<PAGE>
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement [_] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy materials
[_] Definitive additional materials
[_] 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):
[X] 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 transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
DAVOX CORPORATION
6 TECHNOLOGY PARK DRIVE
WESTFORD, MASSACHUSETTS 01886
________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 4, 2000
To The Stockholders of Davox Corporation:
Notice is Hereby Given that the Annual Meeting of Stockholders of Davox
Corporation, a Delaware corporation (the "Company"), will be held at 10:00 a.m.,
Boston time, on May 4, 2000, at the offices of the Company, 6 Technology Park
Drive, Westford, Massachusetts to consider and vote upon proposals:
1. To fix the number of directors constituting the Board of
Directors at three and to elect a Board of Directors for the ensuing year.
2. To approve an increase in the number of shares of Common Stock,
$.10 par value, available for issuance under the Davox 1996 Stock Plan to
3,350,000 shares.
3. To approve an increase in the number of shares of Common Stock,
$.10 par value, available for issuance under the Davox 1991 Employee Stock
Purchase Plan to 450,000 shares.
4. To ratify the selection of the firm of Arthur Andersen LLP as
auditors for the fiscal year ending December 31, 2000.
5. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
Only stockholders of record at the close of business on March 24, 2000 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting in person. To
ensure your representation at the meeting, however, you are urged to sign and
return the enclosed proxy card as promptly as possible in the enclosed postage-
prepaid envelope. You may revoke your proxy in the manner described in the
accompanying Proxy Statement at any time before it has been voted at the Annual
Meeting. Any stockholder attending the Annual Meeting may vote in person even if
he or she has returned a proxy.
By Order of the Board of Directors,
Timothy C. Maguire
Secretary
Westford, Massachusetts
March 31, 2000
<PAGE>
DAVOX CORPORATION
6 TECHNOLOGY PARK DRIVE
WESTFORD, MASSACHUSETTS 01886
_______________________________
PROXY STATEMENT
_______________________________
March 31, 2000
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 May 4, 2000 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 24, 2000 (the "Record Date") will
be entitled to vote at the meeting and any adjournments thereof. As of that
date, 14,556,094 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, 1999, 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 April 73, 2000.
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 (i) a proposal to
amend the Company's 1996 Stock Plan (the "1996 Stock Plan") to increase the
number of shares of Common Stock authorized for issuance pursuant to the 1996
Stock Plan, (ii) a proposal to amend the Company's 1991 Employee Stock Purchase
Plan (the "1991 Stock Plan") to increase the number of shares of Common Stock
authorized for issuance pursuant to the 1991 Stock Plan and (iii) 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
<PAGE>
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.
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote. 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>
MANAGEMENT AND PRINCIPAL STOCKHOLDERS OF DAVOX
The following table sets forth, as of March 24, 2000 (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:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Class
- ---------------------------- ------------------------ ----------------
<S> <C> <C>
Entities associated with 692,200(2) 5.1%
Amvescap PLC
1315 Peachtree Street, N.E.
Atlanta, GA 30309
Entities and an individual 1,058,750(3) 7.8%
associated with
Kopp Investment Advisors, Inc.
7701 France Avenue South
Suite 500
Edina, MN 55435
Entities associated with 1,348,525(4) 10.0%
Neuberger Berman, Inc.
605 Third Ave.
New York, NY 10158-3698
Alphonse M. Lucchese 597,705(5) 4.2%
R. Scott Asen 542,341(6) 4.0%
Michael D. Kaufman 307,550(7) 2.3%
John J. Connolly 73,898(8) *
Joseph R. Coleman 68,463(9) *
Douglas W. Smith 112,669(10) *
Mark Donovan 69,876(11) *
All Directors, Nominees and Executive 1,830,366(12) 12.6%
Officers as a group (11 Persons)
</TABLE>
______________________________
* Less than 1.0%.
(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 24, 2000.
(2) This information is as of December 31, 1999 and is based on a Schedule 13G
dated February 3, 2000 filed by Amvescap PLC.
-3-
<PAGE>
(3) This information is as of December 31, 1999 and is based on a Schedule 13G
dated February 4, 2000 filed by Kopp Investment Advisors, Inc.
(4) This information is as of December 31, 1999 and is based on a Schedule 13G
dated January 31, 2000 filed by Neuberger Berman, Inc.
(5) Includes 597,705 shares subject to options held by Mr. Lucchese exercisable
within 60 days of March 24, 2000.
(6) Includes 20,000 shares owned by Asen and Co. f/b/o SDFJ, Inc., 10,000
shares held by a company to which Mr. Asen, a Director of the Company,
provides certain advisory services and 2,500 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
487,341 shares individually owned by Mr. Asen and 22,500 shares subject to
options held by Mr. Asen that are exercisable within 60 days of March 24,
2000.
(7) Includes 150,000 shares held by MK Global Ventures, 5,000 shares held by MK
GVS Fund, 3,999 shares held by MK Global Management and 4,694 shares held
by MK GVS Management. Mr. 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 disclaims beneficial ownership of all shares
held by MK Global Ventures, MK GVS Fund, MK Global Management and MK GVS
Management. Also includes 121,357 shares individually owned by Mr. Kaufman
and 22,500 shares subject to options held by Mr. Kaufman that are
exercisable within 60 days of March 24, 2000.
(8) Includes 73,898 shares subject to options held by Mr. Connolly exercisable
within 60 days of March 24, 2000.
(9) Includes 63,187 shares subject to options held by Mr. Coleman exercisable
within 60 days of March 24, 2000.
(10) Includes 55,919 shares subject to options held by Mr. Smith exercisable
within 60 days of March 24, 2000.
(11) Includes 64,376 shares subject to options held by Mr. Donovan exercisable
within 60 days of March 24, 2000.
(12) Includes 946,336 shares subject to options held by officers and Directors
which are exercisable within 60 days of March 24, 2000. Also includes
shares held by entities associated with Messrs. Asen and Kaufman as
described in footnotes 6 and 7 respectively.
-4-
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
The directors of Davox 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 three 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 eight times, and took actions by written consent
seven times, during the year ended December 31, 1999. The Audit Committee of the
Board of Directors, of which R. Scott Asen and Michael D. Kaufman are members,
oversees the accounting and tax functions of Davox, including matters relating
to the appointment and activities of Davox's independent auditors. The Audit
Committee met once during the year ended December 31, 1999. The Compensation
Committee of the Board of Directors, of which R. Scott Asen and Michael D.
Kaufman are members, reviews and makes recommendations concerning executive
compensation. The Compensation Committee met three times, and took action by
written consent two times, during the year ended December 31, 1999. The Davox
Board does not currently have a standing nominating committee. Walter J.
Levison, a former director of the Company, was a member of the Audit Committee
and the Compensation Committee during the year ended December 31, 1999. 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
The following table sets forth the nominees for Director, their ages as of
the Record Date and their present positions with Davox.
Name Age Position
- --- --- --------
Alphonse M. Lucchese 64 President, Chairman of the Board of
Directors and Chief Executive Officer
Michael D. Kaufman (1)(2) 58 Director
R. Scott Asen (1)(2) 55 Director
___________________
(1) Member of Compensation Committee
(2) Member of Audit Committee
The By-Laws of the Company provide that Board of Directors shall be elected
annually. Officers are elected by, and serve at the discretion of, the Board of
Directors.
Mr. Lucchese has served as President of the Company since May 4, 1999,
Chief Executive Officer of the Company since July 1, 1994 and has served as a
Director and Chairman of the Board of Directors since August 9, 1994. In
addition, Mr. Lucchese served as President of the Company from
-5-
<PAGE>
July 1, 1994 until January 12, 1998. 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. 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 and MK
GVS 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 DISC, Inc., Human Phermone Sciences, Inc.
(formerly Erox Corp.), Hypermedia Communications, Inc., Asante Technologies,
Inc. and Syntellect, Inc.
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. and Pioneer IV, L.P.,
each a venture capital fund, a general partner of AB Associates, LP and a
manager-member of Pioneer III-A, LLP and Pioneer III-B, LLP, each an investment
management entity. Mr. Asen currently serves as a director of Barringer
Laboratories, Inc..
Director Compensation
All Non-employee Directors are compensated at a rate of $1,200 per meeting
of the Board of Directors attended and $500 per meeting of the Audit or
Compensation Committees 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 $8,000. Non-employee Directors are
also entitled to receive stock options pursuant to the 1988 Non-employee
Director Stock Option Plan.
Shares represented by all proxies received by the Board of Directors and
not marked so as to withhold authority to vote for any individual director (by
writing that individual director's name where indicated on the proxy) or for all
directors will be voted (unless one or more nominees are unable or unwilling to
serve) FOR the election of all the nominees named above. The the election of
directors will be determined by a plurality of the votes cast at the Annual
Meeting. The Board of Directors knows of no reason why any such nominee would be
unable or unwilling to serve, but if such should be the case, proxies may be
voted for the election of another person.
-6-
<PAGE>
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
The following table shows compensation information with respect to services
rendered to the Company in all capacities during the years ended December 31,
1999, 1998 and 1997 for (i) the individual who served as the Chief Executive
Officer as of December 31, 1999 and (ii) the other four most highly compensated
executive officers of the Company (collectively with the Chief Executive
Officer, the "Named Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation (1) Compensation (2)
----------------------- ----------------
Awards
----------------
Securities
Underlying All Other
Name and Options(4)/ Compensation
Principal Position Year Salary ($) Bonus ($)(3) SARs (#) ($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alphonse M. Lucchese................. 1999 354,168 205,957 100,000/0 0
President, Chairman and 1998 345,000 125,260 0 0
Chief Executive Officer 1997 330,000 230,672 299,999/0 0
Douglas W. Smith..................... 1999 201,670 97,761 10,000/0 0
Senior Vice President -
International Operations 1998 175,000 51,993 20,000/0 0
International Operations 1997 160,000 93,201 59,999/0 0
John J. Connolly..................... 1999 184,167 44,636 10,000/0 0
Senior Vice President - Finance 1998 171,250 25,552 10,000/0 0
and Chief Financial Officer 1997 156,250 45,508 59,999/0 0
Joseph R. Coleman.................... 1999 175,385 103,561 20,000/0 0
Senior Vice President - North 1998 131,669 37,417(5) 80,000/0 0
American Sales 1997 86,786 174,405(6) 47,500/0 0
Mark Donovan......................... 1999 184,167 44,636 10,000/0 0
Senior Vice President -- 1998 166,250 21,795 60,000/0 0
Customer Service and Operations 1997 132,000 30,756 29,999/0 0
</TABLE>
____________________
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or 10%
of the total salary and bonus reported.
(2) The Company did not grant any restricted stock awards or stock appreciation
rights ("SARs") or make any long term incentive plan payouts during the
fiscal years ended December 31, 1999, 1998 and 1997.
(3) Indicates bonus payments earned by the Named Officers in the year indicated,
for services rendered in such year, some of which were paid in the next
subsequent year.
(4) Reflects the stock split effected by the Company on May 28, 1997.
(5) Includes amounts earned as Director of Inbound Products and Senior Director
of Inbound Products, as well as Vice President of North American Sales.
(6) Includes amounts earned as Regional Vice President, Sales and Director of
Inbound Products and commissions and bonuses earned as a Senior Marketing
Representative.
-7-
<PAGE>
Options/SAR Grants in Last Fiscal Year
Shown below is information with respect to options to purchase the Company's
Common Stock granted to the Named Officers during the fiscal year ended December
31, 1999 under the Company's stock option plans. No stock appreciation rights
were granted to these individuals during such year.
Individual Grants
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options/SARs Potential Realizable Value at
Underlying Granted To Exercise of Assumed Annual Rates Of Stock
Option/SARs Employees In Base Price Price Appreciation for Option Term
Granted (#) Fiscal Year ($/Sh) Expiration Date 5% ($) 10% ($)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alphonse M. Lucchese 100,000/0 11.16% 14.63 October 21, 2009 828,133 2,184,950
Douglas W. Smith 10,000/0 1.12% 14.63 October 21, 2009 82,813 218,495
John J. Connolly 10,000/0 1.12% 8.56 January 26, 2009 50,795 131,601
Joseph R. Coleman 10,000/0 1.12% 14.63 October 21, 2009 82,813 218,495
10,000/0 1.12% 21.75 December 23, 2009 120,496 320,702
Mark Donovan 10,000/0 1.12% 8.56 January 26, 2009 50,795 131,601
</TABLE>
Option Exercises and Year-End Values
Shown below is information with respect to (i) exercises of stock options
of the Named Officers during the fiscal year ended December 31, 1999 and (ii)
unexercised options outstanding at December 31, 1999 and the value of such
unexercised in-the-money options at December 31, 1999.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year End Option
Values
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options/SARs at In-the-money
Acquired December 31, 1999 Options/SARs at
On Value (#) (December 31, 1999 ($)(2)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ---------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Alphonse M. Lucchese 0 0 547,705 212,501 6,366,910.89 500,000.00
Douglas W. Smith 56,750 683,727.47 44,668 47,502 71,446.54 151,718.75
John J. Connolly 0 0 73,897 38,752 607,516.19 113,671.87
Joseph R. Coleman 0 0 50,810 98,189 135,835.06 438,484.37
Mark Donovan 0 0 51,875 57,499 165,000.00 96,796.87
</TABLE>
_______________________
(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, 1999 ($19.63
per share, the last reported sales price of the Company's Common Stock on
the Nasdaq National Market System on December 31, 1999) multiplied by the
number of shares underlying the option.
-8-
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the two
member Compensation Committee of the Board of Directors (the "Compensation
Committee"). The two 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 1999 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 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.
Mr. Alphonse Lucchese is the President, Chief Executive Officer and a
Director of the Company. His fiscal 1999 performance was evaluated on the basis
of the factors described above applicable to officers generally. His base
salary was based on a number of factors, including the base salaries of
executives performing similar functions for peer companies. The annual bonus
component, as well as his salary, reflect the Company's financial performance,
the continued introduction and commercialization of new products and progress
toward achieving business goals and the achievement by Mr. Lucchese of non-
financial goals. In assessing Mr. Lucchese's performance for fiscal 1999, the
Compensation Committee took into account the degree to which the financial and
non-financial goals on which his compensation was based had been achieved.
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
Stock Plan"), administered by the Board of Directors, is the vehicle for the
granting of stock options.
The 1996 Stock Plan permits the Board of Directors to grant stock options
to eligible employees, including executive officers. Options become exercisable
in increments over time, contingent upon continued employment. The value
realizable from exercisable options is dependent upon the extent to
-9-
<PAGE>
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 "1991
Stock Plan") in which all executives may participate on the same terms as non-
executive employees who meet applicable eligibility criteria. The 1991 Stock
Plan provides for the sale of shares of the Company's Common Stock to employees
(as defined in the 1991 Stock Plan) of the Company pursuant to non-transferable
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 1991 Stock Plan. As of March 24, 2000, 141,968 shares of
Common Stock had been issued under the 1991 Stock Plan.
In general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Company cannot deduct, for federal income tax
purposes, compensation in excess of $1,000,000 paid to certain executive
officers. This deduction limitation does not apply, however, to compensation
that constitutes "qualified performance-based compensation" within the meaning
of Section 162(m) of the Code and the regulations promulgated thereunder. The
Company has considered the limitations on deductions imposed by Section 162(m)
of the Code, and it is the Company's present intention that, for so long as it
is consistent with its overall compensation objective, substantially all tax
deductions attributable to executive compensation will not be subject to the
deduction limitations of Section 162(m) of the Code.
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
-10-
<PAGE>
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, 1999, 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
30, 1994 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>
- ------------------------------------------------------------------------------------
12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Davox Corporation 100.00 220.93 767.45 910.02 212.69 547.40
Nasdaq Market Index 100.00 129.71 161.18 197.16 278.08 490.46
Peer Group Index 100.00 161.26 171.16 204.54 445.54 1015.23
- ------------------------------------------------------------------------------------
</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.
-11-
<PAGE>
SEVERANCE ARRANGEMENTS
Pursuant to the terms of an agreement between the Company and Alphonse M.
Lucchese, if Mr. Lucchese is terminated due to an economic layoff, a downsizing
or merger that eliminates his position or a reorganization or merger that would
require Mr. Lucchese to relocate, then the Company shall continue to provide Mr.
Lucchese with medical benefits for a period of twelve months and the Company
shall pay Mr. Lucchese twelve 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. The
Company will not be obligated to make any future payments if Mr. Lucchese
assumes new employment within twelve months from the date of his termination of
employment.
Pursuant to the terms of an agreement between the Company and John
Connolly, if Mr. Connolly is terminated for reasons other than for cause, then
the Company shall continue Mr. Connolly's base salary and medical benefits until
the earlier of (i) twelve months from the date of such termination of employment
or (ii) Mr. Connolly assumes new employment.
Pursuant to the terms of agreements between the Company and each of Joseph
Coleman, Mark Donovan and Douglas Smith (each, an "executive"), if the executive
is terminated due to an economic layoff, a downsizing that eliminates his
position or a reorganization that would require the executive to relocate, then
the Company shall continue the executive's base salary and medical benefits
until the earlier of (i) six months from the date of the executive's termination
of employment or (ii) the executive assumes new employment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF THE COMPANY
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 General Counsel of the Company and received
approximately $125,000 in compensation during the fiscal year ended December 31,
1999.
PROPOSAL II
PROPOSAL TO AMEND THE 1996 STOCK PLAN
The 1996 Stock Plan was adopted by the Company's Board of Directors in July
1996 and was approved by the Company's stockholders in April 1997. A maximum of
900,000 shares (as adjusted in connection with the stock split effected by the
Company in May 1997) of Common Stock were originally reserved for issuance under
the 1996 Stock Plan upon the exercise of options or in connection with awards of
stock of the Company or the opportunity to make direct stock purchases of shares
of the Company. At the Company's 1998 Annual Meeting of Stockholders held on
May 6, 1998, the Company's stockholders approved a proposal to increase the
total number of shares authorized for issuance pursuant to the 1996 Stock Plan
to 1,950,000 shares. At the Company's 1999 Annual Meeting of Stockholders held
on May 4, 1999, the Company's Stockholders approved a proposal to increase the
total number of shares authorized for issuance pursuant to the 1996 Stock Plan
to 2,7000,000 shares. The Board of Directors has approved and recommended to
the stockholders that they approve an increase in the number of shares
authorized for issuance pursuant to the 1996 Stock Plan by 650,000 shares to
3,350,000 shares.
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<PAGE>
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 believes that the
proposed increase in the number of shares available under the 1996 Stock Plan is
essential to permit the Company's management to continue to provide long-term,
equity-based incentives to present and future key employees.
The following table sets forth as of March 24, 2000 all options granted
under the 1996 Stock Plan since its inception to (i) each of the Named Officers,
(ii) each person who has received five percent or more of the stock options
granted under the 1996 Stock Plan, (iii) all current executive officers of the
Company as a group and (iv) all employees, excluding executive officers, of the
Company as a group. Non-employee directors of the Company are not eligible to
receive stock options under the 1996 Stock Plan and no non-employee director has
been granted stock options under the 1996 Stock Plan since its inception.
Future awards are in the discretion of the Board of Directors and cannot be
determined at this time.
<TABLE>
<CAPTION>
Number of Shares
Represented by Options (1)
----------------------------------
<S> <C>
Alphonse M. Lucchese* 399,999
President, Chairman and Chief Executive Officer
John J. Connolly 79,999
Senior Vice President - Finance and Chief Financial
Officer
Mark Donovan 109,999
Senior Vice President - Customer Service
and Operations
Douglas W. Smith 89,999
Senior Vice President - International Operations
Joseph R. Coleman* 147,500
Senior Vice President - North American Sales
Executive Group (9 persons) 1,052,495
Non-Executive Employee Group 1,463,040
</TABLE>
______________
* Persons who have received five percent or more of the stock options granted
under the 1996 Stock Plan.
(1) Options vest in eight equal semi-annual installments beginning six months
after date of grant. All stock 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.
Description of the 1996 Stock Plan
The purpose of the 1996 Stock Plan is to provide incentives to directors,
officers and other employees and consultants of the Company and of any present
or future parent or subsidiary of the Company by providing them with
opportunities to purchase stock of the Company and participate in the ownership
of the Company.
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<PAGE>
Under the 1996 Stock Plan, employees and officers of the Company may be
awarded incentive stock options ("ISO" or "ISOs"), as defined in Section 422(b)
of the Code, and directors (provided they are also employees), 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 Stock Plan provides for the issuance of a maximum of
2,700,000 shares of Common Stock of the Company pursuant to the grant of Stock
Rights. As of March 24, 2000, 473 employees (including one director who is also
an employee and officer of the Company) of the Company are eligible to
participate in the 1996 Stock Plan.
The 1996 Stock Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors. The Compensation Committee is currently
comprised of two outside directors, Michael D. Kaufman and R. Scott Asen.
Subject to the terms of the 1996 Stock 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 Stock 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 Stock 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 Stock 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 Stock 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 Stock
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 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, (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 or (iv) by any
combination of the above.
The 1996 Stock Plan limits to 750,000 shares (as adjusted in connection
with the stock split effected by the Company in May 1997) the number of shares
of Common Stock that any employee may acquire under the 1996 Stock Plan in any
one calendar year.
-14-
<PAGE>
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 disability, 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 Stock Plan, certain of which are subject to stockholder
approval, and may terminate the 1996 Stock Plan, at any time (although such
action shall not affect options previously granted). Any shares subject to an
option granted under the 1996 Stock Plan, which for any reason expire or
terminate unexercised, may again be available for future option grants. Unless
terminated sooner, the 1996 Stock 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 Rights granted under the 1996
Stock Plan, and certain other rights granted under the 1996 Stock 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
Stock 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 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 and the
optionee does not satisfy the requisite 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 disposition will be taxed to the optionee as
ordinary income in the year of such disposition.
-15-
<PAGE>
4. In any year that an optionee recognizes ordinary income on a
Disqualifying Disposition of shares acquired upon exercising an ISO, the Company
generally should 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 or her
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 Stock 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.
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 shares (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 should 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.
-16-
<PAGE>
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.
Awards and Purchases. The following general rules are applicable under
current federal income tax law to Awards and Purchases under the 1996 Stock
Plan.
Persons receiving shares pursuant to an Award or Purchase under the 1996
Stock 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 should be entitled to a corresponding federal income tax deduction.
When such shares are sold, the seller 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.
The Board of Directors recommends a vote FOR the proposal to approve the
amendment to the Company's 1996 Stock Plan.
PROPOSAL III
PROPOSAL TO AMEND THE 1991 STOCK PLAN
The 1991 Stock Plan was adopted by the Company's Board of Directors in
April 1991 and was approved by the Company's stockholders in June 1991. A
maximum of 150,000 shares (as adjusted in connection with the stock split
effected by the Company in May 1997) of Common Stock were originally reserved
for issuance under the 1991 Stock Plan upon the exercise of options. The Board
of Directors has approved and recommended to the stockholders that they approve
an increase in the number of shares authorized for issuance pursuant to the 1991
Stock Plan by 300,000 shares to 450,000 shares.
Description of the 1991 Stock Plan
The 1991 Stock Plan provides that all employees of the Company and
participating subsidiaries (including officers and directors) who work more than
twenty hours per week and more than five months in any calendar year on or
before the first day of the applicable offering period are eligible to
participate. However, no employee who holds five percent (5%) or more of the
Company's Common Stock is eligible to participate. Furthermore, no employee may
be granted an option pursuant to which the employee's right to purchase Common
Stock under the 1991 Stock Plan accrues at a rate which exceeds $25,000 of fair
market value of such stock per year.
The 1991 Stock Plan is administered by the Compensation Committee of the
Board of Directors. The Compensation Committee is currently comprised of two
outside directors, Michael D. Kaufman and R. Scott Asen. Subject to the terms of
the 1991 Stock Plan, the Committee has the authority to adopt rules and
regulations for carrying out the 1991 Stock Plan. As of March 24, 2000, 141,968
shares of Common Stock have been purchased under the 1991 Stock Plan and 8,032
remain available for purchase under the 1991 Stock Plan. Approximately 420
employees are currently eligible to participate in the 1991 Stock Plan.
-17-
<PAGE>
Eligible employees of the Company elect to participate in the 1991 Stock
Plan by giving notice to the Company and instructing the Company to withhold a
specified dollar amount from the employee's salary during the following six-
month period (the periods run from January 1 to June 30 and from July 1 to
December 31 and each is referred to as an "Offering Period"). On the last
business day of that Offering Period, the amount withheld is used to purchase
Common Stock at a price equal to 85% of the fair market value of the Common
Stock on either the first day of the Offering Period or on the last day of the
Offering Period, whichever is less (the "Option Exercise Price"). Fair market
value is the average of the high and low sales prices of the Company's Common
Stock as reported on the Nasdaq National Market System. The Company technically
grants an option to each participant, on the first day of the Offering Period,
to purchase, on the last day of the Offering Period, at the Option Exercise
Price, that number of shares of Common Stock that his or her accumulated payroll
deductions on the last day of the Offering Period will pay for at such price.
The option is automatically deemed to be exercised if the employee is still a
participant on the last day of the Offering Period. Participation ends
automatically upon termination of employment with the Company.
A participating employee may authorize a payroll deduction of any even
dollar amount, equal to not more than 10% of his or her base pay (including
commissions, if applicable), but not less than 0.5% per payroll period.
Deductions from any employee's compensation may not be increased or decreased
during an Offering Period. Under the 1991 Stock Plan, the number of shares
purchased at the end of any Offering Period may not be more than 375 shares of
Common Stock.
An employee may withdraw from the 1991 Stock Plan, and withdraw all of the
payroll deductions credited to his or her account under the 1991 Stock Plan, at
any time prior to the last business day of any Offering Period. Upon such a
withdrawal, the Company will refund without interest the entire remaining
balance of the employee's deductions.
Certain Federal Tax Information
The following discussion of United States federal income tax consequences
of the issuance and exercise of options granted under the 1991 Stock 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.
The 1991 Stock Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Code. An employee will not recognize income on
the grant or exercise of an option under the 1991 Stock Plan, and the Company
will not have a deduction. If the employee does not dispose of the shares of
Common Stock for at least two years from the grant of an option under the 1991
Stock Plan, the employee will realize ordinary income upon disposition
(including by sale, gift or death) in an amount equal to the lesser of: (i) the
excess of the fair market value of the Common Stock at the time of disposition
over the Option Exercise Price, or (ii) the excess of the fair market value of
the Common Stock at the time the Option was granted over the Option Exercise
Price15% of the fair market value of the Common Stock on the first day of the
Offering Period. Gain in excess of this amount, if any, will be taxed as long-
term capital gain. If the sale price is less than the price paid, the employee
will not recognize any ordinary income, and any loss that he suffers on the sale
will be a capital loss. The Company will not have a deductible compensation
expense as a result of the purchase of stock under the 1991 Stock Plan, unless
there is a premature disposition, as described below.
If shares purchased under the 1991 Stock Plan are sold by an employee
within two years after the option is granted, then the employee will realize
ordinary income in the year of disposition in an amount
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<PAGE>
equal to the excess of the fair market value of the shares on the date of
exercise over the Option Exercise Price. Any remaining gain will be treated as
capital gain, which may be long or short term, depending on the time that the
shares are held. If an employee does recognize ordinary income as a result of a
premature disposition, a compensation deduction is allowed to the Company in an
equal amount, provided the Company timely provides the recipient and the
Internal Revenue Service with a form W-2 or W-2c, whichever is applicable.
The Board of Directors recommends a vote FOR the proposal to approve the
amendment to the Company's 1991 Stock Plan.
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, 2000. 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.
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Annual Meeting other than those specifically set forth in the Notice of Meeting
and it knows of no matters to be brought before the Annual Meeting by others.
If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying proxies to vote such proxies
in accordance with the judgment of the Board of Directors.
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. The Company has retained Innisfree M&A Incorporated to
assist in the solicitation of proxies. The Company will bear all reasonable
solicitation fees and expenses and the Company estimates that such fees and
expenses should be approximately $15,000 in the aggregate.
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. John Cambray, an officer of the
Company, failed to file his Statement of Changes in Beneficial Ownership in a
timely manner when he sold 5,000 shares of the Company's Common Stock. Mr.
Cambray subsequently filed such a report that disclosed the aforementioned
transaction. Jeffrey E. Anderholm, an officer of the Company, failed to file
his Initial Statement of
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<PAGE>
Beneficial Ownership of Securities in a timely manner when he joined the Company
in February 1999. Mr. Anderholm subsequently filed such a report. Douglas Smith,
an officer of the Company, failed to file his Statement of Changes in Beneficial
Ownership in a timely manner when he exercised certain options totaling 56,750
shares of the Company's Common Stock. Mr. Smith subsequently filed such a report
that disclosed the aforementioned transaction. Walter Levison, a former director
of the Company, failed to file his Statement of Changes in Beneficial Ownership
in a timely manner in connection with several sales of the Company's Common
Stock in August 1999 and December 1999. Due to Mr. Levison's death in December
1999, no such filings were made or have been made to date. Based on its review
of the copies of such filings received by it with respect to the fiscal year
ended December 31, 1999 and written representations from certain Reporting
Persons, the Company believes that all other Reporting Persons complied with all
Section 16(a) filing requirements in 1999.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the Company's proxy
materials to be furnished to all stockholders entitled to vote at the 2001
Annual Meeting of Stockholders pursuant to SEC Rule 14a-8 must be received at
the Company's principal executive offices not later than December 3, 2000.
Stockholders who wish to make a proposal at the 2001 Annual Meeting - other than
one that will be included in the Company's proxy materials - should notify the
Company no later than February 16, 2001. If a stockholder who wishes to present
a proposal fails to notify the Company 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 SEC's
proxy rules.
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<PAGE>
DAVOX CORPORATION
1991 EMPLOYEE STOCK PURCHASE PLAN
Article 1 - Purpose.
- -------------------
This 1991 Employee Stock Purchase Plan (the "Plan") is intended as an
incentive to, and to encourage stock ownership by, all eligible employees of
Davox Corporation (the "Company") and participating subsidiaries so that they
may share in the growth of the Company by acquiring or increasing their
proprietary interest in the Company. The Plan is designed to encourage eligible
employees to remain in the employ of the Company. It is intended that options
issued pursuant to this Plan will constitute options issued pursuant to an
"employee stock purchase plan" within the meaning of Section 423(b) of the
Internal Revenue Code of 1986, as amended (the "Code").
Article 2 - Administration of the Plan.
- --------------------------------------
The Plan may be administered by a committee appointed by the Board of
Directors of the Company (the "Committee"). The Committee shall consist of not
less than two members of the Company's Board of Directors. The Board of
Directors may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, howsoever caused, shall be filled by the
Board of Directors. The Committee may select one of its members as Chairman,
and shall hold meetings at such times and places as it may determine. Acts by a
majority of the Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.
The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted under it shall be final, unless otherwise
determined by the Board of Directors. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best,
provided that any such rules and regulations shall be applied on a uniform basis
to all employees under the Plan. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
In the event the Board of Directors fails to appoint or refrains from
appointing a Committee, the Board of Directors shall have all power and
authority to administer the Plan. In such event, the word "Committee" wherever
used herein shall be deemed to mean the Board of Directors.
<PAGE>
Article 3 - Eligible Employees.
- ------------------------------
All employees of the Company or any of its participating subsidiaries who
have completed six months of employment with the Company or any of its
subsidiaries shall be eligible to receive options under this Plan to purchase
the Company's Common Stock, and all eligible employees shall have the same
rights and privileges hereunder. Persons who have been so employed for six
months or more on the first day of any Payment Period shall receive their
options as of such day. Persons who attain the status of employment for six
months or more after any date on which options are granted under this Plan shall
be granted options on the next date of the next succeeding Payment Period on
which options are granted to all eligible employees. Directors who are not also
employees of the Company shall not be eligible to receive options under this
Plan. In no event may an employee be granted an option if such employee,
immediately after the option is granted, owns stock possessing 5 percent or more
of the total combined voting power or value of all classes of stock of the
Company or of its parent corporation or subsidiary corporations, as the terms
"parent corporation" and "subsidiary corporation" are defined in Section 424(e)
and (f) of the Code. For purposes of determining stock ownership under this
paragraph, the rules of Section 424(d) of the Code shall apply, and stock which
the employee may purchase under outstanding options shall be treated as stock
owned by the employee.
For purposes of this Article 3, the term "employee" shall not include an
employee whose customary employment is 20 hours or less per week or whose
customary employment is for not more than 5 months in any calendar year.
Article 4 - Stock Subject to the Plan.
- -------------------------------------
The stock subject to the options under the Plan shall be shares of the
Company's authorized but unissued Common Stock, $.10 par value per share, or
shares of such Common Stock reacquired by the Company, including shares
purchased in the open market. The aggregate number of shares which may be
issued pursuant to the Plan is 100,000, subject to adjustment as provided in
Article 12. In the event 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, the unpurchased shares
subject thereto shall again be available under the Plan.
Article 5 - Payment Periods and Stock Options.
- ---------------------------------------------
The six-month periods, July 1 to December 31 and January 1 to June 30, are
Payment Periods during which payroll deductions will be accumulated under the
Plan. Each Payment Period includes only regular pay days falling within it.
The first Payment Period under the Plan may be a shortened Payment Period (i)
commencing on the later to occur of July 1, 1991 or the first day of the first
calendar month following effectiveness of the Form S-8 registration statement
filed with the Securities and Exchange Commission covering the shares to be
issued pursuant to the Plan and (ii) expiring on December 31, 1991.
-2-
<PAGE>
Twice each year, on the first business day of each Payment Period, the
Company will grant to each eligible employee who is then a participant in the
Plan an option to purchase on the last day of such Payment Period, at the Option
Price hereinafter provided for, a maximum of 250 shares, on condition that such
employee remains eligible to participate in the Plan throughout such Payment
Period. The participant shall be entitled to exercise such option so granted
only to the extent of the participant's accumulated payroll deductions on the
last day of such Payment Period. In the event that the participant's
accumulated payroll deductions on the last day of the Payment Period would
enable the participant to purchase more than 250 shares except for the 250-share
limitation, the excess of the amount of the accumulated payroll deductions over
the aggregate purchase price of the 250 shares shall be promptly refunded to the
participant by the Company, without interest. The Option Price for each Payment
Period shall be the lesser of (i) 85% of the average market price of the
Company's Common Stock on the first business day of the Payment Period or (ii)
85% of the average market price of the Company's Common Stock on the last
business day of the Payment Period, in either event rounded up to avoid
fractions of a dollar other than 1/4, 1/2 and 3/4. The foregoing limitation on
the number of shares which may be granted in any Payment Period and the Option
Price per share shall be subject to adjustment as provided in Article 12.
For purposes of this Plan, the term "average market price" on any date
means (i) the average (on that date) of the high and low prices of the Company's
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 System, if the Common Stock is not then
traded on a national securities exchange; or (iii) the average of the closing
bid and asked 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 System. If the Company's Common Stock is not
publicly traded at the time an option is granted under this Plan, "average
market price" shall mean the fair market 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.
For purposes of this Plan the term "business day" means a day on which
there is trading on the NASDAQ National Market System or on the aforementioned
national securities exchange, whichever is applicable pursuant to the preceding
paragraph.
No employee shall be granted an option which permits the employee's right
to purchase Common Stock under the Plan and under all other Section 423(b)
employee stock purchase plans of the Company or any parent or subsidiary
corporations to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined at the time such option is granted) for each calendar
year in which such option is outstanding at any time. The purpose of the
limitation in the preceding sentence is to comply with Section 423(b)(8) of the
Code.
-3-
<PAGE>
Article 6 - Exercise of Option.
- ------------------------------
Each eligible employee who continues to be a participant in the Plan on the
last business day of a Payment Period shall be deemed to have exercised his or
her option on such date and shall be deemed to have purchased from the Company
such number of full shares of Common Stock reserved for the purpose of the Plan
as his or her accumulated payroll deductions on such date will pay for at the
Option Price, subject to the 250-share limit of the option. If a participant is
not an employee on the last business day of a Payment Period, he or she shall
not be entitled to exercise his or her option. Only full shares of Common Stock
may be purchased under the Plan. Unused payroll deductions remaining in an
employee's account at the end of a Payment Period (other than amounts refunded
to the employee pursuant to Article 5) will be carried forward to the succeeding
Payment Period.
Article 7 - Authorization for Entering the Plan.
- -----------------------------------------------
An employee may enter the Plan by filling out, signing and delivering to
the Company an authorization:
A. Stating the percentage to be deducted regularly from the employee's pay;
B. Authorizing the purchase of stock for the employee in each Payment
Period in accordance with the terms of the Plan; and
C. Specifying the exact name in which stock purchased for the employee is
to be issued as provided under Article 11 hereof.
Such authorization must be received by the Company at least 10 days before
the beginning date of the next succeeding Payment Period.
Unless an employee files a new authorization or withdraws from the Plan,
the deductions and purchases under the authorization the employee has on file
under the Plan will continue from one Payment Period to succeeding Payment
Periods as long as the Plan remains in effect.
The Company will accumulate and hold for the employee's account the amounts
from his or her pay. No interest will be paid on these amounts.
Article 8 - Maximum Amount of Payroll Deductions.
- ------------------------------------------------
An employee may authorize payroll deductions in an amount not less than .5%
but not more than 10% of the employee's regular pay.
Article 9 - Change in Payroll Deductions.
- ----------------------------------------
Deductions may not be increased or decreased during a Payment Period.
However, an employee may withdraw in full from the Plan.
-4-
<PAGE>
Article 10 - Withdrawal from the Plan.
- -------------------------------------
An employee may withdraw from the Plan in whole but not in part, at any
time prior to the last business day of each Payment Period by delivering a
withdrawal notice to the Company, in which event the Company will promptly
refund the entire balance of the employee's deductions not theretofore used to
purchase stock under the Plan.
To re-enter the Plan, an employee who has previously withdrawn must file a
new authorization at least 10 days before the beginning date of the next Payment
Period. The employee's re-entry into the Plan cannot, however, become effective
before the beginning of the next Payment Period following his or her withdrawal.
Employees who are subject to Section 16 of the Securities Exchange Act of 1934,
as amended, may not re-enter the Plan earlier than the Payment Period beginning
six months following the date of withdrawal from the Plan by such employee.
Article 11 - Issuance of Stock.
- ------------------------------
Certificates for stock issued to participants will be delivered as soon as
practicable after each Payment Period.
Stock purchased under the Plan will be issued only in the name of the
employee, or if his or her authorization so specifies, in the name of the
employee and another person of legal age as joint tenants with rights of
survivorship.
Article 12 - Adjustments.
- ------------------------
Upon the happening of any of the following described events, an optionee's
rights under options granted hereunder shall be adjusted as hereinafter
provided:
A. In the event shares of Common Stock of the Company shall be subdivided
or combined into a greater or smaller number of shares or if, upon a merger,
consolidation, reorganization, split-up, liquidation, combination,
recapitalization or the like of the Company, the shares of the Company's
Common Stock shall be exchanged for other securities of the Company or of
another corporation, each optionee shall be entitled, subject to the
conditions herein stated, to purchase such number of shares of Common Stock
or amount of other securities of the Company or such other corporation as
were exchangeable for the number of shares of Common Stock of the Company
which such optionee would have been entitled to purchase except for such
action, and appropriate adjustments shall be made in the purchase price per
share to reflect such subdivision, combination, or exchange; and
B. In the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which shall
at the time be subject to option
-5-
<PAGE>
hereunder, each optionee upon exercising such an option shall be entitled to
receive (for the purchase price paid upon such exercise) the shares as to
which he or she is exercising his or her option and, in addition thereto (at
no additional cost), such number of shares of the class or classes in which
such stock dividend or dividends were declared or paid, and such amount of
cash in lieu of fractional shares, as is equal to the number of shares
thereof and the amount of cash in lieu of fractional shares, respectively,
which he or she would have received if he or she had been the holder of the
shares as to which he or she is exercising his or her option at all times
between the date of the granting of such option and the date of its exercise.
Upon the happening of any of the foregoing events, the class and aggregate
number of shares set forth in Article 4 hereof which are subject to options
which have been or may be granted under the Plan and the limitations set forth
in the second paragraph of Article 5 shall also be appropriately adjusted to
reflect the events specified in paragraphs A and B above. Notwithstanding the
foregoing, any adjustments made pursuant to subsections A or B shall be made
only to the extent that the Committee, based on advise of counsel for the
Company, determines that such adjustments will not constitute a change requiring
stockholder approval under Section 423(b)(2) of the Code.
If the Company is to be consolidated with or acquired by another entity in
a merger, a sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee shall, with respect to options then
outstanding under this Plan, either (i) make appropriate provision for the
continuation of such options by arranging for the substitution on an equitable
basis for the shares then subject to such options the consideration payable with
respect to the outstanding shares of the Company's Common Stock in connection
with the Acquisition; or (ii) terminate all outstanding options in exchange for
a cash payment equal to the excess of the fair market value of the shares
subject to the options (determined as of the date of the Acquisition) over the
Option Price thereof (determined with reference only to the first business day
of the applicable Payment Period).
The Committee shall determine the adjustments to be made under this Article
12, and its determination shall be conclusive.
Article 13 - No Transfer or Assignment of Employee's Rights.
- -----------------------------------------------------------
An employee's rights under the Plan are the employee's alone and may not be
transferred or assigned to, or availed of by, any other person other than by
will or the laws of descent and distribution. Any option granted to an employee
may be exercised, during the employee's lifetime, only by the employee.
Article 14 - Termination of Employee's Rights,
- ---------------------------------------------
An employee's rights under the Plan will terminate when he or she ceases to
be an employee because of retirement, resignation, lay-off, discharge, death,
change of status or for any
-6-
<PAGE>
other reason, except that if any employee is on a leave of absence from work
during the last three months of any Payment Period, he or she shall be deemed to
be a participant in the Plan on the last day of the Payment Period. A withdrawal
notice will be considered as having been received from the employee on the day
his or her employment ceases, and all payroll deductions not used to purchase
stock will be refunded.
If an employee's payroll deductions are interrupted by any legal process, a
withdrawal notice will be considered as having been received from the employee
on the day the interruption occurs.
Article 15 - Termination and Amendments to Plan.
- -----------------------------------------------
The Plan may be terminated at any time by the Company's Board of Directors
but such termination shall not affect options then outstanding under the Plan.
It will terminate in any case when all or substantially all of the unissued
shares of stock reserved for the purposes of the Plan have been purchased. If
at any time shares of stock reserved for the purpose of the Plan remain
available for purchase but not in sufficient number to satisfy all then unfilled
purchase requirements, the available shares shall be apportioned among
participants in proportion to their options and the Plan shall terminate. Upon
such termination or any other termination of the Plan, all payroll deductions
not used to purchase stock will be refunded.
The Committee or the Board of Directors may from time to time adopt
amendments to the Plan provided that, without the approval of the shareholders
of the Company, no amendment may increase the number of shares that may be
issued under the Plan or change the class of employees eligible to receive
options under the Plan.
Article 16 - Limitations on Sale of Stock Purchased
- ---------------------------------------------------
Under the Plan.
- --------------
The Plan is intended to provide Common Stock for investment and not for
resale. The Company does not, however, intend to restrict or influence any
employee in the conduct of his or her own affairs. An employee may, therefore,
sell stock purchased under the Plan at any time the employee chooses, subject to
compliance with any applicable Federal or state securities laws; provided,
however, that because of certain Federal tax requirements, each employee agrees
by entering the Plan, promptly to give the Company notice of any such stock
disposed of within two years after the date of grant of the applicable option
showing the number of such shares disposed of. THE EMPLOYEE ASSUMES THE RISK OF
ANY MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.
Article 17 - Participating Subsidiaries.
- ---------------------------------------
The term "participating subsidiaries" shall mean any subsidiary of the
Company, as that term is defined in Section 424(f) of the Code, which is
designated by the Board of Directors to
-7-
<PAGE>
participate in the Plan. The Board of Directors shall have the power to make
such designation before or after the Plan is approved by the shareholders.
Article 18 - Optionees Not Shareholders.
- ---------------------------------------
Neither the granting of an option to an employee nor the deductions from
his or her pay shall constitute such employee a shareholder of the shares
covered by an option until such shares have been purchased by and issued to the
employee.
Article 19 - Application of Funds.
- ---------------------------------
The proceeds received by the Company from the sale of Common Stock pursuant
to options granted under the Plan will be used for general corporate purposes.
Article 20 - Governmental Regulations.
- -------------------------------------
The Company's obligation to sell and deliver shares of the Company's 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,
including the Securities and Exchange Commission and the Internal Revenue
Service.
The Company intends to apply to the Internal Revenue Service for a ruling
regarding the tax aspects of the Plan. If the Company does not receive a
favorable tax ruling before the last day of the first Payment Period under the
Plan, December 31, 1991, the Company reserves the right to rescind all options
granted to employees on the first day of such Payment Period, in which event all
payroll deductions will be promptly refunded to participating employees without
interest.
Article 21 - Approval of Shareholders.
- -------------------------------------
The Plan shall be subject to approval by the holders of a majority of the
shares of the Common Stock of the Company present or represented by proxy at a
duly called meeting of shareholders, which approval must occur by April 22,
1992. The Plan was adopted by the Board of Directors on April 22, 1991 subject
to approval by the shareholders. In the event that the approval of the
shareholders is not received by April 22, 1992, any and all options granted
prior to April 22, 1992 shall be rescinded, and the Company will promptly refund
the entire balance of each participating employee's deductions. In addition, in
such event the Plan will be deemed terminated as of April 22, 1992.
-8-
<PAGE>
Exhibit 4.1
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.
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
1
<PAGE>
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 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
2
<PAGE>
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 900,000 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 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
3
<PAGE>
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
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).
4
<PAGE>
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
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
5
<PAGE>
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
such ISOs or would cause adverse tax consequences to the holders, it may refrain
from making such adjustments.
6
<PAGE>
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 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
7
<PAGE>
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
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
8
<PAGE>
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.
9
<PAGE>
AMENDMENT NO. 1
TO THE
DAVOX CORPORATION
1996 STOCK PLAN
Pursuant to action taken by the Board of Directors of Davox Corporation
(the "Corporation") on April 27, 1997, the Corporation's 1996 Stock Plan (the
"Plan") is amended effective as of such date by:
1. Amending and restating Section 6(A) thereof so that said Section 6(A) shall
read in its entirety as follows:
"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 (i) 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, (ii) options representing the right to purchase in the aggregate a
maximum of ten percent (10%) of the number of shares authorized under the Plan
(as set forth in Section 4 hereof) may be granted with exercise prices below
fair market value, and (iii) no option may be granted with an exercise price of
less than eighty-five percent (85%) of fair market value. 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."
Except as modified hereby, the Plan shall remain in full force and effect.
10
<PAGE>
AMENDMENT NO. 2
TO THE
DAVOX CORPORATION
1996 STOCK PLAN
Pursuant to actions taken by the Board of Directors of Davox Corporation
(the "Corporation"), the Corporation's 1996 Stock Plan (the "Plan") is amended
as follows:
1. Amending Section 4 thereof to increase the Plan Share Limit so that the
aggregate number of shares which may be issued pursuant to the Plan is increased
to 1,950,000 shares.
Except as modified hereby, the Plan shall remain in full force and effect.
11
<PAGE>
AMENDMENT NO. 3
TO THE
DAVOX CORPORATION
1996 STOCK PLAN
Pursuant to action taken by the Board of Directors of Davox Corporation
(the "Corporation") on July 23, 1998, the Corporation's 1996 Stock Plan (the
"Plan") is amended effective as of such date by:
1. Amending and restating the first (1st) sentence of Section 2(C) of the
Plan so that said sentence shall read in its entirety as follows:
"Stock Rights may be granted to members of the Board who are also employees
of the Company; members of the Board who are not employees of the Company
shall not be eligible to receive Stock Rights."
2. Amending and restating the second (2nd) sentence of Section 3 of the
Plan so that said sentence shall read in its entirety as follows:
"Non-Qualified Options, Awards and authorizations to make Purchases may be
granted to any employee, officer or director (provided such director is
also an employee) or consultant of the Company or any Related Corporation."
3. Amending and restating the fifth (5th) sentence of Section 15 of the
Plan so that said sentence shall read in its entirety as follows:
"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
Stock Rights 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);
(d) the expiration date of the Plan may not be extended; (e) the exercise
price of more than ten percent (10%) of outstanding ISOs may not be
reduced; and (f) benefits under the Plan and the group of persons eligible
to receive Stock Rights under the Plan may not be increased."
Except as modified hereby, the Plan shall remain in full force and effect.
12
<PAGE>
AMENDMENT NO. 4
TO THE
DAVOX CORPORATION
1996 STOCK PLAN
Pursuant to action taken by the Board of Directors of Davox Corporation
(the "Corporation") on January 26, 1999, the Corporation's 1996 Stock Plan (the
"Plan") is amended effective as of such date by:
1. Amending Section 4 thereof to increase the Plan Share Limit so that the
aggregate number of shares which may be issued pursuant to the Plan is increased
to 2,700,000 shares.
Except as modified hereby, the Plan shall remain in full force and effect.
13
<PAGE>
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, May 4, 2000, 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
relating thereto dated March 31, 2000, 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 1, 2, 3, 4 and 5.
(To be signed on reverse side.)
-----------
SEE REVERSE
SIDE
-----------
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible.
Annual Meeting of Stockholders
DAVOX CORPORATION
May 4, 2000
Please Detach and Mail in the Envelope Provided
A Please mark your
[X] votes as in this
example.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHOLD Nominees: A.M. Lucchese FOR AGAINST ABSTAIN
To fix the number M.D. Kaufman 2. To approve an increase in the number of
of directors [_] [_] R.S. Asen shares available for issuance under the
constituting the Company's 1996 Stock Plan to 3,350,000. [_] [_] [_]
Board of Directors
at three and to elect a Board of 3. To approve an increase in the number of
Directors for the ensuing year. shares available for issuance under the
Company's 1991 Employee Stock Purchase
INSTRUCTIONS: To withhold for a Plan to 450,000. [_] [_] [_]
specific nominee, write that
nominee's name on the space 4. To ratify the selection of the firm of
provided. Arthur Andersen LLP as auditors for the
Company for the fiscal year ending
- ------------------------------------- December 31, 2000. [_] [_] [_]
5. To consider and act upon any other
matters that may properly be brought
before the Annual Meeting of
Stockholders of the Company. [_] [_] [_]
SIGNATURE(S) SIGNATURE IF HELD JOINTLY DATED 2000
------------------------------- ------------------------------ --------------------
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.
</TABLE>
