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-12
Davox Corporation
-----------------
(Name of Registrant as Specified in Its Charter)
_______________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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:
Davox Corporation
6 Technology Park Drive
Westford, Massachusetts 01886
----------------
Notice of Annual Meeting of Stockholders
To Be Held May 2, 2002
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.,
Eastern Standard Time, on May 2, 2002, at the offices of the Company, 6
Technology Park Drive, Westford, Massachusetts to consider and vote upon the
following proposals:
1. To fix the number of directors constituting the Board of
Directors at five (5) and to elect a Board of Directors for the ensuing
year.
2. To consider and act upon a proposal to approve an amendment to
the Company's Restated Certificate of Incorporation, as amended, to change
the name of the Company to Concerto Software, Inc.
3. 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 22, 2002 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,
Paul R. Lucchese
Secretary
Westford, Massachusetts
April 2, 2002
Davox Corporation
6 Technology Park Drive
Westford, Massachusetts 01886
-------------------------------
Proxy Statement
-------------------------------
April 2, 2002
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 2, 2002 at 10:00 a.m.
Eastern Standard Time at the offices of the Company, 6 Technology Park Drive,
Westford, Massachusetts 01886.
Only stockholders of record as of March 22, 2002 (the "Record Date") will
be entitled to vote at the meeting and any adjournments thereof. As of that
date, 12,244,756 shares of Common Stock, $.10 par value, of the Company were
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, 2001, 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 2, 2002.
The persons named as attorneys in the proxy card are directors and/or
officers of the Company. All properly executed proxies returned in time to be
counted at the meeting will be voted as stated below under "Election of
Directors." Any stockholder giving a proxy has the right to withhold authority
to vote for any individual nominee to the Board of Directors by writing that
nominee's name in the space provided on the proxy. In addition to the election
of directors, the stockholders will consider and vote upon a proposal to approve
an amendment to the Company's Restated Certificate of Incorporation, as amended
(the "Certificate of Incorporation"), to change the name of the Company 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 outstanding and entitled to vote at the meeting is
necessary to constitute a quorum for the transaction of business. Votes withheld
from any nominee for election as director, as well as abstentions and broker
"non-votes" with respect to all other matters being submitted to stockholders,
are counted as present or represented for purposes of determining the presence
or absence of a quorum for the meeting. A "non-vote" occurs when a nominee
holding shares for a beneficial owner votes on one proposal, but does not vote
on another proposal because, in respect of such other proposal, the nominee does
not have discretionary voting power and has not received instructions from the
beneficial owner.
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote. Approval of the
amendment to the Certificate of Incorporation will require the affirmative vote
of a majority of the outstanding shares of Common Stock of the Company. 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. Abstentions are included in the number of
shares present or represented and voting on each matter and, therefore, with
respect to votes on specific proposals, will have the effect of negative votes.
Except with respect to the vote as to the amendment to the Certificate of
Incorporation, broker "non-votes" are not so included.
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
Management And Principal Stockholders Of Davox
The following table sets forth, as of the Record Date (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:
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Class
------------------------ ------------------------ ----------------
Entities associated with 1,351,875(2) 11.04%
Neuberger Berman, Inc.
605 Third Ave.
New York, NY 10158-3698
Individuals associated with Sterling Capital 1,303,975(3) 10.65%
Management LLC and Sterling MGT, Inc.
301 S. College Street, Suite 3200 Charlotte,
NC 28202
Entities and an individual associated with 1,049,400(4) 8.57%
Kopp Investment Advisors, Inc.
7701 France Avenue South
Suite 500
Edina, MN 55435
Entities and Individuals associated with 951,200(5) 7.77%
Cannell Capital LLC
150 California Street
5th Floor
San Francisco, CA 94111
Alphonse M. Lucchese 710,206(6) 5.80%
R. Scott Asen 556,941(7) 4.55%
Michael D. Kaufman 351,207(8) 2.87%
Peter Gyenes 20,000(9) *
James D. Foy 75,000(10) *
Mark Donovan 124,874(11) 1.02%
Michael J. Provenzano, III 39,812(12) *
Jeffrey E. Anderholm 64,425(13) *
Anthony Colangelo 35,000(14) *
David M. Sample 150,000(15) 1.23%
Mark Zabroske 46,750(16) *
All Directors, Nominees and Executive Officers 2,174,215(17) 17.76 %
as a group (11 Persons)
------------------------------
* Less than 1.0%.
3
(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 22, 2002.
(2) This information is as of December 31, 2001 and is based on a Schedule 13G
dated February 12, 2002 filed by Neuberger Berman, Inc.
(3) This information is as of December 31, 2001 and is based on a Schedule 13G
dated February 6, 2002 filed by Sterling Capital Management LLC and
Sterling MGT, Inc.
(4) This information is as of December 31, 2001 and is based on a Schedule 13G
dated January 24, 2002 filed by Kopp Investment Advisors, Inc.
(5) This information is as of December 31, 2001 and is based on a Schedule 13G
dated February 14, 2002 filed by Cannell Capital LLC.
(6) Includes 577,706 shares subject to options held by Mr. Lucchese that are
exercisable within 60 days of March 22, 2002.
(7) Includes (i) 17,000 shares held by a company to which Mr. Asen, a Director
of the Company, provides certain advisory services, (ii) 3,000 shares held
by an individual to which Mr. Asen provides certain advisory services,
(iii) 6,500 shares held by the IRA of an individual to whom Mr. Asen
provides certain advisory services and (iv) 23,100 shares held by a
company to which 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 20,000 shares subject to
options held by Mr. Asen that are exercisable within 60 days of March 22,
2002.
(8) Includes (i) 150,000 shares held by MK Global Ventures, (ii) 5,000 shares
held by MK GVS Fund, (iii) 6,456 shares held by MK Global Management and
(iv) 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, MK GVS Fund, MK Global Management and MK GVS
Management. 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 162,557 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 22, 2002.
(9) Includes 20,000 shares subject to options held by Mr. Gyenes that are
exercisable within 60 days of March 22, 2002.
(10) Includes 75,000 shares subject to options held by Mr. Foy exercisable
within 60 days of March 22, 2002.
(11) Includes 119,374 shares subject to options held by Mr. Donovan exercisable
within 60 days of March 22, 2002.
(12) Includes 38,750 shares subject to options held by Mr. Provenzano
exercisable within 60 days of March 22, 2002.
(13) Includes 60,625 shares subject to options held by Mr. Anderholm
exercisable within 60 days of March 22, 2002.
(14) Includes 28,000 shares subject to options held by Mr. Colangelo
exercisable within 60 days of March 22, 2002.
(15) Includes 148,000 shares subject to options held by Mr. Sample that are
exercisable within 60 days of March 22, 2002.
(16) Includes 46,750 shares subject to options held by Mr. Zabroske exercisable
within 60 days of March 22, 2002.
(17) Includes 1,156,705 shares subject to options held by Executive Officers
and Directors which are exercisable within 60 days of March 22, 2002. Also
includes shares held by entities associated with Messrs. Asen and Kaufman
as described in footnotes 7 and 8 respectively.
4
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 five (5) 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 nine times, and took actions by written consent
ten times, during the year ended December 31, 2001. Mr. James D. Foy was
appointed to the Board of Directors on September 4, 2001. The Audit Committee of
the Board of Directors, of which R. Scott Asen, Peter Gyenes and Michael D.
Kaufman are members, oversees the financial reporting, accounting and tax
functions of the Company, including matters relating to the appointment and
activities of Davox's independent auditors. The Audit Committee met five times
during the year ended December 31, 2001. The Compensation Committee of the Board
of Directors, of which R. Scott Asen, Peter Gyenes and Michael D. Kaufman are
members, reviews and makes recommendations concerning executive compensation.
The Compensation Committee met two times, and took action by written consent
nine times, during the year ended December 31, 2001. The Board of Directors does
not currently have a standing nominating committee. Each of the directors
attended at least 85% 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 66 Chairman of the Board of Directors and
Board Advisor
James D. Foy 55 President, Chief Executive Officer and
Director
R. Scott Asen (1)(2) 57 Director
Peter Gyenes (1)(2) 56 Director
Michael D. Kaufman (1)(2) 59 Director
-------------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
The By-Laws of the Company provide that the Board of Directors shall be
elected annually. Officers are elected by, and serve at the discretion of, the
Board of Directors.
5
Mr. Lucchese 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 July 1, 1994 until January 12, 1998 and from May 4, 1999 until
November 7, 2000, and as Chief Executive Officer of the Company from July 1,
1994 until November 7, 2000. On November 7, 2000 Mr. Lucchese retired from the
positions of President and Chief Executive Officer.
Mr. Foy serves as President, Chief Executive Officer and Director. Mr. Foy
joined the Company in September 2001. Prior to joining the Company, Mr. Foy
served as President of Informix Software Corporation, a global enterprise
software company, from July 2000 to August 2001 and Executive Vice President of
the Transaction Business Group from April 1999 through June 2000. Mr. Foy also
served as Vice President of Engineering at Ardent Software Inc. (formerly Vmark
Software Inc.), an international enterprise software company, from April 1995
through March 1999.
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. Gyenes has been a Director of the Company since May 2000. Mr. Gyenes
has been the Chief Executive Officer of Ascential Software Corporation (formerly
Informix Corporation), an asset management solutions company, since July 2000.
Prior to joining Ascential Software, Mr. Gyenes was the Chief Executive Officer
of Ardent Software Inc. (formerly Vmark Software Inc.), an international
enterprise software company, from 1997 until 2000 and Vice President of Sales
for Vmark Software from 1996 until 1997.
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.
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 $8,000. Non-employee Directors are
also entitled to receive stock options pursuant to the 1988 Non-Employee
Director Stock Option Plan and the 2001 Stock Option Plan.
The Board of Directors recommends a vote FOR the proposal to approve the
election of the Board of Directors.
6
Compensation and Other Information
Concerning Directors and Officers
The following table shows compensation information with respect to services
rendered to the Company in all capacities during the years ended December 31,
2001, 2000 and 1999 for (i) the two individuals who served as Chief Executive
Officer of the Company for the year ended December 31, 2001, (ii) the four most
highly compensated executive officers of the Company, and (iii) an officer who
would have been listed but for the fact that he was no longer an executive
officer on December 31, 2001 (such individuals are collectively referred to as
the "Named Officers"):
Summary Compensation Table
Long Term
Annual Compensation (1) Compensation
------------------------------------------ Awards(2)
Other Annual Securities All Other
Name and Compensation Underlying Options/ Compensation
Principal Position Year Salary ($) Bonus ($)(3) ($) SARs (#) ($)
------------------------------- ------- ---------- ------------ ------------ ------------------- ------------
James D. Foy ................... 2001(4) 133,333 75,576 - 600,000 -
President & Chief Executive 2000 - - - - -
Officer 1999 - - - - -
David M. Sample ................ 2001 231,250 190,000(5) - - 463,750(5)
President & Chief Executive 2000 49,242 36,900 - 400,000/0 -
Officer 1999 - - - - -
Anthony Colangelo .............. 2001 237,375 109,896 39,343(6) - -
Executive Vice President 2000 18,750 - - 140,000/0 -
Global Sales 1999 - - - - -
Jeffrey E. Anderholm ........... 2001 237,375 72,082 - 25,000/0 -
Executive Vice President 2000 203,125 58,729 - 35,000/0 -
Product Group 1999 145,833 47,532 - 60,000/0 -
Mark Donovan ................... 2001 209,167 46,546 - 15,000/0 -
Senior Vice President - 2000 199,167 31,128 - 20,000/0 -
Customer Service and 1999 184,167 44,636 - 10,000/0 -
Operations
Mark Zabroske .................. 2001 208,333 65,350 - 25,000/0 -
Vice President - North 2000(7) 161,591 55,252 - 50,000/0 -
American Sales 1999(8) 106,669 176,183 - 10,000/0 -
Michael J. Provenzano, III ..... 2001 183,750 48,640 - 40,000/0 -
Vice President, Finance & 2000(9) 154,583 19,817 - 40,000/0 -
Chief Financial Officer 1999(9) 20,405 - - 22,000/0 -
--------------------------------------------------------------------------------
(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, 2001, 2000 and 1999.
(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
subsequent year.
7
(4) Mr. Foy began employment as President and Chief Executive Officer on
September 4, 2001.
(5) Indicates the total severance payment to Mr. Sample pursuant to a severance
agreement and release dated August 31, 2001 entered into by Mr. Sample and
the Company (the "Severance Agreement") in connection with Mr. Sample's
departure from the Company. Pursuant to the Severance Agreement, Mr. Sample
shall receive a total severance payment of $575,000, which represents (i)
$111,250 in bonus earned during 2001, of which $37,083 was paid in 2001 and
$74,167 will be paid in 2002, and (ii) $463,750 in severance payments, of
which $154,584 was paid in 2001 and $309,166 will be paid in 2002.
(6) Indicates the amount of principal and accrued interest forgiven on December
31, 2001 pursuant to the terms of Mr. Colangelo's loan agreement with the
Company.
(7) Includes amounts earned as Director North American Sales.
(8) Includes amounts earned as Regional Vice President, Sales.
(9) Includes amounts earned as Corporate Controller.
Options/SAR Grants in Last Fiscal Year
Shown below is information with respect to options to purchase the Company's
Common Stock granted to the Named Officers during the fiscal year ended December
31, 2001 under the Company's stock option plans. No stock appreciation rights
were granted to these individuals during such year.
Individual Grants
Number of Percent of
Securities Total Potential Realizable Value
Underlying Options/SARs at Assumed Annual Rates Of
Option/SARs Granted To Exercise of Stock Price Appreciation
Granted Employees In Base Price for Option Term(2)
(#)(1) Fiscal Year ($/Sh) Expiration Date 5% ($) 10% ($)
----------- ------------ ----------- ----------------- ---------------------------
James D. Foy 600,000/0 37.46% 9.46 September 4, 2011 3,569,606 9,046,082
David M. Sample -/- - - - - -
Anthony Colangelo -/- - - - - -
Jeffrey E. Anderholm 25,000/0 1.56% 9.69 February 26, 2011 152,318 386,004
Mark Donovan 15,000/0 0.94% 9.69 February 26, 2011 91,391 231,603
Mark Zabroske 25,000/0 1.56% 9.69 February 26, 2011 152,318 386,004
Michael J. Provenzano, III 40,000/0 2.50% 9.69 February 26, 2011 243,709 617,607
(1) The exercise price per share of each option was determined by the
Compensation Committee to be equal to the last reported sales price of the
Company's Common Stock on the Nasdaq National Market System on the day
prior to the date of grant.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation of the
Company's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
growth. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the timing of such exercises and the future
performance of the Company's Common Stock. There can be no assurance that
the rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the individuals.
8
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, 2001 and (ii)
unexercised options outstanding at December 31, 2001 and the value of such
unexercised in-the-money options at December 31, 2001.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year End Option Values
Number of Unexercised Value of Unexercised
Shares Options/SARs at In-the-Money
Acquired December 31, 2001 Options/SARs at
On Value (#)(1) December 31, 2001 ($)(2)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
James D. Foy - - - 600,000 - 126,000.00
David M. Sample(3) 2,000 2,280.00 148,000 - 228,659.99 -
Anthony Colangelo - - 35,000 105,000 54,074.99 162,224.99
Jeffrey E. Anderholm - - 46,875 73,125 35,034.25 42,402.75
Mark Donovan - - 106,249 38,125 67,924.87 13,630.87
Mark Zabroske - - 34,875 63,875 4,153.12 4,153.12
Michael J. Provenzano, III - - 26,000 76,000 15,850.00 47,550.00
_______________________
(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, 2001
($9.67 per share, the last reported sales price of the Company's Common
Stock on the Nasdaq National Market System on December 31, 2001)
multiplied by the number of shares underlying the option.
(3) On October 6, 2000, the Company granted Mr. Sample an option to purchase
400,000 shares of the Company's Common Stock (the "Option") under the
Company's 1996 Stock Plan. In connection with Mr. Sample's departure from
the Company, Mr. Sample and the Company entered into a Severance
Agreement (as defined in footnote 6 on page 9). Pursuant to the terms of
the Severance Agreement, the Company accelerated the vesting of the
Option such that Mr. Sample was entitled to purchase a total of 150,000
shares of the Company's Common Stock. Mr. Sample's right to purchase the
remaining 250,000 shares of the Company's Common Stock pursuant to the
Option expired upon his departure from the Company.
9
Compensation Committee Report On Executive Compensation
The Company's executive compensation program is administered by the three
member Compensation Committee of the Board of Directors (the "Compensation
Committee"). The three members of the Compensation Committee are all
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 2001 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.
Until August 31, 2001 Mr. David M. Sample was the President and Chief
Executive Officer of the Company. His fiscal 2001 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. Sample of
non-financial goals. In assessing Mr. Sample's performance for fiscal 2001, 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.
Mr. James D. Foy joined the Company on September 4, 2001, as the President
and Chief Executive Officer. His beginning 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. Foy of non-financial goals.
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
10
employment. The value realizable from exercisable options is dependent upon the
extent to which the Company's performance is reflected in the market price of
the Company's Common Stock at any particular point in time.
The Company also maintains the 1991 Employee Stock Purchase Plan (the "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 22, 2002, 227,818 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
Compensation Committee has considered the limitations on deductions imposed by
Section 162(m) of the Code, and it is the Compensation Committee'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.
The members of the Compensation Committee have submitted this report:
R. Scott Asen
Peter Gyenes
Michael D. Kaufman
11
Audit Committee Report
This report is submitted by the Audit Committee of the Board of Directors,
which reviews with the independent auditors and management the annual financial
statements and independent auditors' opinion, reviews the results of the audit
of the Company's financial statements with the independent auditors, recommends
the retention of the independent auditors to the Board of Directors and
periodically (at least quarterly) reviews the Company's accounting policies and
internal accounting and financial controls for the fiscal year ended December
31, 2001. The Audit Committee is composed of Messrs. Asen, Gyenes, and Kaufman.
None of Messrs. Asen, Gyenes, and Kaufman are officers or employees of the
Company, and aside from being directors of the Company, each is otherwise
independent of the Company (as independence is defined pursuant to Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards). The Audit Committee operates under a written charter adopted by the
Board of Directors.
The Audit Committee has reviewed the audited balance sheets of the Company
for the fiscal years ending December 31, 2001 and December 31, 2000, and the
audited statements of operations, stockholders' equity and comprehensive income
(loss) and cash flows for each of the three years ended December 31, 2001, and
has discussed them with both management and Arthur Andersen LLP, the Company's
independent auditors. The Audit Committee has also discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees), as currently
in effect. The Audit Committee has received the written disclosures and the
letter from the independent auditors required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), as currently in
effect, and has discussed with Arthur Andersen LLP that firm's independence.
Based on its review of the financial statements and these discussions, the Audit
Committee concluded that it would be reasonable to recommend, and on that basis
did recommend, to the Board of Directors that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2001.
In view of the highly publicized events involving Arthur Andersen LLP,
including its recent indictment, the Audit Committee and the Board of Directors
will continue to monitor and respond accordingly to the Company's engagement of
Arthur Andersen LLP and other developments relating to that firm.
The members of the Audit Committee have submitted this report:
R. Scott Asen
Peter Gyenes
Michael D. Kaufman
Audit Fees
The aggregate fees billed by Arthur Andersen LLP for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2001 and for the review of the financial
statements included in the Company's Forms 10-Q for the fiscal year ended
December 31, 2001 were $90,250.
Financial Information Systems Design and Implementation Fees
------------------------------------------------------------
There were no fees billed by Arthur Andersen LLP for financial information
systems design and implementation professional services for the fiscal year
ended December 31, 2001.
All Other Fees
--------------
The aggregate fees billed by Arthur Andersen LLP for services other than
those described above for the fiscal year ended December 31, 2001 totaled
$141,760 and were primarily for tax services performed.
Davox's Audit Committee has determined that the provision of the services
provided by Arthur Andersen LLP as set forth herein are compatible with
maintaining Arthur Andersen LLP's independence.
12
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, 2001, with the cumulative total return on (i)
the Nasdaq Market Index and (ii) a broad peer group index prepared by Media
General consisting of Nasdaq listed companies grouped under SIC Code 7373,
Computer Integrated Systems Design. The comparison assumes $100 was invested on
December 31, 1996 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends, if any. The graph reflects the
3-for-2 stock split effected in the form of a stock dividend by the Company on
May 28, 1997.
Comparison of Five Year Cumulative Total Return Among Davox Corporation
Nasdaq Market Index and SIC Code Index
[GRAPH]
-----------------------------------------------------------------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/29/00 12/31/01
-----------------------------------------------------------------------------------------------------------------------------
Davox Corporation 100.00 118.58 27.71 71.33 35.44 35.15
Nasdaq Market Index 100.00 122.32 172.52 304.29 191.25 175.37
SIC Code Index 100.00 119.50 260.31 593.15 291.59 152.46
-----------------------------------------------------------------------------------------------------------------------------
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.
13
Severance Arrangements
Pursuant to the terms of an agreement between the Company and Mr. James D.
Foy, if Mr. Foy is terminated for other than non-performance or in the event of
a change in control of the Company that results in the loss of his job, demotion
of his title, change in his responsibilities, or relocation of the Company, then
the Company shall (i) continue to provide Mr. Foy with medical benefits
continuation for a period of twelve (12) months from the termination date, (ii)
pay Mr. Foy's base salary (in effect at the time of such termination) for twelve
(12) months from the termination date, and (iii) pay an amount equal to the
actual earned bonus paid during the previous twelve (12) months prior to the
termination date. The Company will not be obligated to make any future payments
if Mr. Foy assumes new employment with a competitor of the Company.
Pursuant to the terms of agreements between the Company and each of Mr.
Jeffrey E. Anderholm, Mr. Anthony Colangelo, Mr. Mark Donovan, Mr. Michael J.
Provenzano, III and Mr. Mark Zabroske (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., Vice President, General Counsel and Secretary, is
the son of Mr. Alphonse M. Lucchese, Chairman of the Board of Directors and
Board Advisor, and received approximately $198,221 in total compensation during
the fiscal year ended December 31, 2001.
Mr. Anthony A. Colangelo, Executive Vice President, Global Sales, was given
a loan from the Company in the amount of $100,000.00 in December 2000. The loan
amount, including interest, will be forgiven over a three year period, with
one-third being forgiven on Mr. Colangelo's yearly anniversary date of his hire.
On December 31, 2001, an amount equal to $39,343, which comprised one-third of
the loan amount, including accrued interest thereon, was forgiven pursuant to
the terms of the loan agreement.
Mr. Alphonse M. Lucchese, Chairman of the Board of Directors, for the year
ended December 31, 2001, received $400,008 salary and a $194,847 bonus for
services rendered as Board Advisor under the terms of the Transition and
Retention Agreement dated November 7, 2000, between Mr. Lucchese and the Company
(the "Retention Agreement"). Further, Mr. Lucchese and the Company entered into
an agreement dated November 7, 2001 to amend the Retention Agreement (the
"Amendment"). The Amendment provides that the Retention Agreement shall be
revised to (i) extend its term to December 31, 2002; and (ii) fix Mr. Lucchese's
annual salary at $200,000 for the period beginning January 1, 2002 and ending
December 31, 2002.
Mr. Ralph S. Breslauer, Executive Vice President, Sales and Marketing,
entered into an agreement with the Company such that, if as a consequence of a
merger or acquisition that results in the elimination, consolidation or
relocation of Mr. Breslauer's employment, then the Company shall continue his
base salary and medical benefits for a period of twelve months from the date of
the termination of his employment. If Mr. Breslauer's employment is terminated
for any reason other than a merger or acquisition, then the Company shall
continue his base salary and medical benefits for a period of six months from
the date of the termination of his employment.
14
Ms. Kristina Lengyl, Vice President, Professional Services, entered into an
agreement with the Company such that if Ms. Lengyl is terminated due to an
economic layoff, a downsizing that eliminates her position or a reorganization
that would require her to relocate, then the Company shall continue Ms. Lengyl's
base salary and medical benefits until the earlier of (i) six months from the
date of her termination of employment or (ii) the date she assumes new
employment.
Mr. Alexander Tellez, Executive Vice President, Research and Development,
entered into an employment agreement with the Company, which became effective
January 14, 2002 (the "Agreement"). Pursuant to the terms of the Agreement, Mr.
Tellez shall receive a base annual salary of $200,000 and is eligible to
participate in the Company's Executive Incentive Compensation Program, under
which Mr. Tellez may receive a bonus equal to fifty (50%) percent of his base
salary. Further, Mr. Tellez was granted an option to purchase 125,000 shares of
the Company's Common Stock and is eligible to participate in all benefit plans
provided by the Company. Under the terms of the Agreement, if Mr. Tellez is
terminated due to an economic layoff, a downsizing that eliminates his position
or a reorganization that would require him to relocate, then the Company shall
continue Mr. Tellez's base salary and medical benefits until the earlier of (i)
six months from the date of his termination of employment or (ii) the date he
assumes new employment.
Mr. Alexander Tellez, Executive Vice President, Research and Development,
in connection with a loan in the principal amount of $125,000, entered into a
Secured Promissory Note and Assignment Agreement with the Company, which became
effective March 13, 2002 (the "Promissory Note"). Pursuant to the terms of the
Promissory Note, Mr. Tellez shall repay the principal sum of $125,000 plus
accrued interest on the earlier of: (i) January 14, 2004 or (ii) the date that
Mr. Tellez is no longer employed by the Company. Further, Mr. Tellez and the A.
Tellez Limited Partnership assign to the Company their Delayed Common Holder
Payments (as defined in the Agreement and Plan of Merger dated January 14, 2002
by and among the Company, AP Acquisition Corporation and CellIt, Inc.) such that
payments made to the Company from the Delayed Common Holder Payments shall
reduce the principal and interest due under the Promissory Note.
15
Proposal II
Approval of an Amendment to the Company's
Restated Certificate of Incorporation, as amended,
to Change the Company's Name to Concerto Software, Inc.
Stockholders are being asked to approve an amendment to the Company's
Restated Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), changing its name to Concerto Software, Inc., to reflect the
Company's new image as a result of its acquisition of CellIt, Inc. and the
desire to be recognized as a comprehensive multi-media customer interaction
management solution provider. While the Board of Directors believes that the
name Davox Corporation has had a positive impact on how the Company is being
received by the investing public, the Board of Directors believes that in the
long term the Company will be better served doing business under the name
Concerto Software, Inc.
Over the last several months, the Company has made several significant
changes in management, product strategy, and market strategy in order to better
position itself to exploit market opportunities. By changing the name of the
company, along with its logo, the Company intends to clearly inform prospects,
customers, investors, partners and employees, that these changes are significant
and that as a result of these changes, it is a markedly different company than
it was previously.
If the stockholders approve the amendment to the Company's Certificate of
Incorporation, the Company will file a Certificate of Amendment of its
Certificate of Incorporation with the Secretary of State of the State of
Delaware reflecting the name change.
The Board of Directors recommends a vote FOR the proposal to approve the
amendment to the Company's Certificate of Incorporation to change the Company's
name to Concerto Software, Inc.
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, email, telephone or telegraph following
the original solicitation. The Company will bear all reasonable solicitation
fees.
16
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file with the Commission initial reports
of ownership and reports of changes in ownership of Common Stock of the Company.
Such persons are required by regulations of the Commission to furnish the
Company with copies of all such filings. Based on its review of the copies of
such filings received by it with respect to the fiscal year ended December 31,
2001 and written representations from certain Reporting Persons, the Company
believes that all Reporting Persons complied with all Section 16(a) filing
requirements in 2001.
Stockholders Proposals
Proposals of stockholders intended for inclusion in the Company's proxy
materials to be furnished to all stockholders entitled to vote at the 2003
Annual Meeting of Stockholders pursuant to SEC Rule 14a-8 must be received at
the Company's principal executive offices not later than December 1, 2002.
Stockholders who wish to make a proposal at the 2003 Annual Meeting - other than
one that will be included in the Company's proxy materials - should notify the
Company no later than February 12, 2003. If a stockholder who wishes to present
a proposal fails to notify the Company by this date, the stockholder will not be
entitled to present the proposal at the meeting. If, however, the proposal is
properly brought before the meeting, then, under the SEC's proxy rules, proxies
solicited by management for the meeting will confer discretionary voting
authority with respect to the stockholder's proposal on the persons selected by
management to vote the proxies. If a stockholder makes a timely notification,
the proxies may still exercise discretionary voting authority under
circumstances consistent with the SEC's proxy rules.
17
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DAVOX CORPORATION
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James D. Foy and Michael J. Provenzano,
III 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 2, 2002, at 10:00 a.m. at the offices of the Company, 6
Technology Park Drive, Westford, Massachusetts, and at any adjournment thereof,
upon matters set forth in the Notice of Annual Meeting and Proxy Statement dated
April 2, 2002, 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 proposals 1, 2
and 3.
(TO BE SIGNED ON REVERSE SIDE) --------------------
SEE REVERSE
SIDE
--------------------
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--------------------------------------------------------------------------------
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHOLD Nominees: A.M. Lucchese
1. To fix the number // // M.D. Kaufman
of directors constituting R.S. Asen
the Board of Directors J.D. Foy
at five and to elect a Board of Directors for the P. Gyenes
ensuing year.
INSTRUCTIONS: To withhold for a specific nominee, write
that nominee's name on the space provided.
-------------------------------------------------
FOR AGAINST ABSTAIN
2. To consider and act upon a proposal to approve an // // //
amendment to the Company's Restated Certificate of
Incorporation, as amended, to change the name of the
Company to Concerto Software, Inc.
3. To consider and act upon any other matters that may properly be brought
before the Annual Meeting of Stockholders of the Company.
SIGNATURE(S)__________________ __________________________ Dated:________, 2002
signature if held jointly
Note: Please sign exactly as your name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
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