<PAGE> 1
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:
[X] Preliminary Proxy Statement [ ] Confidential for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Davox Corporation
--------------------------------------------------------------------------
(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):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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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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[ ] 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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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
DAVOX CORPORATION
6 TECHNOLOGY PARK DRIVE
WESTFORD, MASSACHUSETTS 01886
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
APRIL 24, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Davox
Corporation, a Delaware corporation (the "Company"), will be held on Thursday,
April 24, 1997 at 10:00 a.m. local time at the offices of the Company, 6
Technology Park Drive, Westford, Massachusetts, for the following
purposes:
1. To fix the number of directors constituting the Board of
Directors at four and to elect a Board of Directors for the ensuing year.
2. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock, $.10 par value, from 10,000,000 to 30,000,000 shares.
3. To approve the adoption of the Company's 1996 Stock Plan.
4. To ratify the selection of the firm of Arthur Andersen, LLP as
auditors for the fiscal year ending December 31, 1997.
5. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only stockholders of record at the close of business on March 10, 1997 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors
Timothy C. Maguire,
SECRETARY
Boston, Massachusetts
March 21, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
<PAGE> 3
DAVOX CORPORATION
6 TECHNOLOGY PARK DRIVE
WESTFORD, MASSACHUSETTS 01886
-------------------------------
PROXY STATEMENT
-------------------------------
MARCH 21, 1997
Proxies in the form enclosed with this proxy statement are solicited by
the Board of Directors of Davox Corporation (the "Company" or "Davox") for use
at the Annual Meeting of Stockholders to be held on April 24, 1997 at 10:00 a.m.
local time at the offices of the Company, 6 Technology Park Drive, Westford,
Massachusetts 01886.
Only stockholders of record as of March 10, 1997 (the "Record Date") will
be entitled to vote at the meeting and any adjournments thereof. As of that
date, 7,552,339 shares of Common Stock, $.10 par value, of the Company were
issued and outstanding. Each share of Common Stock outstanding as of the Record
Date will be entitled to one vote and stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right to
attend the meeting and vote in person. Any stockholder giving a proxy has the
right to revoke it by written notice to the Secretary of the Company at any time
before it is exercised or by delivering a later executed proxy to the Secretary
of the Company at any time before the original proxy is exercised.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended December 31, 1996, is being mailed together with this proxy
statement to all stockholders entitled to vote. This proxy statement and the
form of proxy were first mailed to stockholders on or about March 21, 1997.
The persons named as attorneys in the proxy card are directors and/or
officers of the Company. All properly executed proxies returned in time to be
counted at the meeting will be voted as stated below under "Election of
Directors." Any stockholder giving a proxy has the right to withhold authority
to vote for any individual nominee to the Board of Directors by writing that
nominee's name in the space provided on the proxy. In addition to the election
of directors, the stockholders will consider and vote upon a proposal to amend
the Company's Amended and Restated Certificate of Incorporation to increase the
authorized shares of Common Stock, a proposal to adopt the Company's 1996 Stock
Plan (the "1996 Plan") and a proposal to ratify the selection of auditors, as
further described in this proxy statement. Where a choice has been specified on
the proxy with respect to the foregoing matters, the shares represented by the
proxy will be voted in accordance with the specifications and will be voted FOR
if no specification is indicated.
The representation in person or by proxy of at least a majority of all
shares of Common Stock issued, outstanding and entitled to vote at the meeting
is necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee for election as director, as well as abstentions and
broker "non-votes" with respect to all other matters being submitted to
stockholders, are counted as present or represented for purposes of determining
the presence or absence of a quorum for the meeting. A "non-vote" occurs when a
nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal because, in respect of such other proposal, the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
<PAGE> 4
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote. Votes may be cast
in favor of or withheld from each nominee. The amendment of the Company's
Amended and Restated Certificate of Incorporation requires the approval of the
majority of the outstanding shares entitled to vote; therefore, abstentions and
broker "non-votes" will have the practical effect of voting against the proposed
amendment. On all other matters being submitted to stockholders, an affirmative
vote of a majority of the shares present in person or by proxy and entitled to
vote on each such matter is required for approval; therefore, abstentions will
have the practical effect of voting against each such matter since they are
included in the number of shares present and voting on each such matter.
However, broker "non-votes" are not considered shares entitled to vote and
therefore will have no impact on the outcome of the vote.
The Board of Directors of the Company knows of no other matters to be
presented at the meeting. If any other matter should be presented at the meeting
upon which a vote properly may be taken, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
-2-
<PAGE> 5
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
<TABLE>
The following table sets forth, as of March 10, 1997 (except as noted
below), certain information regarding the ownership of shares of the Company's
Common Stock by (i) each person who, to the knowledge of the Company, owned
beneficially more than 5% of the shares of Common Stock of the Company
outstanding at such date, (ii) each Director and nominee of the Company, (iii)
each Named Officer (as defined below) and (iv) all Directors, nominees and
Executive Officers as a group:
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership(1) Percent of Class
- ------------------- ---------------------- ----------------
<S> <C> <C>
Entities and individuals 1,814,328 (2) 24.0%
associated with
Gilder, Gagnon, Howe & Co.
1775 Broadway
New York, NY 10019
Entities and individuals 1,187,626 (3) 15.7%
associated with
MK Global Ventures
2471 East Bayshore Road,
Suite 520
Palo Alto, CA 94303
Entities and Individuals 441,500 (4) 5.8%
associated with
Chancellor LGT Asset
Management, Inc.
1166 Avenue of the Americas
New York, NY 10036
Entities and individuals 430,000 (5) 5.7%
associated with American
Century Companies, Inc.
4500 Main Street, P.O. Box 418210
Kansas City, MO 64141-9210
Alphonse M. Lucchese 175,629 (6) 2.3%
R. Scott Asen 303,781 (7) 4.0%
Michael D. Kaufman 1,187,626 (3) 15.7%
Walter J. Levison 5,000 (8) *
John E. Cambray 9,773 (9) *
John J. Connolly 1,683 (10) *
James F. Mitchell 32,556 *
Douglas W. Smith 36,369 (11) *
All Directors, Nominees and 1,794,168 (12) 22.9%
Executive Officers as a group
(11 Persons)
* Less than 1.0%
- -----------------------
<FN>
(1) Except as otherwise noted, each person or entity named in the table has sole
voting and investment power with respect to the shares. Includes all shares
which the named person has the right to acquire within 60 days following
March 10, 1997.
(2) Includes the following shares as to which Gilder, Gagnon, Howe & Co.
disclaims beneficial ownership: (i) 929,817 shares held in customer accounts
over which one or another of its partners or employees may have
</TABLE>
-3-
<PAGE> 6
discretion to purchase or dispose of but over which Gilder, Gagnon, Howe &
Co. does not have discretion; (ii) 868,161 shares held in accounts owned by
its partners and by its partners' families and controlled by its partners;
and (iii) 16,350 shares held in the account of its firm profit sharing plan
controlled by certain of its partners.
(3) Includes 517,847 shares held by MK Global Ventures, 320,000 shares held by
MK GVD Fund and 193,880 shares held by MK GVS Fund. Mr. Michael D. Kaufman,
a Director of the Company, is the sole general partner of the sole general
partner of each of MK Global Ventures and MK GVS Fund. Mr. Kaufman is a
general partner of the sole general partner of MK GVD Fund and has shared
voting and investment power with respect to the shares held by MK GVD Fund.
Mr. Kaufman disclaims beneficial ownership of all shares held by MK Global
Ventures, MK GVS Fund and MK GVD Fund. Also includes 150,899 shares
individually owned by Mr. Kaufman and 5,000 shares subject to options held
by Mr. Kaufman that are exercisable within 60 days of March 10, 1997.
(4) Aggregate shares beneficially owned by Chancellor LGT Asset Management,
Inc. ("CLAM") and CLAM's wholly-owned subsidiary Chancellor LGT Trust
Company ("CLTC") as investment advisors for various fiduciary accounts,
and LGT Asset Management, Inc. ("LAM"), as the holding company for CLAM.
LAM is an indirect wholly owned subsidiary of Liechtenstein Global Trust,
AG is controlled by The Prince of Liechtenstein Foundation, is a parent
organization for the various business enterprises of the Princely Family of
Liechtenstein. The address of LAM is 50 California Street, San Francisco,
CA 94111. This information is based on Schedule 13G dated February 7, 1997
filed by CLAM, CLTC and LAM.
(5) American Century Investment Management, Inc. ("ACIM") is an investment
advisor registered under the Investment Advisors Act of 1940. As a
result of its status as an investment advisor to certain entities, ACIM
is deemed to be the beneficial owner of such shares. ACIM is a wholly
owned subsidiary of American Century Companies, Inc. ("ACC") and Mr.
James E. Stowers, Jr., controls ACC by virtue of his beneficial ownership
of a majority of the voting stock of ACC. Therefore, ACC and Mr. Stowers
are each deemed to be the beneficial owner of such shares as well. Mr.
Stowers, ACC and ACIM all disclaim beneficial ownership of all such
shares. This information is based on Schedule 13G dated February 5, 1997
filed by ACIM, ACC and Mr. Stowers.
(6) Includes 175,629 shares subject to options held by Mr. Lucchese exercisable
within 60 days of March 10, 1997.
(7) Includes 12,000 shares owned by Asen and Co. f/b/o SDFJ, Inc., 2,000 shares
owned by an individual to whom Mr. R. Scott Asen, a Director of the
Company, provides certain advisory services and 3,000 shares held by the
IRA of an individual to whom Mr. Asen provides certain advisory services,
all of such shares as to which Mr. Asen disclaims beneficial ownership.
Also includes 236,781 shares individually owned by Mr. Asen and 50,000
shares subject to options held by Mr. Asen that are exercisable within 60
days of March 10, 1997.
(8) Includes 5,000 shares subject to options held by Mr. Levison which will be
exercisable within 60 days of March 10, 1997.
(9) Includes 9,375 shares subject to options held by Mr. Cambray exercisable
within 60 days of March 10, 1997.
(10) Includes 1,683 shares subject to options held by Mr. Connolly exercisable
within 60 days of March 10, 1997.
(11) Includes 36,369 shares subject to options held by Mr. Smith exercisable
within 60 days of March 10, 1997.
(12) Includes 292,807 shares subject to options held by officers and Directors
which are exercisable within 60 days of March 10, 1997. Also includes
shares held by entities associated with Messrs. Asen and Kaufman as
described in footnotes 3 and 7.
-4-
<PAGE> 7
PROPOSAL I
ELECTION OF DIRECTORS
The directors of the Company are elected annually and hold office until
the next annual meeting of stockholders and until their successors shall have
been elected and shall have qualified. Shares represented by all proxies
received by the Board of Directors and not so marked as to withhold authority to
vote for any individual director or for all directors will be voted (unless one
or more nominees are unable to serve) for fixing the number of directors for the
ensuing year at four and for the election of the nominees named below. The Board
of Directors knows of no reason why any such nominee should be unable or
unwilling to serve, but if such should be the case, proxies will be voted for
the election of some other person or for fixing the number of directors at a
lesser number.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors met four times, and took actions by written consent
four times, during the fiscal year ended December 31, 1996. The Audit Committee
of the Board of Directors, of which R. Scott Asen, Michael D. Kaufman and Walter
J. Levison are members, oversees the accounting and tax functions of the
Company, including matters relating to the appointment and activities of the
Company's independent auditors. The Audit Committee met once during the year
ended December 31, 1996. The Compensation Committee of the Board of Directors,
of which R. Scott Asen, Michael D. Kaufman and Walter J. Levison are members,
reviews and makes recommendations concerning executive compensation. The
Compensation Committee met three times and took action by written consent once
during the year ended December 31, 1996. The Board of Directors does not
currently have a standing nominating committee. Each of the directors attended
at least 75% of the aggregate of the total number of meetings of the Board of
Directors and of all Committees on which he serves.
OCCUPATIONS OF DIRECTORS
<TABLE>
The following table sets forth the nominees for Director, their ages as of
the Record Date and their present positions with the Company.
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Alphonse M. Lucchese 61 Chairman of the Board of
Directors, President and
Chief Executive Officer
Michael D. Kaufman (1)(2) 55 Director
Walter J. Levison (1)(2) 78 Director
R. Scott Asen (1)(2) 52 Director
- -------------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
The By-Laws of the Company provide that the Board of Directors shall be
elected annually. Officers are elected by, and serve at the discretion of, the
Board of Directors.
</TABLE>
-5-
<PAGE> 8
Mr. Lucchese has served as President and Chief Executive Officer of the
Company since July 1, 1994 and has served as a Director and Chairman of the
Board of the Directors since August 9, 1994. Prior to his employment with the
Company, Mr. Lucchese was President and Chief Executive Officer of Iris
Graphics, Inc., a manufacturer of high quality color printers, from 1987 until
1994. Mr. Lucchese is currently a director of V-Mark Corporation.
Mr. Kaufman has been a Director of the Company since 1982. Since 1987,
Mr. Kaufman has served as the managing general partner of MK Global Ventures,
MK GVS Fund and MK GVD Fund, each of which is an investment company and a
stockholder of the Company, and MK Global Ventures II, also an investment
company. Mr. Kaufman currently serves as a director of Document
Technologies, Inc., DISC, Inc., Proxim, Inc., Hypermedia Communications, Inc.
and Asante Technologies, Inc.
Mr. Levison has been a Director of the Company since June 1994. Mr.
Levison has been a general partner of the Aegis Venture Funds, a group of
limited partnerships, since 1982. Mr. Levison formerly served as a director
of Chipcom Corporation and Scitex Corporation, and currently serves as a
director of D.M. Management Company.
Mr. Asen has been a Director of the Company since April 1992. Mr. Asen
has been President of Asen & Co., Inc., an investment management firm, since
1983. He is also a general partner of Pioneer Associates, L.P., Pioneer III,
L.P. and Pioneer IV, L.P., each a venture capital fund. Mr. Asen currently
serves as a director of Biomagnetic Technologies, Inc., Barringer
Laboratories, Inc. and SeaMed Corporation.
DIRECTOR COMPENSATION
All Non-employee Directors are compensated at a rate of $1,000 per meeting
attended, plus normal travel expenses incurred in connection with attendance at
such meetings. All Non-employee Directors are also compensated on an annual
basis at the rate of $8,000. Non-employee Directors are also entitled to receive
stock options pursuant to the 1988 Non-employee Director Stock Option Plan.
-6-
<PAGE> 9
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
The following table shows compensation information with respect to
services rendered to the Company in all capacities during the years ended
December 31, 1996, 1995 and 1994 for (i) the individual who served as the Chief
Executive Officer as of December 31, 1996 and (ii) the other four most highly
compensated executive officers of the Company (collectively with the Chief
Executive Officer, the "Named Officers"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Annual Compensation(1) Compensation(2)
--------------------- --------------
Awards
--------------
Securities All Other
Name and Underlying Compensation
Principal Position Year Salary($) Bonus($)(3) Options/SARs(#) ($)
---------------------- ---- -------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Alphonse M. Lucchese (4).. 1996 297,504 211,524 0 0
Chairman, President 1995 265,008 224,190 0 1,515(8)
and Chief Executive 1994 131,734 202,500(7) 501,805 1,343(8)
Officer
James F. Mitchell......... 1996 159,000 47,105 0 0
Senior Vice President 1995 159,000 56,048 0 0
and Chief Technical 1994 149,133 22,000 150,000 0
Officer
Douglas W. Smith (5)...... 1996 146,259 85,913 0 0
Vice President - 1995 130,672 92,122 0 0
Sales and Marketing 1994 42,000 25,200 103,789 0
John J. Connolly (6)...... 1996 141,250 41,845 0 0
Vice President - 1995 126,250 44,502 0 0
Finance and Chief 1994 50,000 12,000 86,491 0
Financial Officer
John E. Cambray........... 1996 131,208 31,227 0 0
Vice President - 1995 122,000 34,404 0 0
Development 1994 117,121 0 50,000 0
- ----------
<FN>
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or 10%
of the total salary and bonus reported.
(2) The Company did not grant any restricted stock awards or stock appreciation
rights ("SARs") or make any long term incentive plan payouts during the
fiscal years ended December 31, 1996, 1995 and 1994.
(3) Indicates bonus payments earned by the Named Officers in the year
indicated, for services rendered in such year, some of which were paid in
the next subsequent year.
(4) Mr. Lucchese was elected President and Chief Executive Officer effective
July 1, 1994. Mr. Lucchese was elected Chairman of the Board of
Directors on August 9, 1994.
(5) Mr. Smith was elected Vice President - Sales and Marketing effective
September 1, 1994.
(6) Mr. Connolly was elected Vice President - Finance and Chief Financial
Officer effective August 1, 1994.
(7) Includes: (i) a signing bonus of $112,500; and (ii) a performance based
bonus of $90,000.
(8) Consists of life insurance premiums paid by the Company.
</TABLE>
-7-
<PAGE> 10
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options or stock appreciation rights
to any of the Named Officers during the fiscal year ended December 31, 1996.
OPTION EXERCISES AND YEAR-END VALUES
Shown below is information with respect to options to purchase the
Company's Common Stock granted to the Named Officers under the Company's stock
option plans, including the number of unexercised options outstanding at
December 31, 1996 and the value of such unexercised in-the money options at
December 31, 1996.
<TABLE>
OPTION VALUES AT DECEMBER 31, 1996
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options at In-the-money
Acquired December 31, 1996 Options at
on Value (#)(1) December 31, 1996($)(2)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alphonse M. Lucchese 87,000 2,307,800.00 208,903 205,902 8,044,088.25 7,927,800.50
James F. Mitchell 120,500 2,685,890.63 0 56,250 0.00 2,076,562.50
John E. Cambray 36,048 856,340.52 4,375 23,750 160,898.44 859,687.50
John J. Connolly 43,000 1,173,000.00 246 43,245 9,286.50 1,679,373.75
Douglas W. Smith 3,500 119,437.50 48,395 51,894 1,868,411.25 2,003,998.50
- -----------------
<FN>
(1) Options granted to the Named Officers become fully vested immediately prior
to the merger, consolidation, liquidation or sale of substantially all of
the assets of the Company and terminate immediately after the effective
date of such merger, consolidation, liquidation or sale.
(2) Value is based on the difference between the option exercise price and the
fair market value of the Company's Common Stock on December 31, 1996
($41.25 per share, the last reported sales price of the Company's Common
Stock on the Nasdaq National Market System on December 31, 1996) multiplied
by the number of shares underlying the option.
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the three
member Compensation Committee of the Board of Directors (the "Compensation
Committee"). The three members of the Compensation Committee are non-employee
Directors. Pursuant to the authority delegated by the Board of Directors, the
Compensation Committee establishes each year the compensation of the Chief
Executive Officer, and together with the Chief Executive Officer, establishes
the compensation of the other executive officers of the Company.
Under the supervision of the Compensation Committee, the Company developed
and implemented the 1996 Management Compensation Plan for the Chief Executive
Officer and certain of the executive officers of the Company (the "Plan"). The
Plan is designed to reward executive officers whose performance yields
improvement in corporate operating results, market share and shareholder value.
The ultimate goal of the Plan is to align the interests of management with those
of the
-8-
<PAGE> 11
stockholders. Compensation under the Plan is comprised of cash compensation in
the form of annual base salary, incentive compensation in the form of
performance-based cash bonuses, and long-term incentive compensation in the form
of stock options.
In setting cash compensation levels for executive officers (including the
Chief Executive Officer), the Compensation Committee takes into account such
factors as: (i) the Company's past financial performance and future
expectations, (ii) the general and industry-specific business environment and
(iii) corporate and individual performance goals. The base salaries are
established at levels comparable to the amounts paid to senior executives with
comparable qualifications, experience and responsibilities at other companies
located in the northeastern United States of similar size and engaged in a
similar business to that of the Company.
Incentive compensation in the form of performance-based bonuses for the
Chief Executive Officer and the Company's other executive officers is based upon
management's success in meeting the Company's financial and strategic goals as
well as meeting individual performance goals. Target levels of revenue and net
income were set at the time the Plan was established, and bonuses were allocated
to the Chief Executive Officer and certain other executive officers contingent
upon the achievement of the target levels. In addition, based on the Company's
exceeding both target revenues and target net income, the Compensation Committee
awarded additional discretionary bonuses to the executive officers in the same
proportion as bonuses were allocated under the Plan.
Incentive compensation in the form of stock options is designed to provide
long term incentives to executive officers and other employees, to encourage the
executive officers and other employees to remain with the Company and to enable
optionees to develop and maintain a significant, long-term stock ownership
position in the Company's Common Stock. The Compensation Committee grants stock
options to the Company's executive officers in consideration of the strategic
goals and direction of the Company. The Company's 1996 Stock Plan (the "1996
Plan"), administered by the Board of Directors, is the vehicle for the granting
of stock options.
The 1996 Plan permits the Board of Directors to grant stock options to
eligible employees, including executive officers. In 1996, the Board of
Directors granted stock options to various employees, but did not make any
grants to any of the Named Officers. Options become exercisable in increments
over time, contingent upon continued employment. The value realizable from
exercisable options is dependent upon the extent to which the Company's
performance is reflected in the market price of the Company's Common Stock at
any particular point in time.
The Company also maintains the 1991 Employee Stock Purchase Plan (the
"Stock Purchase Plan") in which all executives may participate on the same terms
as non-executive employees who meet applicable eligibility criteria. The Stock
Purchase Plan provides for the sale of shares of the Company's Common Stock to
employees (as defined in the Stock Purchase Plan) of the Company pursuant to
nontransferable options at less than fair market value. Employees who own 5% or
more of the Common Stock of the Company and non-employee directors are not
eligible to participate in the Stock Purchase Plan. As of the date hereof,
32,146 shares of Common Stock have been issued under the Stock Purchase Plan.
The Revenue Reconciliation Act of 1993 generally limits the Company's
ability to deduct for federal income tax purposes compensation in excess of
$1,000,000 per executive for the Chief Executive Officer and four additional
executive officers who are highest paid and employed at year end, except to the
extent such excess constitutes performance-based compensation. The policy of the
Board of Directors and the Compensation Committee is to qualify future
compensation arrangements to ensure deductibility, except in those cases where
the Board of Directors determines it is advantageous to use an alternative
approach.
-9-
<PAGE> 12
The Compensation Committee is satisfied that the executive officers of the
Company are dedicated to achieving significant improvements in the long-term
financial performance of the Company and that the compensation policies and
programs implemented and administered have contributed and will continue to
contribute towards achieving this goal.
This report has been submitted by the members of the Compensation Committee:
R. Scott Asen
Michael D. Kaufman
Walter J. Levison
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock for the five
fiscal years ended December 31, 1996, with the cumulative total return on (i)
the Nasdaq Market Index and (ii) a broad peer group index prepared by Media
General consisting of Nasdaq listed companies grouped under SIC Code 7373,
Computer Integrated Systems Design. The comparison assumes $100 was invested on
December 31, 1991 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends, if any.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG DAVOX CORPORATION,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Davox Corporation 100.00 100.00 222.22 238.89 527.78 1,833.33
Nasdaq Market Index 100.00 100.98 121.13 127.17 164.96 204.98
Peer Group Index 100.00 109.54 121.95 116.66 188.13 199.68
- ------------------------------------------------------------------------------------
</TABLE>
The stock price performance shown on the graph above is not necessarily
indicative of future price performance. Information used in the graph was
obtained from Media General Financial Services, a source believed to be
reliable; however, the Company is not responsible for any errors or omissions in
such information.
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<PAGE> 13
SEVERANCE ARRANGEMENTS
Pursuant to the terms of Mr. Lucchese's 1994 Executive Compensation Plan,
if Mr. Lucchese is terminated without cause he will receive 12 monthly severance
payments totaling the greater of (i) Mr. Lucchese's annual base salary in the
year of termination; or (ii) Mr. Lucchese's prior year base salary plus any
bonus earned in the prior year.
Pursuant to the terms of Mr. Mitchell's 1994 Executive Compensation Plan,
the Company shall continue Mr. Mitchell's base salary and medical benefits for a
period of 12 months if Mr. Mitchell is terminated due to an economic layoff, a
downsizing that eliminates his position or a reorganization that would require
Mr. Mitchell to relocate.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy that all transactions between the Company
and its officers, directors, principal stockholders and their affiliates be on
terms no less favorable to the Company than could be obtained from unrelated
third parties and that any loans by the Company to officers, directors,
principal stockholders and their affiliates must be approved by a majority of
the outside independent and disinterested directors. Mr. Paul Lucchese, Esq.,
son of Mr. Alphonse M. Lucchese, is a member of the Company's legal staff and
received $76,454 in compensation during the fiscal year ended December 31, 1996.
QCC, Inc., a corporation of which Mr. Alphonse M. Lucchese, Jr., son of Mr.
Alphonse M. Lucchese, is a fifty-percent stockholder, provided consulting
services to the Company in connection with Management Information Systems and
other development matters and received an aggregate of $101,901.75 in connection
therewith during the fiscal year ended December 31, 1996.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file with the Commission initial reports
of ownership and reports of changes in ownership of Common Stock of the Company.
Such persons are required by regulations of the Commission to furnish the
Company with copies of all such filings. Based on its review of the copies of
such filings received by it with respect to the fiscal year ended December 31,
1996 and written representations from certain Reporting Persons, the Company
believes that all Reporting Persons complied with all Section 16(a) filing
requirements in 1996.
PROPOSAL II
AMENDMENT TO THE COMPANY'S AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
THE AUTHORIZED SHARES OF COMMON STOCK
At a meeting held on January 23, 1997, the Board of Directors voted to
recommend to the stockholders that the Company amend the Company's Amended and
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock $.10 par value, from 10,000,000 shares to 30,000,000
shares (the "Amendment"), which Amendment the Board of Directors proposes to
submit to the stockholders for approval. Shares of the Company's Common Stock,
including the additional shares proposed for authorization, do not have
preemptive or similar rights.
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<PAGE> 14
If adopted by the stockholders, the proposed Amendment will be
accomplished by the filing of a Certificate of Amendment with the Secretary of
State of the State of Delaware. It is anticipated that such Certificate of
Amendment will be filed effective the close of business on April 25, 1997.
The Amendment will make a greater number of authorized but unissued shares
available for issuance from time to time, as determined by the Board of
Directors, for acquisitions of other properties or businesses, the declaration
of stock dividends, future financings, and for other appropriate corporate
purposes. Although the Company has no present intention of issuing any
unreserved shares of Common Stock and there are no plans, negotiations,
agreements or understandings with respect thereto, the Board of Directors
believes that the increase in the authorized number of shares of Common Stock
will give the Company desired flexibility in meeting possible future
developments and needs in the Company's business. No further action or
authorization of the stockholders would be necessary prior to the issuance of
additional shares of Common Stock unless required for a particular transaction
by applicable law or the rules of any stock exchange or quotation service on
which the Company's securities may then be listed. The additional shares of
Common Stock authorized for issuance pursuant to the Amendment will have all of
the rights and privileges which the presently outstanding shares of Common Stock
possess; the increase in authorized shares would not affect the terms, or rights
of holders, of existing shares of Common Stock. All outstanding shares would
continue to have one vote per share on all matters to be voted on by the
stockholders, including the election of directors.
The issuance of additional shares of stock could have the effect of
diluting earnings per share and book value per share, which could adversely
affect the Company's existing stockholders. In addition, the authorized but
unissued shares of Common Stock could be used to make more difficult a change in
control of the Company. For example, such shares could be sold to purchasers who
might side with the Board of Directors in opposing a takeover bid that the Board
determines not to be in the best interest of the Company and its stockholders.
Such a sale could have the effect of discouraging an attempt by another person
or entity, through the acquisition of a substantial number of shares of the
Company's Common Stock, to acquire control of the Company, since the issuance of
new shares could be used to dilute the stock ownership of such person or entity.
The Company is not aware, however, of any pending or threatened efforts to
obtain control of the Company, and the Board of Directors has no current
intention to use the additional shares of Common Stock in order to impede a
takeover attempt.
Approval of the Amendment to increase the number of authorized shares of
Common Stock will require the affirmative vote of a majority of the outstanding
shares of Common Stock of the Corporation. The Board of Directors recommends a
vote FOR the approval of the Amendment.
PROPOSAL III
ADOPTION OF THE COMPANY'S 1996 STOCK PLAN
The Company's 1996 Stock Plan (the "1996 Plan") was adopted by the Board
of Directors of the Company on July 25, 1996. The complete text of the 1996 Plan
is attached hereto as Exhibit A. The following is a summary of the major
provisions of the 1996 Plan and is qualified in its entirety by the full text
thereof.
The 1996 Plan was adopted by the Board of Directors of the Company to
replace the Company's 1986 Stock Plan which expired pursuant to its terms on
September 17, 1996. The Company's management relies on stock options as
essential parts of the compensation packages necessary for the Company to
attract and retain experienced officers and employees. The Board of Directors of
the
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<PAGE> 15
Company believes that the adoption of the 1996 Plan is essential to permit the
Company's management to continue to provide long-term, equity-based incentives
to present and future key employees.
Description of the 1996 Plan
- ----------------------------
The purpose of the 1996 Plan is to provide incentives to directors,
officers and other employees of the Company by providing them with opportunities
to purchase stock of the Company and participate in the ownership of the
Company.
Under the 1996 Plan, employees and officers of the Company may be awarded
incentive stock options ("ISO" or "ISOs"), as defined in Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), and directors, officers,
employees and consultants of the Company may be granted (i) options which do not
qualify as ISOs ("Non-Qualified Option" or "Non-Qualified Options"), (ii) awards
of stock in the Company ("Awards"), and (iii) opportunities to make direct
purchases of stock in the Company ("Purchases"). ISOs, Non-Qualified Options,
Awards and Purchases are sometimes collectively referred to as "Stock Rights"
and ISOs and Non-Qualified Options are sometimes collectively referred to as
"Options." The 1996 Plan provides for the issuance of a maximum of 600,000
shares of Common Stock of the Company pursuant to the grant of Stock Rights.
Currently, 240 employees (including directors who are also employees and
officers of the Company), and three non-employee directors of the Company are
eligible to participate in the 1996 Plan.
The 1996 Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company. The Compensation
Committee is currently comprised of three outside directors, Michael D. Kaufman,
R. Scott Asen and Walter J. Levison. Subject to the terms of the 1996 Plan, the
Committee has the authority to determine the persons to whom Stock Rights are
granted, the exercise price per share and other terms and provisions governing
the Stock Rights, including restrictions, if any, applicable to the shares of
Common Stock issuable upon exercise of Stock Rights.
Stock Rights may be granted under the 1996 Plan at any time on or prior to
July 24, 2006. The exercise price per share of Non-Qualified Options granted,
and the purchase price per share of stock granted in any Award or authorized as
a Purchase, under the 1996 Plan cannot be less than the minimum legal
consideration required therefor under the laws of any jurisdiction in which the
Company may be organized. The exercise price per share of each ISO cannot be
less than the fair market value of the Common Stock on the date of grant (or, in
the case of an ISO granted to an employee holding more than ten percent of the
voting stock of the Company, 110% of the fair market value of the Common Stock
on the date of grant). The 1996 Plan provides that each option shall expire on
the date specified by the Committee, but not more than ten years from its date
of grant in the case of an ISO, and five years in the case of an ISO granted to
an employee or officer holding more than ten percent of the voting stock of the
Company.
Each Option granted under the 1996 Plan may either be fully exercisable at
the time of grant or may become exercisable in such installments as the
Committee may specify. Each Option may be exercised from time to time, in whole
or in part, up to the total number of shares with respect to which it is then
exercisable. The Committee has the right to accelerate the date that any
installment of any Option becomes exercisable (subject to the $100,000 per year
limitation on the fair market value of stock subject to ISOs granted to any
employee which first become exercisable in any calendar year).
Payment of the exercise price of an Option granted under the 1996 Plan may
be made in cash or by check or, if authorized by the Committee in its discretion
in writing at the time of grant (i) by
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<PAGE> 16
tendering shares of Common Stock of the Company having fair market value equal
as of the date of the exercise to the cash exercise price of the Option, (ii) in
full or in part by a personal recourse, interest bearing note, or (iii) through
the delivery of an assignment to the Company of a sufficient amount of the
proceeds from the sale of the Common Stock acquired upon exercise of the Option.
The 1996 Plan limits to 500,000 shares the number of shares of Common
Stock that any employee may acquire under the 1996 Plan in any one calendar
year.
Only the grantee may exercise a Stock Right; no assignments or transfers
of Stock Rights are permitted except by will or by the laws of descent and
distribution, or in the case of Non-Qualified Options only, pursuant to a valid
domestic relations order.
If an ISO optionee ceases to be employed by the Company other than by
reason of death or retirement, no further installments of his or her ISOs will
become exercisable, and vested ISOs shall terminate after the passage of three
months from the date of termination of employment (but no later than their
specified expiration dates), except to the extent that such ISOs shall have been
converted into Non-Qualified Options. If an optionee ceases to be employed by
the Company by reason of disability, or if an optionee dies, any ISO held by the
optionee may be exercised, to the extent exercisable on the date of disability
or death, by the optionee or the optionee's estate, personal representative or
beneficiary, at any time within 180 days from the date of the optionee's
disability or death (but not later than the specified expiration date of the
ISO).
Option holders are protected against dilution in the event of a stock
dividend, stock split, consolidation, merger, recapitalization, reorganization
or similar transaction. The Board of Directors may from time to time adopt
amendments to the 1996 Plan, certain of which are subject to stockholder
approval, and may terminate the 1996 Plan, at any time (although such action
shall not affect options previously granted). Any shares subject to an option
granted under the 1996 Plan, which for any reason expire or terminate
unexercised, may again be available for future option grants. Unless terminated
sooner, the 1996 Plan will terminate on July 24, 2006.
Certain Federal Tax Information
- -------------------------------
The following discussion of United States federal income tax consequences
of the issuance and exercise of options and stock grants granted under the 1996
Plan, and certain other rights granted under the 1996 Plan is based upon the
provisions of the Code as in effect on the date of this Proxy Statement, current
regulations, and existing administrative rulings of the Internal Revenue
Service. It is not intended to be a complete discussion of all of the federal
income tax consequences of these plans or of the requirements that must be met
in order to qualify for the described tax treatment. In addition, there may be
foreign, state or local tax consequences that are not discussed herein.
Incentive Stock Options. The following general rules are applicable under
current United States federal income tax law to ISOs granted under the 1996
Plan:
1. In general, an optionee will not recognize any income upon the grant of
an ISO or upon the issuance of shares to him or her upon the exercise of an ISO,
and the Company will not be entitled to a federal income tax deduction upon
either the grant or the exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of within
(i) two years from the date the option was granted or (ii) one year after the
date the shares are issued to the optionee pursuant to
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<PAGE> 17
the ISO exercise (the "Holding Periods"), the difference between the amount
realized on any subsequent disposition of the shares and the exercise price will
generally be treated as capital gain or loss to the optionee.
3. If shares acquired upon exercise of an ISO are disposed of before the
expiration of one or both of the Holding Periods (a "Disqualifying
Disposition"), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the exercise
price or (ii) the actual gain on dispositions will be taxed to the optionee as
ordinary income in the year of such disposition.
4. In any year that an optionee recognizes ordinary income on a
Disqualifying Disposition of shares acquired upon exercising an ISO, the Company
generally will be entitled to a corresponding federal income tax deduction.
5. The difference between the amount realized by an optionee as the result
of a Disqualifying Disposition and the sum of (i) the exercise price and (ii)
the amount of ordinary income recognized under the above rules generally will be
treated as capital gain or loss.
6. Capital gain or loss recognized by an optionee on a disposition of
shares will be long-term capital gain or loss if the optionee's holding period
for the shares exceeds one year.
7. An optionee may be entitled to exercise an ISO by delivering shares of
the Company's Common Stock to the Company in payment of the exercise price, if
the optionee's ISO agreement so provides. If an optionee exercises an ISO in
such fashion, special rules will apply.
8. In addition to the tax consequences described above, the exercise of an
ISO may result in an "alternative minimum tax". The "alternative minimum tax"
(the maximum rate is 28%) will be applied against a taxable base which is equal
to "alternative minimum taxable income," reduced by a statutory exemption. In
general, the amount by which the value of the shares received upon exercise of
the ISO exceeds the exercise price is included in the optionee's alternative
minimum taxable income. A taxpayer is required to pay the higher of his regular
tax liability or the alternative minimum tax. A taxpayer who pays alternative
minimum tax attributable to the exercise of an ISO may be entitled to a tax
credit against his or her regular tax liability in later years.
9. Special rules apply if the shares acquired upon the exercise of an ISO
are subject to vesting, or are subject to certain restrictions on resale under
federal securities laws applicable to directors, officers or 10% stockholders.
Non-Qualified Stock Options. The following general rules are
applicable under current federal income tax law to Non-Qualified Options
granted under the 1996 Plan:
1. In general, the optionee will not recognize any income upon the grant
of a Non-Qualified Option, and the Company will not be allowed a federal income
tax deduction upon such grant.
2. The optionee generally will recognize ordinary income at the time of
exercise of the Non-Qualified Option in an amount equal to the excess, if any,
of the fair market value of the shares on the date of exercise over the exercise
price. The Company may be required to withhold income tax on this amount.
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<PAGE> 18
3. When the optionee sells the shares acquired through the exercise of a
Non-Qualified Option, he or she generally will recognize capital gain or loss in
an amount equal to the difference between the amount realized upon the sale of
the shares and his or her basis in the stock (generally, the exercise price plus
the amount taxed to the optionee as ordinary income). If the optionee's holding
period for the shares exceeds one year, such gain or loss will be a long-term
capital gain or loss.
4. When the optionee recognizes ordinary income attributable to a
Non-Qualified Option, the Company generally will be entitled to a corresponding
federal income tax deduction.
5. An optionee may be entitled to exercise a Non-Qualified Option by
delivering shares of the Company's Common Stock to the Company in payment of the
exercise price. If an optionee exercises a Non-Qualified Option in such fashion,
special rules apply.
6. Special rules apply if the shares acquired upon the exercise of a
Non-Qualified Option are subject to vesting, or are subject to certain
restrictions on resale under federal securities laws applicable to directors,
officers or 10% stockholders.
Stock Awards. The following general rules are applicable under current
federal income tax law to awards of Restricted Stock and Stock Grants under the
1996 Plan, if implemented:
Under current federal income tax law, persons receiving shares pursuant to
an award of stock or a grant of an opportunity to purchase stock under the 1996
Plan will generally recognize ordinary income equal to the fair market value of
the shares received, reduced by any purchase price paid. The Company generally
will be entitled to a corresponding federal income tax deduction. When such
shares are sold, the grantee generally will recognize capital gain or loss.
Special rules apply if the shares acquired are subject to vesting, or are
subject to certain restrictions on resale under federal securities laws
applicable to directors, officers or 10% stockholders.
NEW PLAN BENEFITS
<TABLE>
The Stock Rights that have been made to date under the 1996 Plan are
described in the table below. Future awards are in the discretion of the
Committee and cannot be determined at this time.
<CAPTION>
Number of Shares
Represented by Options(1)
------------------------
<S> <C>
Executive Group................................ 10,000
Non-Executive Officer Employee Group .......... 63,350
- --------------
<FN>
(1) Options vest in eight equal semi-annual installments beginning six months
after date of grant. All Options were granted with an exercise price equal to
the fair market value of the Common Stock on the date of grant. The ultimate
value of the options will depend on the future market value of the Company's
stock, which cannot be forecast with reasonable accuracy.
</TABLE>
The Board of Directors recommends a vote FOR Proposal III to approve the
adoption of the Company's 1996 Plan.
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<PAGE> 19
PROPOSAL IV
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen, LLP
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1997. Arthur Andersen, LLP has served as the Company's
auditors since fiscal year ended December 31, 1983. It is expected that a member
of the firm will be present at the meeting with the opportunity to make a
statement if so desired and will be available to respond to appropriate
questions. The Board of Directors recommends a vote FOR the ratification of this
selection.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next annual meeting of
stockholders of the Company must be received at the Company's principal
executive offices not later than November 20, 1997. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proponents submit their proposals by Certified Mail, Return
Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of a nominee and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs. Solicitation by officers and employees of the Company may also be made of
some stockholders in person or by mail, telephone or telegraph following the
original solicitation.
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<PAGE> 20
EXHIBIT A
---------
DAVOX CORPORATION
1996 STOCK PLAN
---------------
1. PURPOSE. The purpose of the Davox Corporation 1996 Stock Plan (the
"Plan") is to encourage key employees of Davox Corporation (the "Company") and
of any present or future parent or subsidiary of the Company (collectively,
"Related Corporations") and other individuals who render services to the Company
or a Related Corporation, by providing opportunities to participate in the
ownership of the Company and its future growth through (a) the grant of options
which qualify as "incentive stock options" ("ISOs") under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"); (b) the grant of options
which do not qualify as ISOs ("Non-Qualified Options"); (c) awards of stock in
the Company ("Awards"); and (d) opportunities to make direct purchases of stock
in the Company ("Purchases"). Both ISOs and Non-Qualified Options are referred
to hereafter individually as an "Option" and collectively as "Options." Options,
Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of the Code.
2. ADMINISTRATION OF THE PLAN.
--------------------------
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered
by the Board of Directors of the Company (the "Board") or, subject to
Paragraph 2D (relating to compliance with Section 162(m) of the Code), by a
committee appointed by the Board (the "Committee"). Hereinafter, all
references in this Plan to the "Committee" shall mean the Board if no
Committee has been appointed. Subject to ratification of the grant or
authorization of each Stock Right by the Board (if so required by
applicable state law), and subject to the terms of the Plan, the Committee
shall have the authority to (i) determine to whom (from among the class of
employees eligible under paragraph 3 to receive ISOs) ISOs shall be
granted, and to whom (from among the class of individuals and entities
eligible under paragraph 3 to receive Non-Qualified Options and Awards and
to make Purchases) Non-Qualified Options, Awards and authorizations to make
Purchases may be granted; (ii) determine the time or times at which Options
or Awards shall be granted or Purchases made; (iii) determine the purchase
price of shares subject to each Option or Purchase, which prices shall not
be less than the minimum price specified in paragraph 6; (iv) determine
whether each Option granted shall be an ISO or a Non-Qualified Option; (v)
determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (vi) extend the
period during which outstanding Options may be exercised; (vii) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options, Awards and Purchases and the nature of such
restrictions, if any, and (viii) interpret the Plan and prescribe and
rescind rules and regulations relating to it. If the Committee determines
to issue a Non-Qualified Option, it shall take whatever actions it deems
necessary, under Section 422 of the Code and the regulations promulgated
thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the
Plan or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such
rules and regulations for carrying out the Plan as it may deem advisable.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock
Right granted under it.
<PAGE> 21
B. COMMITTEE ACTIONS. The Committee may select one of its members as
its chairman, and shall hold meetings at such time and places as it may
determine. A majority of the Committee shall constitute a quorum and acts
of a majority of the members of the Committee at a meeting at which a
quorum is present, or acts reduced to or approved in writing by all the
members of the Committee (if consistent with applicable state law), shall
be the valid acts of the Committee. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan.
C. GRANT OF STOCK RIGHTS TO BOARD MEMBERS. Stock Rights may be
granted to members of the Board. All grants of Stock Rights to members of
the Board shall in all respects be made in accordance with the provisions
of this Plan applicable to other eligible persons. Members of the Board who
either (i) are eligible to receive grants of Stock Rights pursuant to the
Plan or (ii) have been granted Stock Rights may vote on any matters
affecting the administration of the Plan or the grant of any Stock Rights
pursuant to the Plan, except that no such member shall act upon the
granting to himself or herself of Stock Rights, but any such member may be
counted in determining the existence of a quorum at any meeting of the
Board during which action is taken with respect to the granting to such
member of Stock Rights.
D. PERFORMANCE-BASED COMPENSATION. The Board, in its discretion, may
take such action as may be necessary to ensure that Stock Rights granted
under the Plan qualify as "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code and applicable regulations
promulgated thereunder ("Performance-Based Compensation"). Such action may
include, in the Board's discretion, some or all of the following (i) if the
Board determines that Stock Rights granted under the Plan generally shall
constitute Performance-Based Compensation, the Plan shall be administered,
to the extent required for such Stock Rights to constitute
Performance-Based Compensation, by a Committee consisting solely of two or
more "outside directors" (as defined in applicable regulations promulgated
under Section 162(m) of the Code), (ii) if any Non-Qualified Options with
an exercise price less than the fair market value per share of Common Stock
are granted under the Plan and the Board determines that such Options
should constitute Performance-Based Compensation, such options shall be
made exercisable only upon the attainment of a pre-established, objective
performance goal established by the Committee, and such grant shall be
submitted for, and shall be contingent upon shareholder approval and (iii)
Stock Rights granted under the Plan may be subject to such other terms and
conditions as are necessary for compensation recognized in connection with
the exercise or disposition of such Stock Right or the disposition of
Common Stock acquired pursuant to such Stock Right, to constitute
Performance-Based Compensation.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees
of the Company or any Related Corporation. Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any employee, officer or
director (whether or not also an employee) or consultant of the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant a Stock Right. The
granting of any Stock Right to any individual or entity shall neither entitle
that individual or entity to, nor disqualify such individual or entity from,
participation in any other grant of Stock Rights.
4. STOCK. The stock subject to Stock Rights shall be authorized but
unissued shares of Common Stock of the Company, par value $.10 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner. The aggregate number of shares which may be issued
-2-
<PAGE> 22
pursuant to the Plan is equal to the "Plan Share Limit" as defined below. If any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part or shall be repurchased by the Company, the unpurchased shares
of Common Stock subject to such Option shall again be available for grants of
Stock Rights under the Plan.
For purposes of this Plan the "Plan Share Limit" shall be 600,000 shares,
such total to include the number of shares that are available for grant, award
or purchase under the Company's 1986 Stock Plan (the "Old Plan") at the time of
expiration of the Old Plan.
No employee of the Company or any Related Corporation may be granted Options
to acquire, in the aggregate, more than 500,000 shares of Common Stock during
any fiscal year of the Company. If any Option granted under the Plan shall
expire or terminate for any reason without having been exercised in full or
shall cease for any reason to be exercisable in whole or in part or shall be
repurchased by the Company, the shares subject to such Option shall be included
in the determination of the aggregate number of shares of Common Stock deemed to
have been granted to such employee under the Plan.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan
at any time on or after July 25, 1996 and prior to July 25, 2006. The date of
grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant.
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
-------------------------------------
A. PRICE FOR NON-QUALIFIED OPTIONS, AWARDS AND PURCHASES. Subject to
Paragraph 2D (relating to compliance with Section 162(m) of the Code), the
exercise price per share specified in the agreement relating to each
Non-Qualified Option granted, and the purchase price per share of stock
granted in any Award or authorized as a Purchase, under the Plan may be
less than the fair market value of the Common Stock of the Company on the
date of grant, provided that, in no event shall such exercise price or such
purchase price be less than the minimum legal consideration required
therefor under the laws of any jurisdiction in which the Company or its
successors in interest may be organized. The Committee may, in its
discretion, subject any Stock Right granted under the Plan to any terms or
conditions necessary for compensation recognized in connection with the
exercise of such Stock Right or the disposition of Common Stock acquired
pursuant to such Stock Right, to constitute qualified performance-based
compensation under Section 162(m) of the Code and applicable regulations
promulgated thereunder.
B. PRICE FOR ISOS. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, the
price per share specified in the agreement relating to such ISO shall not
be less than one hundred ten percent (110%) of the fair market value per
share of Common Stock on the date of grant. For purposes of determining
stock ownership under this paragraph, the rules of Section 424(d) of the
Code shall apply. The date of grant for purposes of this subparagraph shall
mean the date that the Company or a Related Corporation completes the
corporate action constituting an offer of stock for sale to an individual.
C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible employee
may be granted Options treated as ISOs only to the extent that, in the
aggregate under this Plan and all
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<PAGE> 23
incentive stock option plans of the Company and any Related Corporation,
ISOs do not become exercisable for the first time by such employee during
any calendar year with respect to stock having a fair market value
(determined at the time the ISOs were granted) in excess of $100,000. The
Company intends to designate any Options granted in excess of such
limitation as Non-Qualified Options and the Company shall issue separate
certificates to the optionee with respect to Options that are Non-Qualified
Options and Options that are ISOs.
D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the date of grant or, if the
prices or quotes discussed in this sentence are unavailable for such date,
the last business day for which such prices or quotes are available prior
to the date of grant and shall mean (i) the average (on that date) of the
high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common
Stock is then traded on a national securities exchange; or (ii) the last
reported sale price (on that date) of the Common Stock on the Nasdaq
National Market, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the
Nasdaq National Market. If the Common Stock is not publicly traded at the
time an Option is granted under the Plan, "fair market value" shall mean
the fair value of the Common Stock as determined by the Committee after
taking into consideration all factors which it deems appropriate,
including, without limitation, recent sale and offer prices of the Common
Stock in private transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(B). Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.
8. EXERCISE OF OPTION. Subject to the provisions of Paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date that any installment of any Option becomes exercisable;
provided that the Committee shall not, without the consent of an optionee,
accelerate the permitted exercise date of any installment of any Option
granted to any employee as an ISO (and not previously converted into a
Non-Qualified
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<PAGE> 24
Option pursuant to paragraph 16) if such acceleration would violate the
annual vesting limitation contained in Section 422(d) of the Code, as
described in paragraph 6(C).
9. TERMINATION OF EMPLOYMENT. Unless otherwise specified in the agreement
relating to such ISO, if an ISO optionee ceases to be employed by the Company
and all Related Corporations other than by reason of death or disability as
defined in paragraph 10, no further installments of his or her ISOs shall become
exercisable, and his or her ISOs shall terminate on the earlier of (a) three
months after the date of termination of his or her employment, or (b) their
specified expiration dates, except to the extent that such ISOs (or unexercised
installments thereof) have been converted into Non-Qualified Options pursuant to
paragraph 16. For purposes of this paragraph 9, employment shall be considered
as continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute or
by contract. A bona fide leave of absence with the written approval of the
Committee shall not be considered an interruption of employment under this
paragraph 9, provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of the optionee
after the approved period of absence. ISOs granted under the Plan shall not be
affected by any change of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an employee of the Company
or any Related Corporation. Nothing in the Plan shall be deemed to give any
grantee of any Stock Right the right to be retained in employment or other
service by the Company or any Related Corporation for any period of time.
10. DEATH; DISABILITY.
-----------------
A. DEATH. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his or her death, any ISO owned
by such optionee may be exercised, to the extent otherwise exercisable on
the date of death, by the estate, personal representative or beneficiary
who has acquired the ISO by will or by the laws of descent and
distribution, until the earlier of (i) the specified expiration date of the
ISO or (ii) 180 days from the date of the optionee's death.
B. DISABILITY. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his or her disability,
such optionee shall have the right to exercise any ISO held by him or her
on the date of termination of employment, for the number of shares for
which he or she could have exercised it on that date, until the earlier of
(i) the specified expiration date of the ISO or (ii) 180 days from the date
of the termination of the optionee's employment. For the purposes of the
Plan, the term "disability" shall mean "permanent and total disability" as
defined in Section 22(e)(3) of the Code or any successor statute.
11. ASSIGNABILITY. No Stock Right shall be assignable or transferable by
the grantee except by will, by the laws of descent and distribution or, in the
case of Non-Qualified Options only, pursuant to a valid domestic relations
order. Except as set forth in the previous sentence, during the lifetime of a
grantee each Stock Right shall be exercisable only by such grantee.
12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may specify that any
Non-Qualified Option shall be subject to the restrictions set forth herein with
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<PAGE> 25
respect to ISOs, or to such other termination and cancellation provisions as the
Committee may determine. The Committee may from time to time confer authority
and responsibility on one or more of its own members and/or one or more officers
of the Company to execute and deliver such instruments. The proper officers of
the Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
with or acquired by another entity in a merger or other reorganization in
which the holders of the outstanding voting stock of the Company
immediately preceding the consummation of such event, shall, immediately
following such event, hold, as a group, less than a majority of the voting
securities of the surviving or successor entity, or in the event of a sale
of all or substantially all of the Company's assets or otherwise (each, an
"Acquisition"), the Committee or the board of directors of any entity
assuming the obligations of the Company hereunder (the "Successor Board"),
shall, as to outstanding Options, either (i) make appropriate provision for
the continuation of such Options by substituting on an equitable basis for
the shares then subject to such Options either (a) the consideration
payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition, (b) shares of stock of the surviving or
successor corporation or (c) such other securities as the Successor Board
deems appropriate, the fair market value of which shall not materially
exceed the fair market value of the shares of Common Stock subject to such
Options immediately preceding the Acquisition; or (ii) upon written notice
to the optionees, provide that all Options must be exercised, to the extent
then exercisable or to be exercisable as a result of the Acquisition,
within a specified number of days of the date of such notice, at the end of
which period the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the fair market value of
the shares subject to such Options (to the extent then exercisable or to be
exercisable as a result of the Acquisition) over the exercise price
thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the
Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise
the securities he or she would have received if he or she had exercised
such Option prior to such recapitalization or reorganization.
D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs
shall be made only after the Committee, after consulting with counsel for
the Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the
Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Committee determines that such adjustments made with respect
to ISOs would constitute a modification of
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<PAGE> 26
such ISOs or would cause adverse tax consequences to the holders, it may
refrain from making such adjustments.
E. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such
other time and subject to such other conditions as shall be determined by
the Committee.
F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
G. FRACTIONAL SHARES. No fractional shares shall be issued under
the Plan and the optionee shall receive from the Company cash in lieu of
such fractional shares.
H. ADJUSTMENTS. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall
also be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in United States dollars in
cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option, (c) at the discretion of the
Committee, by delivery of the grantee's personal recourse note bearing interest
payable not less than annually at no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise, or (e) at the
discretion of the Committee, by any combination of (a), (b), (c) and (d) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b), (c), (d) or
(e) of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of an Option shall not
have the rights of a shareholder with respect to the shares covered by such
Option until the date of issuance of a stock certificate to such holder for such
shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date such
stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on July
25, 1996, subject, with respect to the validation of ISOs granted under the
Plan, to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained prior to July 25, 1997, any grants of ISOs under
the Plan made prior to that date shall be Non-Qualified Options. The Plan shall
expire at the end of the day on
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<PAGE> 27
July 24, 2006 (except as to Options outstanding on that date). Subject to the
provisions of paragraph 5 above, Options may be granted under the Plan prior to
the date of stockholder approval of the Plan. The Board may terminate or amend
the Plan in any respect at any time, except that, without the approval of the
stockholders obtained within 12 months before or after the Board adopts a
resolution authorizing any of the following actions: (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustment pursuant to paragraph 13); (b) the provisions of paragraph 3
regarding eligibility for grants of ISOs may not be modified; (c) the provisions
of paragraph 6(B) regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment pursuant to paragraph
13); and (d) the expiration date of the Plan may not be extended. Except as
otherwise provided in this paragraph 15, in no event may action of the Board or
stockholders alter or impair the rights of a grantee, without such grantee's
consent, under any Stock Right previously granted to such grantee.
16. MODIFICATIONS OF ISOS; CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS.
Subject to Paragraph 13D, without the prior written consent of the holder of an
ISO, the Committee shall not alter the terms of such ISO (including the means of
exercising such ISO) if such alteration would constitute a modification (within
the meaning of Section 424(h)(3) of the Code). The Committee, at the written
request or with the written consent of any optionee, may in its discretion take
such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but shall not be limited to, extending the exercise period
or reducing the exercise price of the appropriate installments of such ISOs. At
the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. Upon the taking of such action, the
Company shall issue separate certificates to the optionee with respect to
Options that are Non-Qualified Options and Options that are ISOs.
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying Disposition (as described
in Sections 421, 422 and 424 of the Code and regulations thereunder) of any
stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 18), the vesting or transfer of restricted
stock or securities acquired on the exercise of an Option hereunder, or the
making of a distribution or other payment with respect to such stock or
securities, the Company may withhold taxes in respect of amounts that constitute
compensation includible in gross income. The Committee in its discretion may
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<PAGE> 28
condition (i) the exercise of an Option, (ii) the grant of an Award, (iii) the
making of a Purchase of Common Stock for less than its fair market value, or
(iv) the vesting or transferability of restricted stock or securities acquired
by exercising an Option, on the grantee's making satisfactory arrangement for
such withholding. Such arrangement may include payment by the grantee in cash or
by check of the amount of the withholding taxes or, at the discretion of the
Committee, by the grantee's delivery of previously held shares of Common Stock
or the withholding from the shares of Common Stock otherwise deliverable upon
exercise of a Option shares having an aggregate fair market value equal to the
amount of such withholding taxes.
20. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by grantees of Options in connection with
the Plan.
21. GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing Options shall be governed by the laws of the State of
Delaware, or the laws of any jurisdiction in which the Company or its successors
in interest may be organized.
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<PAGE> 29
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DAVOX CORPORATION
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alphonse M. Lucchese and James F. Mitchell
and each or either of them, proxies with full power of substitution to vote all
shares of stock of Davox Corporation (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
on Thursday, April 24, 1997, at 10:00 a.m. at the offices of the Company, 6
Technology Park Drive, Westford, Massachusetts, and at any adjournment thereof,
upon matters set forth in the Notice of Annual Meeting and Proxy Statement dated
March 21, 1996, a copy of which has been received by the undersigned. THIS PROXY
WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH YOUR INDICATED
DIRECTIONS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF DIRECTORS AND FOR PROPOSALS 2, 3 AND 4.
(TO BE SIGNED ON REVERSE SIDE)
----------------
SEE REVERSE
SIDE
---------------
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[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD Nominees: A.M. Lucchese
1. To fix the number [ ] [ ] M.D. Kaufman
of directors constituting W.J. Levison
the Board of Directors R.S. Asen
at four and to elect a Board of
Directors for the ensuing year.
INSTRUCTIONS: To withhold for a specific nominee,
write that nominee's name on the space provided.
- -------------------------------------------------
2. To approve an amendment to the Company's FOR AGAINST ABSTAIN
Amended and Restated Certificate of [ ] [ ] [ ]
Incorporation to increase the number
of authorized shares of Common Stock,
$.01 par value, from 10,000,000 to
30,000,000 shares.
3. To approve adoption of the Company's [ ] [ ] [ ]
1997 Stock Plan
4. To ratify the selection of the firm [ ] [ ] [ ]
of Arthur Andersen LLP as auditors for
the Company for the fiscal year ending
December 31, 1997
SIGNATURE(S) ________________ _________________________ Dated:___________, 1997
signature if held jointly
Note: Please sign exactly as your name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
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