receive notice of and to vote at the Annual Meeting. At the close of business
on
May 2, 2008 there were outstanding and entitled to vote 9,346,966 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. 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. 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 on any proposal. Shares
of
Common Stock held of record by brokers who return a signed and dated proxy
or
comply with the voting instructions (“broker non-votes”) but who fail to vote on
any proposal will be considered present at the Annual Meeting and will count
toward the quorum but will be deemed not to have voted on such
proposal.
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. Abstentions and broker non-votes
will have no effect on the outcome of the vote for the election of Directors.
The
proposal to approve the plan of recapitalization will require the affirmative
vote of a majority of the issued and outstanding shares of voting capital stock.
Abstentions and broker non-votes will count as votes cast against such
proposal.
The
proposal to adjourn the annual meeting to permit us to seek more proxies if
necessary will require the affirmative vote of a majority of the issued and
outstanding shares of voting capital stock present and eligible to be cast
at
the annual meeting. Abstentions will be counted as present and/or represented
and entitled to vote, and will be included in calculating the number of votes
cast. Abstentions will thus have the effect of a "no" vote on this proposal.
Broker non-votes will not be included in calculating the number of votes cast
on
such proposal and accordingly will not affect the outcome of the
vote.
We
do not
intend to submit any other proposals to the stockholders at the annual meeting.
The Board of Directors was not aware, a reasonable time before mailing of this
proxy statement to stockholders, of any other business that may properly be
presented for action at the annual meeting. If any other business should
properly come before the annual meeting, shares represented by all proxies
received by us will be voted with respect thereto in accordance with the best
judgment of the persons named as attorneys in the proxies.
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 the final vote. A person’s proxy vote may
be revoked by filing a written notice of revocation with the Secretary of Zoom
at Zoom's headquarters, 207 South Street, Boston, Massachusetts 02111, by duly
executing a proxy bearing a later date, or 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. Zoom may engage a professional proxy solicitation firm to assist
in the proxy solicitation and, if so, will pay such solicitation firm customary
fees plus expenses.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
A
Board
of five (5) Directors is to be elected at the Annual Meeting. The Board of
Directors, upon the recommendation of the Nominating Committee, has nominated
the persons listed below for election as Directors of Zoom:
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·
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Frank
B. Manning
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·
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Peter
R. Kramer
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·
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Bernard
Furman
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·
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J.
Ronald Woods
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·
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Joseph
J. Donovan
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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 unwilling 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 unwilling 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 Annual
Meeting, will be elected Directors of Zoom.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
ELECTION
OF THE FIVE NOMINEES SET FORTH ABOVE.
BOARD
OF DIRECTORS AND MANAGEMENT
Information
Regarding the Board of Directors
The
Board
of Directors currently consists of five members. At each meeting of
stockholders, Directors are elected for a one-year term. The following table
and
biographical descriptions set forth information regarding the current members
of
the Board of Directors, all of whom have been nominated for
re-election.
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Name
|
Age
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Principal
Occupation
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Director
Since
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|||
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Frank
B. Manning
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59
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Chief
Executive Officer, President and Chairman of the Board of Zoom
Technologies, Inc.
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1977
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Peter
R. Kramer
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56
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Executive
Vice President and Director of Zoom Technologies, Inc.
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1977
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Bernard
Furman (1)
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78
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Consultant
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1991
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J.
Ronald Woods (1)
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72
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President
of Rowood Capital Corp.
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1991
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Joseph
J. Donovan (1)
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58
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Director
of Education Programs at Suffolk
University's
Sawyer School of Management
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2005
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(1)
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Current
members of the Audit, Nominating and Compensation
Committees.
|
Frank
B. Manning
is a
co-founder of our company. Mr. Manning has been our President, Chief Executive
Officer, and a Director since May 1977. He has served as our Chairman of the
Board since 1986. He earned his BS, MS and PhD degrees in Electrical Engineering
from the Massachusetts Institute of Technology, where he was a National Science
Foundation Fellow. From 1998 through late 2006 Mr. Manning was also 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. Mr. Manning is the brother of Terry Manning, our Vice
President of Sales and Marketing. From 1999 to 2005 Mr. Manning was a Director
of Intermute, a company that Zoom co-founded and that was sold to Trend Micro
Inc., a subsidiary of Trend Micro Japan. Mr. Manning has been a Director of
Unity Business Networks, a hosted VoIP service provider, since Zoom’s investment
in July 2007; and has been a Director of Redmoon, Inc., a provider of wireless
networks, since Zoom’s investment in January 2008.
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. From 1999 to 2005 Mr. Kramer
was a
Director of Intermute, a company that Zoom co-founded and that was sold to
Trend
Micro Inc., a subsidiary of Trend Micro Japan.
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 a 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.
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 Anterra Corporation, Inc., where he serves on the audit
committee.
Joseph
J. Donovan
has been
a Director of Zoom since 2005. Since March 2004 Mr. Donovan has served as the
Director of Education Programs of Suffolk University's Sawyer School of
Management on the Dean College campus, and he is responsible for the
administration of undergraduate and graduate course offerings at Dean College.
Mr. Donovan also serves as an adjunct faculty member at Suffolk University's
Sawyer School of Management. He teaches Money and Capital Markets, Managerial
Economics, and Managerial Finance in the Graduate School of Business
Administration at Suffolk University. Mr. Donovan served as the Director of
Emerging Technology Development for the Commonwealth of Massachusetts' Office
of
Emerging Technology from January 1993 through October 2004. Mr. Donovan also
served as a Director of the Massachusetts Technology Development Corporation,
the Massachusetts Emerging Technology Development Fund, and the Massachusetts
Community Development Corporation. He received a Bachelor of Arts in Economics
and History from St. Anselm College in Manchester, N.H. and a Master's Degree
in
Economics and Business from the University of Nebraska.
Board
of Directors' Meetings and Committees
The
Board
of Directors held six (6) meetings during the year ending December 31, 2007.
Each Director attended at least 75% of the meetings of the Board of Directors
and each Committee on which he served. All of Zoom's Directors are encouraged
to
attend Zoom's annual meeting of stockholders. All of Zoom's Directors, other
than Mr. Woods, were in attendance at Zoom's 2007 Annual Meeting.
Standing
committees of the Board include an Audit Committee, a Compensation Committee
and
a Nominating Committee. During 2007 Messrs. Donovan, Furman and Woods served
as
the members of each of these Committees.
Board
Independence.
The
Board of Directors has reviewed the qualifications of Messrs. Donovan, Furman
and Woods and has determined that each individual is "independent" as such
term
is defined under the current listing standards of the Nasdaq Stock Market.
In
addition, each member of the Audit Committee is independent as required under
Section 10A (m) (3) of the Securities Exchange Act of 1934, as amended.
Audit
Committee. Messrs.
Donovan, Furman and Woods are currently the members of the Audit Committee.
The
Board of Directors has determined that Mr. Woods qualifies as an "audit
committee financial expert" as defined by applicable SEC rules.
The
Audit
Committee operates under a written charter adopted by the Board of Directors,
which is publicly available on Zoom's website at www.zoom.com. Under the
provisions of the Audit Committee Charter, the primary functions of the Audit
Committee are to assist the Board of Directors with the oversight of (i) Zoom's
financial reporting process, accounting functions and internal controls and
(ii)
the qualifications, independence, appointment, retention, compensation and
performance of Zoom's independent registered public accounting firm. The Audit
Committee is also responsible for the establishment of "whistle-blowing"
procedures, and the oversight of certain other compliance matters. The Audit
Committee held six (6) meetings during 2007. See "Audit Committee Report"
below.
Compensation
Committee.
Messrs.
Donovan, Furman and Woods are currently the members of Zoom's Compensation
Committee. The primary functions of the Compensation Committee include (i)
reviewing and approving Zoom's executive compensation, (ii) reviewing the
recommendations of the Chief Executive Officer regarding the compensation of
senior officers, (iii) evaluating the performance of the Chief Executive
Officer, and (iv) overseeing the administration of, and the approval of grants
of stock options and other equity awarded under Zoom's stock option plans.
The
Compensation Committee operates under a written charter adopted by the Board
of
Directors. A copy of the Compensation Committee's written charter is publicly
available on Zoom's website at www.zoom.com. The Compensation Committee held
one
(1) meeting during 2007.
Decisions
regarding executive compensation are made by the Compensation Committee. The
Compensation Committee is also responsible for administering the 1990 Stock
Option Plan and the 1998 Employee Equity Incentive 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. Mr.
Manning and Mr. Kramer, both of whom are executive officers and Directors of
Zoom, made recommendations to the Compensation Committee regarding the granting
of stock options and participated in deliberations of the Compensation Committee
concerning executive officer compensation. Neither Mr. Manning nor Mr. Kramer
participated in any deliberation or vote establishing their
compensation.
Nominating
Committee.
Messrs.
Donovan, Furman, and Woods are currently the members of Zoom's Nominating
Committee. The primary functions of the Nominating Committee are to (i)
identify, review and evaluate candidates to serve as Directors of Zoom, and
(ii)
make recommendations to the Board of candidates for all directorships to be
filled by the stockholders or the Board.
The
Nominating Committee may consider candidates recommended by stockholders as
well
as from other sources such as other Directors or officers, third party search
firms or other appropriate sources. For all potential candidates, the Nominating
Committee may consider all factors it deems relevant, such as a candidate's
personal integrity and sound judgment, business and professional skills and
experience, independence, possible conflicts of interest, diversity, the extent
to which the candidate would fill a present need on the Board, and concern
for
the long-term interests of the stockholders. In general, persons recommended
by
stockholders will be considered on the same basis as candidates from other
sources. If a stockholder wishes to recommend a candidate for Director for
election at the 2009 Annual Meeting of Stockholders, it must follow the
procedures described in "Deadline for Receipt of Stockholder Proposals and
Recommendations for Director."
The
Nominating Committee operates under a written charter adopted by the Board
of
Directors. A copy of the Nominating Committee's written charter is publicly
available on Zoom's website at www.zoom.com. The Nominating Committee held
one
(1) meeting during 2007.
AUDIT
COMMITTEE REPORT
The
Audit
Committee has reviewed and discussed with management Zoom's audited consolidated
financial statements for the year ended December 31, 2007. The Audit Committee
has also discussed with UHY LLP, Zoom's independent registered public accounting
firm for the year ended December 31, 2007, 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 UHY LLP regarding their independence,
and has discussed the matter with UHY LLP.
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
2007 be included in Zoom's Annual Report on Form 10-K for the year ended
December 31, 2007.
Audit
Committee:
Joseph
J.
Donovan
Bernard
Furman
J.
Ronald Woods
Certain
Relationships and Related Transactions
Item
404(a) of Regulation S-K requires us to disclose in our proxy statement any
transaction involving more than $120,000 in which Zoom is a participant and
in
which any related person has or will have a direct or indirect material
interest. A related person is any executive officer, Director, nominee for
Director, or holder of 5% or more of our common stock, or an immediate family
member of any of those persons.
Since
January 1, 2007, Zoom has not been a participant in any transaction that is
reportable under Item 404(a) of Regulation S-K.
Policies
and Procedures Regarding Review, Approval or Ratification of Related Person
Transactions
In
accordance with our Audit Committee charter, our Audit Committee is responsible
for reviewing and approving the terms of any related party transactions.
Therefore, any material financial transaction between Zoom and any related
person would need to be approved by our Audit Committee prior to us entering
into such transaction.
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 10, 2008 by (i) each person who is known
by Zoom
to own beneficially more than five percent (5%) of Zoom's outstanding Common
Stock, (ii) each of Zoom's Directors and named executive officers, as listed
below in the Summary Compensation Table under the heading "Executive
Compensation", and (iii) all of Zoom's current Directors and executive
officers
as a group.
On
April
10, 2008 there were 9,346,966 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
(1)
|
Number of Shares
Beneficially Owned
|
% of Common Stock
|
|||||
|
Frank
B. Manning(2)(3)
|
776,246
|
8.17
|
%
|
||||
|
Peter
R. Kramer(4)
|
705,978
|
7.46
|
%
|
||||
|
Bernard
Furman(5)
|
64,000
|
.*
|
|||||
|
J.
Ronald Woods(6)
|
42,000
|
.*
|
|||||
|
Joseph
J. Donovan(7)
|
36,000
|
.*
|
|||||
|
Robert
A. Crist(8)
|
60,000
|
.*
|
|||||
|
Deena
Randall(9)
|
75,000
|
.*
|
|||||
|
Terry
Manning (3)(10)
|
156,710
|
1.67
|
%
|
||||
|
All
current Directors and Executive Officers as a group (9
persons)
|
1,953,434
|
19.62
|
%
|
||||
*Less
than one percent of shares outstanding.
| (1) |
Unless
otherwise noted: (i) each person identified possesses sole voting
and
investment power over the shares listed; and (ii) the address
of each
person identified is c/o Zoom Technologies, Inc., 207 South Street,
Boston, MA 02111.
|
|
(2)
|
Includes
150,000 shares that Mr. Frank B. Manning has the right to acquire
upon
exercise of outstanding stock options exercisable within sixty
(60) days
after April 10, 2008. Includes 3,368 shares held by Mr. Frank
B. Manning's
daughter, as to which he disclaims beneficial
ownership.
|
|
(3)
|
Terry
Manning and Frank B. Manning are
brothers.
|
|
(4)
|
Includes
120,000 shares that Mr. Kramer has the right to acquire upon
exercise of
outstanding stock options exercisable within sixty (60) days
after April
10, 2008.
|
|
(5)
|
Includes
36,000 shares the Mr. Furman has the right to acquire upon exercise
of
outstanding stock options exercisable within sixty (60) days
after April
10, 2008.
|
|
(6)
|
Includes
36,000 shares that Mr. Woods has the right to acquire upon exercise
of
outstanding stock options exercisable within sixty (60) days
after April
10, 2008.
|
|
(7)
|
Includes
36,000 shares the Mr. Donovan has the right to acquire upon exercise
of
outstanding stock options exercisable within sixty (60) days
after April
10, 2008.
|
| (8) |
Includes
60,000 shares that Mr. Crist has the right to acquire upon exercise
of
outstanding stock options exercisable within sixty (60) days
after April
10, 2008.
|
|
(9)
|
Includes
75,000 shares that Ms. Randall has the right to acquire upon
exercise of
outstanding stock options exercisable within sixty (60) days
after April
10, 2008.
|
| (10) |
Includes
60,000 shares that Mr. Terry Manning has the right to acquire
upon
exercise of outstanding stock options exercisable within sixty
(60) days
after April 10, 2008.
|
| (11) |
Includes
an aggregate of 573,000 shares that the current 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
10, 2008. Also includes an additional 37,500 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
10, 2008.
|
EXECUTIVE
AND DIRECTOR COMPENSATION
Summary
Compensation Table
The
following Summary Compensation Table sets forth the total compensation
paid or
accrued for the fiscal year ended December 31, 2007 for our principal executive
officer, principal financial officer and our other three most highly compensated
executive officers who were serving as executive officers on December 31,
2007.
We refer to these officers as our named executive officers.
|
Name
and Principal Position
|
Year
|
Salary
|
Option Awards
(2)
|
All Other
Compensation
(3)
|
Total
|
|||||||||||
|
Frank
B. Manning,
|
2007
|
$
|
129,272
|
-0-
|
$
|
2,049
|
$
|
131,321
|
||||||||
|
Chief
Executive Officer
|
2006
|
$
|
129,272
|
$
|
172,625
|
$
|
14,479
|
$
|
316,376
|
|||||||
|
Peter
R. Kramer,
|
2007
|
$
|
55,189
|
(1)
|
-0-
|
$
|
1,533
|
$
|
56,722
|
|||||||
|
Executive
VP and Director
|
2006
|
$
|
113,361
|
(1)
|
$
|
138,100
|
$
|
7,518
|
$
|
258,979
|
||||||
|
Robert
Crist,
|
2007
|
$
|
147,264
|
-0-
|
$
|
5,300
|
$
|
152,564
|
||||||||
|
Vice
President of Finance and Chief Financial Officer
|
2006
|
$
|
147,264
|
$
|
69,050
|
$
|
12,280
|
$
|
228,594
|
|||||||
|
Deena
Randall,
|
2007
|
$
|
128,336
|
-0-
|
$
|
566
|
$
|
128,902
|
||||||||
|
Vice
President of Operations
|
2006
|
$
|
128,366
|
$
|
86,312
|
$
|
566
|
$
|
215,244
|
|||||||
|
Terry
Manning ,
|
2007
|
$
|
123,500
|
-0-
|
$
|
729
|
$
|
124,229
|
||||||||
|
Vice
President of Sales and Marketing
|
2006
|
$
|
123,500
|
$
|
69,050
|
$
|
6,369
|
$
|
198,919
|
|||||||
| (1) |
Mr.
Kramer worked a reduced work schedule during 2007 and during
a portion of
2006.
|
| (2) |
The
amounts in the Option Awards column reflect the dollar amount
recognized
as compensation cost for financial statement reporting purposes
for the
fiscal year ended December 31, 2006, in accordance with SFAS
123(R) for
all stock options granted in 2006 and SFAS 123 for all stock
options prior
to January 1, 2006. The calculation in the table above excludes
all
assumptions with respect to forfeitures. There can be no assurance
that
the amounts set forth in the Option Awards column will ever be
realized. A
forfeiture rate was used in the expense calculation in the financial
statements.
|
| (3) |
For
2007, consists of: (a) life insurance premiums paid by Zoom to
the named
executive officer: Mr. Frank B. Manning $1,699, Mr. Kramer $1,183,
Mr.
Crist $770, Mr. Terry Manning $379 and Ms. Randall $216; (b)
Zoom’s
contribution to a 401(k) plan of $350 for each named executive
officer;
and (c) amounts paid for parking expense to Mr. Crist of $4,180.
For 2006,
consists of: (a) life insurance premiums paid by Zoom to the
named
executive officer: Mr. Frank B. Manning $1,699, Mr. Kramer $1,699,
Mr.
Crist $770, Mr. Terry Manning $379 and Ms. Randall $216; (b)
payments for
accrued but unused vacation time: Mr. Frank B. Manning $12,430,
Mr. Kramer
$5,469, Mr. Crist $7,080 and Mr. Terry Manning $5,640; (c) Zoom’s
contribution to a 401(k) plan of $350 for each named executive
officer;
and (d) amounts paid for parking expense to Mr. Crist of
$4,080.
|
Outstanding
Equity Interests
The
following table sets forth information concerning outstanding stock options
for
each named executive officer as of December 31, 2007.
Outstanding
Equity Awards at Fiscal Year-End
|
Name
|
Number of
Securities Underlying Unexercised Options (1)
|
Option
Exercise
Price
|
Option
Expiration Date
|
||||||||||
|
Exercisable
Options
|
Unexercisable
Options
|
||||||||||||
|
Frank
B. Manning
|
100,000
|
(2)
|
0
|
$
|
2.45
|
05/05/08
|
|||||||
|
50,000
|
(3)
|
50,000
|
(3)
|
$
|
1.03
|
12/12/09
|
|||||||
|
Peter
R. Kramer
|
80,000
|
(2)
|
0
|
$
|
2.45
|
05/05/08
|
|||||||
|
40,000
|
(3)
|
40,000
|
(3)
|
$
|
1.03
|
12/12/09
|
|||||||
|
Robert
Crist
|
40,000
|
(2)
|
0
|
$
|
2.45
|
05/05/08
|
|||||||
|
20,000
|
(3)
|
20,000
|
(3)
|
$
|
1.03
|
12/12/09
|
|||||||
|
Deena
Randall
|
50,000
|
(2)
|
0
|
$
|
2.45
|
05/05/08
|
|||||||
|
25,000
|
(3)
|
25,000
|
(3)
|
$
|
1.03
|
12/12/09
|
|||||||
|
Terry
Manning
|
40,000
|
(2)
|
0
|
$
|
2.45
|
05/05/08
|
|||||||
|
20,000
|
(3)
|
20,000
|
(3)
|
$
|
1.03
|
12/12/09
|
|||||||
| (1) |
All
options set forth in the above table were granted under the 1990
Stock
Option Plan, as amended and vest as to 50% on each of the first
and second
anniversary of 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) |
These
options were granted on May 5,
2005.
|
| (3) |
These
options were granted on December 12, 2006.
|
Option
Exercises
None
of
our named executive officers exercised any stock options during the fiscal
year
ended December 31, 2007.
Employment,
Termination and Change of Control Agreements
On
December 12, 2006 the Compensation Committee of the Board of Directors
of Zoom
approved certain compensatory arrangements for each of the named executive
officers. The purpose of these arrangements is to encourage the named executive
officers to continue as employees and/or assist in the event a change-in-control
of Zoom. Zoom has entered into agreements with each of the named executive
officers formalizing the compensation arrangement described below.
The
arrangements approved by the Board of Directors are as follows:
|
·
|
If
the named executive officer is terminated by Zoom for any reason
other
than for cause or within six months after a change-in-control
or
liquidation of Zoom, then (i) all outstanding stock options issued
after
December 7, 2006 held by the named executive officer will become
immediately vested and will be exercisable for a period of up
to 30 days
after termination and (ii) Zoom will pay severance to the named
executive
officer in an amount equal to the greater of three months’ base salary or
a number of weeks of base salary equal to the number of full
years
employed by Zoom divided by two.
|
|
·
|
Each
named executive officer will receive severance pay equal to six
months’
base salary if (i) the named executive officer’s employment is terminated
without cause within six months after a change-in-control, (ii)
the named
executive officer’s job responsibilities, reporting status or compensation
are materially diminished and the named executive officer leaves
the
employment of the acquiring company within six months after the
change-in-control, or (iii) Zoom is liquidated. In addition,
in the event
of a change-in-control or liquidation of Zoom, outstanding stock
options
granted on or after December 7, 2006 will become immediately
vested.
|
For
purposes of the arrangements described above, “change-in-control” shall mean:
(A) any merger, consolidation, share exchange, business combination or other
similar transaction in which the shareholders of Zoom would own less than 50%
of
the surviving entity following the consummation thereof; and in the event Zoom
issues its own stock as consideration in the transaction, a change-in-control
shall be deemed to occur only if Zoom issues a number of shares equal to more
than 100% of the sum of its outstanding shares of Common Stock plus any
outstanding options, with that sum calculated immediately prior to the closing
of such transaction, and only if that issuance is direct consideration for
a
business being acquired as a result of such transaction, and that any other
shares issued in connection with any financing or any stock options or other
equity awards to new employees, whether or not in connection with or related
to
such transaction, shall not be included in determining such consideration;
or
(B) the acquisition by a person or entity, or any “group” (as such term is
defined under Section 13(d) of the Securities Exchange Act of 1934) of the
beneficial ownership of 50% or more of the voting stock of Zoom whether by
tender offer, exchange offer or otherwise.
Potential
Termination and Change-in-Control Payments
In
the
event a named executive officer had been terminated by Zoom on December 31,
2007
for any reason other than cause or a change-in-control or liquidation of Zoom,
then the named executive officer would have received the following cash
payments: Mr. Frank Manning $37,290; Mr. Kramer $37,290; Mr. Crist $36,816;
Ms.
Randall $37,020 and Mr. Terry Manning $30,875. These amounts represent the
greater of three months salary or the number of weeks of base salary equal
to
the number of years employed by Zoom divided by two. In the event of termination
as a result of a change-in-control or liquidation, the named executive officers
would receive the following cash payments: Mr. Frank Manning $64,636; Mr. Kramer
$64,636; Mr. Crist $73,632; Ms. Randall $64,168 and Mr. Terry Manning $61,750.
These amounts represent six months’ base salary. In the event of either
termination of employment, all options held by the named executive officers
that
were issued after December 7, 2006 would become immediately vested. The value
of
the acceleration of vesting would equal the number of shares multiplied by
the
excess of the then current stock price over the exercise price of the options.
As of December 31, 2007, the stock price was lower than the exercise price
of
such options, therefore the acceleration of vesting provision has no monetary
value.
Director
Compensation
The
following table sets forth information concerning the compensation of our
Directors who are not named executive officers for the fiscal year ended
December 31, 2007.
|
Name
|
Fees Earned or Paid
in Cash
|
Option Awards
(1)(2)(3)
|
All Other
Compensation
|
Total
|
|||||||||
|
Bernard
Furman
|
$
|
2,500
|
$
|
10,095
|
—
|
$
|
12,595
|
||||||
|
J.
Ronald Woods
|
$
|
2,000
|
$
|
10,095
|
—
|
$
|
12,095
|
||||||
|
Joseph
J. Donovan
|
$
|
3,000
|
$
|
10,095
|
—
|
$
|
13,095
|
||||||
| (1) |
The
amounts in the Option Awards column reflect the dollar amount recognized
as compensation cost for financial statement reporting purposes for
the
fiscal year ended December 31, 2007, in accordance with SFAS 123(R)
for
all stock options granted in 2007. The calculation in the table above
excludes all assumptions with respect to forfeitures. There can be
no
assurance that the amounts set forth in the Option Awards column
will ever
be realized.
|
| (2) |
As
of December 31, 2007, each non-employee Director holds the following
aggregate number of shares under outstanding stock
options:
|
|
Name
|
Number of Shares
Underlying Outstanding
Stock Options
|
|||
|
Bernard
Furman
|
48,000
|
|||
|
J.
Ronald Woods
|
48,000
|
|||
|
Joseph
J. Donovan
|
48,000
|
|||
| (3) |
The
number of shares underlying stock options granted to each non-employee
Director in 2007 and the grant date fair market value of such stock
options is:
|
|
Name
|
Grant Date
|
Number of Shares
underlying Stock
Options Grants in
2007
|
Grant Date Fair
Value of Stock
Option Grants in
2007
|
|||||||
|
Bernard
Furman
|
1/10/2007
|
12,000
|
$
|
4,753
|
||||||
|
|
7/10/2007
|
12,000
|
$
|
5,342
|
||||||
|
J.
Ronald Woods
|
1/10/2007
|
12,000
|
$
|
4,753
|
||||||
|
|
7/10/2007
|
12,000
|
$
|
5,342
|
||||||
|
Joseph
J. Donovan
|
1/10/2007
|
12,000
|
$
|
4,753
|
||||||
|
|
7/10/2007
|
12,000
|
$
|
5,342
|
||||||
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"). The Directors
Plan provides in the aggregate that 450,000 shares of Common Stock (subject
to
adjustment for capital changes) may be issued upon the exercise of options
granted under the Directors Plan. Each non-employee Director automatically
receives an option to purchase 12,000 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 2007 Messrs. Furman, Woods, and Donovan each received
options to purchase 24,000 shares of Common Stock at an average exercise price
of $1.215 per share.
PROPOSAL
NO. 2
AMENDMENT
TO OUR CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK
SPLIT
Our
shares of common stock have traded below $1.00 per share for some time. In
order
to continue to be eligible for listing on the Nasdaq Capital Market, our common
stock must have a minimum bid price per share of at least $1.00 for a period
of
at least ten consecutive business days. If we are not able to meet this
requirement by May 14, 2008, we expect that Nasdaq will send us a notice of
its
plan to delist our common stock from the Nasdaq Capital Market. If this occurs,
we expect to appeal the delisting based on our willingness to effect a
recapitalization in the form of a reverse stock split at a ratio determined
by
our Board of Directors, in order to meet the minimum bid price requirements.
The
ratio for the reverse stock split would be determined by our Board of Directors
in their discretion and calculated in their judgment to achieve the minimum
bid
price requirements while allowing us to continue to meet the other listing
requirements for the Nasdaq Capital Market. If we do receive a delisting notice
and our Board of Directors believes that the reverse stock split will result
in
the bid price of our common stock meeting at least the minimum requirements
for
continued listing on the Nasdaq Capital Market and that such reverse stock
split
will otherwise be acceptable to Nasdaq and will allow us to continue to meet
the
other listing requirements for the Nasdaq Capital Market, our Board of Directors
will decide to effect such recapitalization. Otherwise, our Board would decide
whether or not we should effect such recapitalization based on such factors
as
it believes are appropriate. One possible factor is the share price requirement
that might result from merger and acquisition related activities.
Our
Board
of Directors
has
adopted a resolution declaring the advisability of (subject to our Board’s later
determination as to whether to effect such reverse stock split as discussed
below), and submitting to the stockholders for approval, a proposal to amend
our
certificate of incorporation to effect a recapitalization in
the
form of a reverse stock split.
Such
approval permits, but does not require, our Board of Directors in their sole
discretion to effect such recapitalization by filing such approved amendment
to
our certificate of incorporation. The text of the proposed amendment is set
forth in Exhibit
A
to this
proxy statement. If approved by the stockholders, the reverse stock split would
only become effective if our Board of Directors determines to proceed with
such
recapitalization and, if so, at a time, and at a ratio to
be
determined by our Board of Directors (with the ratio to be determined
by our Board of Directors in their discretion and calculated in their judgment
to achieve the minimum bid price requirements while allowing us to continue
to
meet the other listing requirements for the Nasdaq Capital Market).
Our
Board of Directors may effect only one reverse stock split as a result of this
authorization. The Board’s decision as to whether and when to effect the reverse
stock split will be based on a number of factors, including market conditions,
existing and expected trading prices for our common stock, and the continued
listing requirements of the Nasdaq Capital Market. Even if the stockholders
approve the reverse stock split, Zoom reserves the right not to effect the
reverse stock split if the Board of Directors does not deem it to be in the
best
interests of Zoom and its stockholders.
If
the
amendment is approved by Zoom’s stockholders, and if the Board of Directors in
its discretion still believes at that time the proposed recapitalization is
in
the best interests of Zoom and its stockholders, we will file the amendment
to
our certificate of incorporation with the Secretary of State of Delaware.
The
plan
of recapitalization, also referred to as the Reverse Stock Split, will become
effective as of 5:00 p.m. Eastern time on the date that the amendment to our
certificate of incorporation is filed with the Secretary of State of Delaware.
If for any reason our Board of Directors deems it advisable, we may abandon
the
Reverse Stock Split at any time before we file the amendment to our certificate
of incorporation, whether before or after the meeting (even if such proposal
has
been approved by our stockholders).
In
lieu
of issuing less than one whole share resulting from the Reverse Stock Split
to
holders of a number of shares not evenly divisible by the number of pre-split
shares for which each post-split share is to be exchanged, we will determine
the
fair value of each outstanding share of common stock held immediately before
the
Reverse Stock Split takes effect. We currently anticipate that the fair value
of
the outstanding common stock will be based on the average daily closing bid
price per share of our common stock as reported by the primary trading market
for our common stock for the ten (10) trading days immediately preceding the
Reverse Stock Split. In the event our Board of Directors determines that unusual
trading activity would cause such amount to be an inappropriate measure of
the
fair value of our common stock, we may base the fair value of the outstanding
common stock on the fair market value of the common stock as reasonably
determined in good faith by our Board of Directors. Stockholders who hold a
number of shares not evenly divisible by the number of pre-split shares for
which each post-split share is to be exchanged immediately before the Reverse
Stock Split takes effect will be entitled to receive, in lieu of a fractional
share, cash in an amount equal to the fair value of the outstanding common
stock
times such fractional share.
As
soon
as practicable after the date of the Reverse Stock Split, we will mail a letter
to each holder of record of common stock issued and outstanding immediately
before the Reverse Stock Split. The letter will contain instructions for the
surrender of such certificate or certificates to our designated exchange agent
in exchange for certificates representing the number of whole shares of common
stock (plus the fair value of any remainder shares) into which the shares of
common stock have been converted as a result of the Reverse Stock Split. No
cash
payment will be made or new certificate issued to a stockholder until the
stockholder has surrendered his or her outstanding certificates together with
the letter to our exchange agent. See "Exchange of Stock
Certificates."
Purpose
of the Reverse Split
Our
shares of common stock have traded below $1.00 per share for some time. The
Board of Directors is recommending the Reverse Stock Split in order to reduce
the number of outstanding shares with the expectation that each share will
trade
at a higher price. In addition, Nasdaq Marketplace Rule 4310 requires that
in
order for common stock to continue to be eligible for quotation on the Nasdaq
Capital Market, it must have a minimum bid price per share of $1.00 for a period
in excess of ten consecutive business days, as well as meeting certain other
requirements. On November 21, 2007, we received a letter from Nasdaq stating
that for the last 30 consecutive business days, the bid price of our common
stock has closed below the minimum $1.00 per share requirement for continued
inclusion under Marketplace Rule 4310(c)(4) and that we have 180 days or until
May 14, 2008 to regain compliance with Nasdaq’s bid price rule. If we are unable
to demonstrate compliance with this rule by such date, Nasdaq will determine
whether we meet the initial listing criteria for the Nasdaq Capital Market
under
Marketplace Rule 4310(c), except for the bid price requirement. If at any time
before May 14, 2008, the bid price of our common stock closes at $1.00 per
share
or more for a minimum of 10 consecutive business days, we will be provided
written notification that we comply with the rule. Otherwise, we will receive
notification that our common stock will be delisted. If that occurs, we will
have the ability to request an appeal within 7 days of the notice of delisting.
If we do appeal, we believe the delisting process would be stayed until the
appeal is heard, typically within approximately 45 days of the
appeal.
In
the
event we do receive a delisting notice and our Board of Directors determines
that the reverse stock split will result in the bid price of our common stock
meeting at least the minimum requirements for continued listing on the Nasdaq
Capital Market and that such reverse stock split will otherwise be acceptable
to
Nasdaq and will allow us to continue to meet the other listing requirements
for
the Nasdaq Capital Market, we believe that the implementation of the Reverse
Stock Split will be in the best interest of Zoom and its stockholders.
In
the
event that Zoom enters into a significant merger or acquisition transaction,
Zoom might need to meet the Nasdaq Capital Market's initial listing requirements
to remain on Nasdaq. Those requirements include a minimum share bid price of
$4.
This is another reason that Zoom's Board might want to do a reverse
split.
Delisting
of our common stock may materially and adversely affect a holder’s ability to
dispose of, or to obtain accurate quotations as to the market value, of, the
common stock. In addition, delisting may cause the common stock to be subject
to
“penny stock” regulations promulgated by the Securities and Exchange Commission.
Under such regulations, broker-dealers are required to, among other things,
comply with disclosure and special suitability determinations prior to the
sale
of shares of common stock. If the common stock becomes subject to these
regulations, the market price of the common stock and the liquidity thereof
could be materially and adversely affected.
Stockholders
should recognize that if the Reverse Stock Split is effectuated, there can
be no
assurance that the market price of the common stock will, in fact,
correspondingly increase following consummation of the Reverse Stock Split
or,
even if such price increases, such post-Reverse Stock Split market price will
be
sustained.
The
Reverse Stock Split may leave certain stockholders with an odd lot of our common
stock (i.e., a number of shares less than 100). These shares may be more
difficult to sell, or require a greater commission to sell, than shares in
multiples of 100.
Also,
liquidity could be materially and adversely affected by the reduced number
of
shares that would be outstanding after the Reverse Stock Split. Consequently,
there can be no assurance that the Reverse Stock Split will achieve the desired
results that have been outlined above.
Effect
of the Reverse Stock Split
As
a
result of the Reverse Stock Split, the number of whole shares of common stock
held by stockholders of record as of the close of business on the date of the
Reverse Stock Split will be equal to the number of shares of common stock held
immediately prior to the close of business on such date divided by such number
as is determined by the ratio of the split. The Reverse Stock Split will not
affect your percentage ownership interest in the company or proportional voting
power, except for minor differences resulting from the payment of cash in lieu
of fractional shares. The number of shares of common stock issued and
outstanding will be reduced. Consequently, after the Reverse Stock Split the
aggregate par value of the issued common stock will be lower. Future issuances
of common stock may have the effect of diluting the earnings per share and
book
value per share, as well as the stock ownership and voting rights of our
outstanding common stock. The Reverse Stock Split, which will increase the
number of authorized but unissued shares of common stock, may be construed
as
having an anti-takeover effect by permitting the issuance of shares to
purchasers who might oppose a hostile takeover bid or oppose any efforts to
amend or repeal certain provisions of our certificate of incorporation or
by-laws.
The
authorized capital stock of the Company consists of 25,000,000 shares of common
stock. There will be no change in the number of authorized capital stock as
a
result of the Reverse Stock Split. As of May 2, 2008, there were 9,346,966
shares of common stock issued and outstanding. The Reverse Stock Split will
reduce this number, with the actual amount of the reduction depending on the
ratio of the split. The
terms
of our common stock and the rights and privileges of the holders of such shares,
will be unaffected by the Reverse Stock Split. Upon consummation of the Reverse
Stock Split, the total number of shares currently reserved for issuance under
our equity incentive plans would be decreased proportionately. The cash
consideration payable per share upon exercise of outstanding stock options
would
be increased proportionately.
Dissenting
stockholders will not have appraisal rights under Delaware law or under our
certificate of incorporation or by-laws.
Exchange
of Stock Certificates
As
soon
as practicable after the effective date of the Reverse Stock Split, we intend
to
encourage our stockholders to exchange their stock certificates evidencing
shares of common stock outstanding before the effectiveness of the Reverse
Stock
Split for certificates representing the number of whole shares of common stock
into which their shares have been converted as a result of the Reverse Stock
Split, as well as cash in lieu of fractional shares resulting from the Reverse
Stock Split. After the effective date of the Reverse Stock Split, the former
certificates will represent only the right to receive certificates for the
post-split shares when surrendered. At the effective date of the Reverse Stock
Split, the former shares will cease to exist and thereafter, all trading
activity and market quotations for the Company's common stock will be
exclusively in new post-split shares.
You
will
be furnished with the necessary materials and instructions for the surrender
and
exchange of your stock certificates at the appropriate time by our designated
exchange agent. You will not be required to pay a transfer or other fee in
connection with the exchange of certificates.
You
should not submit any certificates to our exchange agent until requested to
do
so.
United
States Federal Income Tax Consequences of the Reverse Stock
Split
The
following is a general description of certain federal income tax consequences
of
the Reverse Stock Split to our common stockholders who are "United States
persons" as defined for United States federal income tax purposes, and who
hold
our common stock as a capital asset. For United States federal income tax
purposes, a "United States person" is a United States citizen or resident alien
(as determined under the Internal Revenue Code of 1986, as amended, also
referred to as the Code), a corporation or partnership organized under the
laws
of the United States or any state, and any estate or trust subject to United
States federal income tax on its income regardless of source.
The
summary is based on the Code, the applicable Treasury Regulations promulgated
thereunder, judicial authority and current administrative rulings and practices
all as in effect on the date of this proxy statement. We have has not sought
and
will not seek an opinion of counsel or a ruling from the Internal Revenue
Service regarding the federal income tax consequences of the Reverse Stock
Split.
This
discussion is for general information only and does not address aspects of
federal income taxation that may be relevant to special classes of taxpayers,
such as non-resident aliens, broker-dealers, tax-exempt organizations, banks
or
insurance companies, or stockholders who acquired their shares of our common
stock in connection with the exercise of an employee stock option or right
or
otherwise as compensation or stockholders who hold our common stock as part
of a
hedge, straddle or conversion transaction. In addition, this summary does not
discuss the tax consequences under the laws of any foreign, state or local
jurisdiction. You are urged to consult your own tax advisors as to the federal,
state, local and foreign tax consequences to you of the Reverse Stock
Split.
We
believe that the Reverse Stock Split should constitute a reorganization within
the meaning of section 368(a)(1)(E) of the Code. Accordingly, we expect that
the
Reverse Stock Split to have the following material federal income tax
consequences:
1.
No
gain or loss should be recognized in the Reverse Stock Split by holders of
our
common stock upon their receipt of post-split shares of our common stock in
exchange for their pre-split shares of our common stock.
2.
The
aggregate tax basis in the shares of our common stock received by each of our
stockholders in the Reverse Stock Split will be equal to each such stockholder's
aggregate tax basis in the shares surrendered in exchange therefore, reduced
by
any cash received and increased by any gain recognized in the
exchange.
3.
The
holding period of shares of our common stock received in the Reverse Stock
Split
will include the period for which the shares surrendered in exchange therefore
were held.
4.
A
stockholders who receives cash in the Reverse Stock Split in lieu of a
fractional share will recognize capital gain or loss (provided the receipt
of
cash is not essentially equivalent to a dividend) measured by the difference
between the amount of cash received and the adjusted tax basis in the fractional
share of common stock, had a fractional share actually been issued. Any such
capital gain or loss will generally be long-term capital gain or loss to the
extent such stockholder’s holding period exceeds 12 months.
5.
Zoom
should recognize no gain or loss as a result of the Reverse Stock
Split.
Our
view
regarding the tax consequences of the reverse stock split is not binding on
the
Internal Revenue Service or the courts. Accordingly, each stockholder should
consult with his, her or its own tax advisor with respect to all of the
potential tax consequences to such stockholder or her of the reverse stock
split.
TO
ENSURE
COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, STOCKHOLDERS ARE HEREBY
NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES IN THIS PROXY STATEMENT
IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY
STOCKHOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON
STOCKHOLDERS UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS INCLUDED
HEREIN BY THE COMPANY IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN
THE
MEANING OF CIRCULAR 230) BY THE COMPANY OF THE TRANSACTIONS OR MATTERS ADDRESSED
HEREIN; AND (C) STOCKHOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
Vote
Required
Approval
of the proposed amendment to our certificate of incorporation to effect the
Reverse Stock Split will require the affirmative vote of a majority of all
of
the issued and outstanding shares of common stock.
Our
Board
of Directors reserves the right to abandon the proposed amendment without
further action by our stockholders at any time before the filing of the
amendment to our certificate of incorporation with the Delaware Secretary of
State, notwithstanding authorization of the proposed amendment by our
stockholders.
The
foregoing summary of the proposed amendment to our certificate of incorporation
to effect the Reverse Stock Split is qualified in its entirety by reference
to
the complete text of the proposed amendment, which is set forth as Exhibit
A to
this proxy statement.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED PLAN OF
RECAPITALIZATION.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant
to Section 16(a) of the Securities Exchange Act of 1934, Zoom Directors and
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 ending December 31, 2007. Based on a
review of such reports, and on written representations from reporting persons,
Zoom believes that all Section 16(a) filing requirements were complied with
during 2007.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit
Committee has appointed UHY LLP (“UHY”) as Zoom’s principal accountants and
independent registered public accounting firm, to audit the consolidated
financial statements of Zoom for the year ending December 31, 2008. A
representative of UHY LLP will be present at the meeting and will have the
opportunity to make a statement if such representative desires to do so and
will
be available to respond to appropriate questions.
Through
April 16,, 2008 (the present date) UHY LLP had a continuing relationship with
UHY Advisors, Inc. (Advisors). Under this relationship UHY LLP leased auditing
staff who were full time, permanent employees of Advisors. UHY LLP partners
provide non-audit services through Advisors. UHY LLP has only a few full time
employees. Therefore, few, if any, of the audit services performed were provided
by permanent full time employees of UHY LLP. UHY LLP manages and supervises
the
audit services and the audit staff and is exclusively responsible for the
opinion rendered in connection with its audit.
Principal
Accountant Fees and Services
The
following table summarizes the fees for audit services and for other services
billed by Zoom’s principal accountants and independent registered pubic
accounting firm, UHY LLP, for fiscal years 2006 and 2007.
|
FEE
CATEGORY
|
2006
|
2007
|
|||||
|
Audit
fees (1)
|
$
|
148,131
|
$
|
126,100
|
|||
|
Audit-related
fees (2)
|
-
|
1,200
|
|||||
|
Tax
fees (3)
|
10,400
|
12,000
|
|||||
|
All
other fees (4)
|
-
|
-
|
|||||
|
Total
fees
|
$
|
158,531
|
$
|
139,300
|
|||
|
(1)
|
Audit
Fees.
Consists of fees billed for professional services rendered for the
audit
of Zoom’s consolidated financial statements and review of the interim
consolidated financial statements included in quarterly reports and
services that are normally provided in connection with statutory
filings
and engagements.
|
|
(2)
|
Audit-Related
Fees.
Consists of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of Zoom’s
consolidated financial statements and are not reported under "Audit
Fees".
|
|
(3)
|
Tax
Fees.
Consists of fees billed for professional services for tax compliance,
tax
advice and tax planning. These services were comprised primarily
of
services for federal, state and international tax
compliance.
|
|
(4)
|
All
Other Fees.
Consists of fees for products and services other than the services
reported above.
|
Audit
Committee Policy on Pre-Approval of Services of Independent Registered Public
Accounting Firm
The
Audit
Committee's policy is to pre-approve all audit and permissible non-audit
services provided by the independent registered public accounting firm. These
services may include audit services, audit-related services, tax services and
other services. Pre-approval is generally provided for up to one year. The
Audit
Committee may also pre-approve particular services on a case-by-case basis.
During our fiscal year ended December 31, 2007, no services were provided to
us
by UHY other than in accordance with the pre-approval procedures described
herein.
CODE
OF ETHICS
Zoom
has
adopted a Code of Ethics for Senior Financial Officers that applies to Zoom's
principal executive officer and its principal financial officer, principal
accounting officer and controller, and other persons performing similar
functions. Zoom's Code of Ethics for Senior Financial Officers is publicly
available on its website at www.zoom.com. If Zoom makes any amendments to this
Code of Ethics or grants any waiver, including any implicit waiver, from a
provision of this Code of Ethics to Zoom's principal executive officer,
principal financial officer, principal accounting officer, controller or other
persons performing similar functions, Zoom will disclose the nature of such
amendment or waiver, the name of the person to whom the waiver was granted
and
the date of waiver in a current report on Form 8-K.
DEADLINE
FOR RECEIPT OF STOCKHOLDER PROPOSALS AND RECOMMENDATIONS FOR
DIRECTOR
Stockholder
proposals for inclusion in Zoom's proxy materials for Zoom's 2009 Annual Meeting
of Stockholders must be received by Zoom no later than January 18, 2009. 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 2009 Annual Meeting - other than one
that
will be included in Zoom's proxy materials - should notify Zoom no later than
April 2, 2009. 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.
Stockholders
may make recommendations to the Nominating Committee of candidates for its
consideration as nominees for Director at Zoom's 2009 Annual Meeting of
Stockholders by submitting the name, qualifications, experience and background
of such person, together with a statement signed by the nominee in which he
or
she consents to act as such, to the Nominating Committee, c/o Secretary, Zoom
Technologies, Inc., 207 South Street, Boston, Massachusetts 02111. Notice of
such recommendations should be submitted in writing as early as possible, but
in
any event not later than 120 days prior to the anniversary date of the
immediately preceding annual meeting or special meeting in lieu thereof and
must
contain specified information and conform to certain requirements set forth
in
Zoom's Bylaws. In addition, any persons recommended should at a minimum meet
the
criteria and qualifications referred to in the Nominating Committee's charter,
a
copy of which is publicly available on Zoom's website at www.zoom.com. The
letter of recommendation from one or more stockholders should state whether
or
not the person(s) making the recommendation have beneficially owned 5% or more
of Zoom's Common Stock for at least one year. The Nominating Committee may
refuse to acknowledge the nomination of any person not made in compliance with
the procedures set forth herein, in the Nominating Committee's Charter or in
Zoom's Bylaws.
STOCKHOLDER
COMMUNICATIONS
Any
stockholder wishing to communicate with any of Zoom's Directors regarding Zoom
may write to the Director c/o Investor Relations, Zoom Technologies, Inc.,
207
South Street, Boston, Massachusetts 02111. Investor Relations will forward
these
communications directly to the Director(s).
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 the 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 section of
the
Proxy Statement entitled "Audit Committee Report" 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, 2007,
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. 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
7, 2008
|
Exhibit
A (To be filed only if Zoom Technologies’ Board of Directors determines to
effect the reverse stock split)
CERTIFICATE
OF AMENDMENT
OF
CERTIFICATE
OF INCORPORATION
OF
ZOOM
TECHNOLOGIES, INC.
Pursuant
to Section 242 of the
General
Corporation Law of the State of Delaware
Zoom
Technologies, Inc. (hereinafter called the “Corporation”), a corporation
organized and existing under and by virtue of the General Corporation Law of
the
State of Delaware, does hereby certify as follows:
A
resolution was duly adopted by the Board of Directors of the Corporation
pursuant to Section 242 of the General Corporation Law of the State of Delaware
setting forth an amendment to the Certificate of Incorporation of the
Corporation and declaring said amendment to be advisable. The
stockholders of the Corporation duly approved said proposed amendment in
accordance with Section 242 of the General Corporation Law of the State of
Delaware. The resolution setting forth the amendment is as
follows:
| RESOLVED: |
That
Article FOURTH of the Certificate of Incorporation of the Corporation
be
and hereby is deleted in its entirety and the following paragraphs
are
inserted in lieu thereof:
|
“FOURTH. The
total number of shares of stock which the Corporation shall have authority
to
issue is as follows: 25,000,000 shares of Common Stock, $.01 par
value.
That,
effective at 5:00 p.m., Eastern time, on the filing date of this Certificate
of
Amendment of Certificate of Incorporation (the “Effective Time”), a
one-for-[**] reverse
stock split of the Corporation’s common stock shall become effective, pursuant
to which each [**] shares of common stock outstanding and held of record by
each stockholder of the Corporation (including treasury shares) immediately
prior to the Effective Time (“Old Common Stock”) shall be reclassified and
combined into one share of common stock automatically and without any action
by
the holder thereof upon the Effective Time and shall represent one share of
common stock from and after the Effective Time (“New Common
Stock”).
Each
holder of record of a certificate or certificates for one or more shares of
the
Old Common Stock shall be entitled to receive as soon as practicable, upon
surrender of such certificate, a certificate or certificates representing the
largest whole number of shares of Common Stock to which such holder shall be
entitled pursuant to the provisions of the immediately preceding paragraph.
Any
certificate for one or more shares of the Old Common Stock not so surrendered
shall be deemed to represent one share of the Common Stock for each [**] shares
of the Old Common Stock previously represented by such certificate.
No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon such combination and reclassification of the Old Common Stock
into shares of Common Stock. Instead of issuing any fractional shares of Common
Stock which would otherwise be issuable upon such combination and
reclassification, the corporation shall pay to the holders of the shares of
Old
Common Stock which were thus combined and reclassified cash in respect of such
fraction in an amount equal to the same fraction of the market price per share
of the Common Stock (as determined in a manner prescribed by the Board of
Directors) at the close of business on the date such combination and
reclassification becomes effective.
IN
WITNESS WHEREOF, the Corporation has caused its corporate seal to be affixed
hereto and this Certificate of Amendment to be signed by its President this
___
day of ______ 2008.
ZOOM
TECHNOLOGIES, INC.
PROXY
FOR
ANNUAL MEETING OF STOCKHOLDERS
JUNE
26,
2008
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 7, 2008, 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 Thursday, June 26, 2008,
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 PROPOSALS TO EFFECT
THE PLAN OF RECAPITALIZATION AND TO ADJOURN THE MEETING.
DETACH
PROXY CARD HERE
v v
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AS DIRECTORS, FOR THE
PROPOSAL TO PERMIT THE DIRECTORS IN TRYING TO MAINTAIN ZOOM’S NASDAQ LISTING TO
EFFECT A PLAN OF RECAPITALIZATION, AND TO ADJOURN THE ANNUAL MEETING TO PERMIT
FURTHER SOLICITATION OF PROXIES.
|
1.
Election
of Directors:
|
o
|
FOR
ALL NOMINEES
except
as marked to the contrary below
|
o
|
WITHHOLD
AUTHORITY
to
vote for all nominees
|
Nominees:
FRANK B.
MANNING, PETER R. KRAMER, JOSEPH J. DONOVAN, BERNARD FURMAN, 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 effect a proposed plan of recapitalization to authorize, but not require,
Zoom Technologies to effect a reverse stock split of Zoom Technologies’ Common
Stock at a ratio to be determined by the Board of Directors in their discretion
and calculated in their judgment to achieve the minimum bid price requirements
of the Nasdaq Capital Market for Zoom Technologies’ Common Stock while allowing
Zoom Technologies to continue to meet the other listing requirements for the
Nasdaq Capital Market.
o FOR
o AGAINST
o
ABSTAIN
3.
To adjourn the annual meeting if necessary to permit further solicitation of
proxies if there are not sufficient votes at the time of the annual meeting
to
approve Proposal No. 2.
o FOR
o AGAINST
o ABSTAIN
|
|
Mark
here for
address
change and
note
at left
|
o
|
|
|
|
|
|
|
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:_____________
|
|
Please
Detach Here
You
Must Detach This Portion of the Proxy Card
Before
Returning it in the Enclosed Envelope