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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT / / FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
ASPEN TECHNOLOGY, INC.
Name of Registrant as Specified In Its Charter)
ASPEN TECHNOLOGY, INC.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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:
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ASPEN TECHNOLOGY, INC.
TEN CANAL PARK
CAMBRIDGE, MA 02141
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
The 1997 Annual Meeting of Stockholders of Aspen Technology, Inc. (the
"Company") will be held at the Royal Sonesta Hotel, Riverfront Room, East Tower,
2nd Floor, 5 Cambridge Parkway, Cambridge, Massachusetts, 02142, on December 16,
1997 at 3:00 P.M. (local time) for the following purposes:
(a) To elect two persons to the Board of Directors to serve as Class I
Directors for three-year terms;
(b) To approve a proposal to change the Company's state of incorporation
from Massachusetts to Delaware;
(c) To approve an amendment to the Company's 1995 Stock Option Plan;
(d) To approve an amendment to the Company's 1995 Directors Stock Option
Plan;
(e) To approve the adoption of the Company's 1998 Employee Stock
Purchase Plan;
(f) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed November 10, 1997, as the record date for the
1997 Annual Meeting of Stockholders. Accordingly, only stockholders of record at
the close of business on November 10, 1997, will be entitled to notice of, and
to vote at, the meeting.
By Order of the Board of Directors
Stephen J. Doyle
Clerk
November 14, 1997
NOTE: THE BOARD OF DIRECTORS SOLICITS THE EXECUTION AND PROMPT RETURN OF THE
ACCOMPANYING PROXY. A RETURN ENVELOPE IS ENCLOSED. IF MORE THAN ONE PROXY IS
ENCLOSED, PLEASE COMPLETE AND RETURN ALL OF THEM.
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ASPEN TECHNOLOGY, INC.
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PROXY STATEMENT
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GENERAL INFORMATION
PROXY SOLICITATION
The enclosed proxy is solicited by the Board of Directors of Aspen
Technology, Inc. (the "Company") for use at the 1997 Annual Meeting of
Stockholders and at any adjournments or postponements thereof (the "Meeting").
The Meeting will be held at 3:00 p.m. on December 16, 1997, at the Royal
Sonesta Hotel, Riverfront Room, East Tower, 2nd Floor, Cambridge, Massachusetts,
02142.
The cost of soliciting proxies by mail, telephone, telegraph or in person
will be borne by the Company. The Company has retained the services of Morrow &
Co., Inc., a proxy solicitation firm based in New York City, to which the
Company will pay a fee of $7,500 plus reimbursement for mailing and
out-of-pocket expenses. In addition to the cost of soliciting proxies by mail,
the Company will reimburse brokerage houses and other nominees for their
expenses incurred in sending proxies and proxy material to the beneficial owners
of shares held by them. This proxy statement and the enclosed proxy are first
being mailed or given to stockholders on or about November 14, 1997.
REVOCABILITY AND VOTING OF PROXY
A form of proxy and a return envelope for the proxy are enclosed. A
proxy, if completed and returned, may be revoked at any time prior to its use at
the Meeting by giving written notice to the Clerk of the Company, by executing a
revised proxy at a later date or by attending the Meeting and voting in person.
Proxies in the form enclosed, unless previously revoked, will be voted at the
Meeting as specified in the proxies or, in the absence of specification, in
favor of the matters listed thereon and, with respect to any other business
which may properly come before the Meeting, in the discretion of the named
proxies. Votes withheld from any nominee, abstentions and broker "non-votes" 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 the nominee does not have discretionary voting power
and has not received instructions from the beneficial owner. Abstentions are
included in the number of shares present or represented and voting on each
matter. Broker "non-votes" are not so included.
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NOTE REGARDING SHARE-RELATED DATA
On February 28, 1997, the Company effected a two-for-one stock split in
the form of a stock dividend. All references to numbers of shares appearing in
this Proxy Statement have been adjusted to reflect such stock dividend.
VOTING SECURITIES AND VOTING RIGHTS
The Company's Common Stock, par value $0.10 per share ("Common Stock"),
is the only class of voting securities outstanding and entitled to vote at the
Meeting. Each stockholder of record on November 10, 1997, is entitled to one
vote for each share registered in that stockholder's name. At that date there
were shares of Common Stock issued and outstanding.
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MATTERS TO BE CONSIDERED AT ANNUAL MEETING
I. PROPOSAL ONE - ELECTION OF DIRECTORS
The Board of Directors currently consists of six members, divided into
three classes of two members each. Each class of directors serves a three-year
term, the terms of which are staggered so that the term of only one class
expires each year. The affirmative vote of the holders of a majority of votes
cast at the Meeting is required for the election of directors. Proxies will be
voted as indicated on a returned proxy card. If there are no voting instructions
then the proxy holders will vote the proxies received by them FOR the nominees
named below.
AN AFFIRMATIVE VOTE OF A MAJORITY OF THE COMMON STOCK REPRESENTED IN
PERSON OR BY PROXY AT THE MEETING IS NECESSARY TO ELECT THE DIRECTORS. THE BOARD
OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF BOTH OF
THE FOLLOWING NOMINEES TO SERVE AS DIRECTORS OF THE COMPANY UNTIL THE ANNUAL
MEETING THREE YEARS FROM NOW OR UNTIL THEIR SUCCESSORS HAVE BEEN ELECTED AND
QUALIFIED.
NOMINEES
The Board of Directors has nominated Mr. Evans and Ms. McArdle for
election as Class I directors, to serve for three-year terms, until the 2000
Annual Meeting or until their respective successors are elected and qualified.
If for any reason either Mr. Evans or Ms. McArdle should become unavailable for
election, the persons named in the proxy may vote the proxy for the election of
a substitute. However, each nominee has consented to serve as a director if
elected, and the Board of Directors has no reason to believe that either of the
nominees will become unavailable for election.
BACKGROUND OF NOMINEES
Lawrence B. Evans, age 63, the principal founder of the Company, has
served as Chairman of the Board of Directors and Chief Executive Officer of the
Company since 1984. He also served as Treasurer of the Company from 1984 through
February 1995 and as President from the inception of the Company until 1984. Mr.
Evans served as Professor of Chemical Engineering at Massachusetts Institute of
Technology ("M.I.T.") from 1962 to 1990 and was the principal investigator for
the ASPEN Project at M.I.T., which lasted from 1976 to
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1981. Mr. Evans holds a B.S. in Chemical Engineering from the University of
Oklahoma and an M.S.E. and Ph.D. in Chemical Engineering from the University of
Michigan.
Joan C. McArdle, age 46, has served as a director of the Company since
July 1994, and is a member of the Audit and Compensation Committees. Since 1985
she has been a Vice President of Massachusetts Capital Resource Company, a
Boston-based investment company. She holds an A.B. in English from Smith
College.
BACKGROUND OF CLASS II AND CLASS III DIRECTORS
The following table sets forth certain information about the Class II
and Class III directors whose terms do not expire this year.
Director Office Term
Name Positions with the Company Class Expiration
- ---- -------------------------- -------- -----------
Joseph F. Boston President and Director II 1998
Gresham T. Brebach, Jr. Director(2) II 1998
Douglas R. Brown Director(2) III 1999
Alison Ross Director(1) III 1999
(1) Member of Audit Committee of the Board of Directors
(2) Member of Compensation Committee of the Board of Directors
Joseph F. Boston, age 60, a founder of the Company, has served as
President of the Company since 1984 and as a director of the Company since 1981.
Mr. Boston served as both the Principal Engineer and as an Associate Project
Manager from 1977 to 1981 of the ASPEN Project at M.I.T. Mr. Boston holds a B.S.
in Chemical Engineering from Washington University and a Ph.D. in Chemical
Engineering from Tulane University.
Gresham T. Brebach, Jr., age 56, has served as a director of the Company
since August 1995, and is a member of the Compensation Committee. Since February
1997, Mr. Brebach has been President and Chief Executive Office of Nextera
Enterprises, L.L.C., a Lexington, Massachusetts based consulting company.
Between January 1995 and February 1997, Mr. Brebach was Executive Vice President
- - Client Services, of Renaissance Solutions Inc., a supplier of management
consulting and client/server systems integration services. From August 1994 to
December 1994, Mr. Brebach operated his own consulting firm, Brebach Associates.
From April 1993 to August 1994, Mr. Brebach served as Executive Vice President
of Digital Consulting at Digital Equipment Company. From December 1989 to April
1993, Mr. Brebach was a director of the New York office of McKinsey & Company.
Mr. Brebach holds a B.S. in Engineering and an M.B.A. in Business Administration
from the University of Illinois.
Douglas R. Brown, age 43, has served as a director of the Company since
1986 and is a member of the Compensation Committee. Mr. Brown has been
President, Chief Executive Officer and Director of Advent International Company,
a venture capital investment firm, since January 1997. Mr. Brown was previously
Chief Investment Officer of Advent International Company from 1994 to December
1995 and Senior Vice President and Managing Director - Europe of Advent
International Company from 1990 to 1994. Mr. Brown holds a B.S. in Chemical
Engineering from M.I.T. and an M.B.A. from the Harvard Graduate School of
Business Administration. Mr. Brown has also served as a director of Ionics,
Incorporated since May 1997.
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Alison Ross, age 37 has served as a director of the Company since
February 1996 and is a member of the Audit Committee. Ms. Ross is the President
of Smart Finance & Co., an investment banking consulting firm she founded in
January 1995. Smart Finance & Co. provides advisory services to the Company from
time to time. See "Certain Transactions" below. From September 1992 to January
1995, Ms. Ross was a Principal of Montgomery Securities. From September 1991
through August 1992, Ms. Ross served as Special Assistant to the secretary of
the Cabinet in the Executive Office of the President of the United States, as
part of a one-year appointment as a White House Fellow. Ms Ross holds an S.B. in
Economics and an S.M. in Management from M.I.T.
BOARD COMMITTEES AND MEETINGS
The Board of Directors of the Company held five meetings during the
fiscal year ended June 30, 1997, and acted by unanimous consent three times. All
directors attended at least 75% of the meetings of the Board and of the
committees of the Board on which they served. The Board of Directors has
appointed an Audit Committee and a Compensation Committee. There is no standing
Nominating Committee. The Audit Committee met five times during the fiscal year
ended June 30, 1997, which included two meetings by telephone. The Audit
Committee reviews the scope and results of the annual audit of the Company's
consolidated financial statements conducted by the Company's independent
accountants; the scope of other services provided by the Company's independent
accountants; proposed changes in the Company's financial and accounting
standards and principles and the Company's policies and procedures with respect
to its internal accounting, auditing and financial controls; and makes
recommendations to the Board of Directors on the engagement of the independent
accountants. The Compensation Committee, which met once and acted by unanimous
consent six times during the fiscal year ended June 30, 1997, administers the
Company's compensation programs, including the Company's 1995 Employees' Stock
Purchase Plan, the 1995 Stock Option Plan, the 1996 Special Stock Option Plan,
and the 401(k) Plan, and performs such other duties as may from time to time be
determined by the Board of Directors.
COMPENSATION FOR DIRECTORS
Directors who are not full-time employees of the Company receive an
annual fee of $15,000 for their services, plus $1,500 for each regular meeting
attended. Additionally, the Company's 1995 Directors Stock Option Plan provides
that each non-employee director be granted an option to purchase 12,000 shares
of Common Stock at fair market value upon his or her initial election as a
director (or December 18, 1995, for previously elected directors) and an option
to purchase 4,000 shares of Common Stock at fair market value following any
annual meeting if such director continues as a non-employee director. The amount
of initial and annual options granted was not automatically increased under the
1995 Directors Stock Option Plan after the two-for-one stock split of February
28, 1997. Proposal Four would increase the first grant of options to an option
for 24,000 shares of Common Stock, and the annual grant of options to an option
for 8,000 shares of Common Stock, each subject to adjustment for stock splits,
stock combinations, stock dividends, reclassifications or other capital
adjustments.
SHARE OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of September 30,
1997, with respect to the beneficial ownership of the Common Stock by (i) each
person known to the Company to own of record or beneficially more than 5% of the
outstanding shares of Common Stock, (ii) those persons listed in the Summary
Compensation Table below, (iii) each director and nominee for director of the
Company, and (iv) all present executive officers and directors of the Company
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as a group. As of September 30, 1997, 20,996,876 shares of the Common Stock were
outstanding.
Shares
Beneficially
Owned(2)
--------------------------
Name and Address of Beneficial Owner(1) Number Percent
- --------------------------------------- --------- -------
Pilgrim Baxter & Associates(3) 2,055,040 9.79
Janus Capital Corporation(3) 1,571,010 7.48
Lawrence B. Evans(4) 843,978 4.02
Joseph F. Boston(5) 313,648 1.49
Herbert I. Britt(6) 266,858 1.27
Mary A. Palermo(7) 180,372 *
Joel B. Rosen(8) 157,876 *
Gresham T. Brebach, Jr.(9) 14,001 *
Douglas R. Brown(10) 14,001 *
Joan C. McArdle(11) 14,001 *
Alison Ross(12) 4,001 *
All executive officers and directors 1,808,736 8.6
as a group (9 persons)(13)
* Less than 1%
(1) The address of all executive officers and directors is in care of the
Company, Ten Canal Park, Cambridge, Massachusetts 02141.
(2) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to shares subject to community property
laws where applicable. Shares not outstanding but deemed beneficially owned by
virtue of the right of a person or group to acquire them within 60 days are
treated as outstanding only for purposes of determining the number of and
percent owned by such person or group.
(3) Based on information obtained from NASDAQ Online services citing filings
with the Securities and Exchange Commission as of October 24, 1997.
(4) Includes 40,062 shares subject to stock options exercisable within 60 days
of September 30, 1997. Also includes 200 shares held by Beverley Evans, wife of
Mr. Evans, and an aggregate of 4,100 shares held by Mr. Evans' sons, as to which
shares Mr. Evans disclaims beneficial interest. Mr. Evans is the Company's
Chairman of the Board and Chief Executive Officer.
(5) Includes 22,838 shares subject to stock options exercisable within 60 days
of September 30, 1997. Mr. Boston is the President and a director of the
Company.
(6) Includes 20,338 shares subject to stock options exercisable within 60 days
of September 30, 1997. Mr. Britt is the Company's Senior Vice President, and
Chief Technical Officer.
(7) Includes 164,880 shares subject to stock options exercisable within 60 days
of September 30, 1997. Ms. Palermo is the Company's Executive Vice President,
Finance and Chief Financial Officer.
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(8) Includes 150,732 shares subject to stock options exercisable within 60 days
of September 30, 1997. Also includes 700 shares held by a trust of which Mr.
Rosen is a co-trustee. Mr. Rosen is the Company's Executive Vice President.
(9) Consists of shares subject to stock options exercisable within 60 days of
September 30, 1997. Mr. Brebach is a director of the Company.
(10) Consists of shares subject to stock options exercisable within 60 days of
September 30, 1997. Mr. Brown is a director of the Company.
(11) Consists of shares subject to stock options exercisable within 60 days of
September 30, 1997. Excludes 175,000 shares held by Massachusetts Capital
Resource Company through the exercise of certain warrants, as to which Ms.
McArdle disclaims beneficial interest. Ms. McArdle is a director of the Company.
(12) Consists of shares subject to stock options exercisable within 60 days of
September 30, 1997. Ms. Ross is a director of the Company.
(13) Includes shares subject to stock options and warrants exercisable within
60 days of September 30, 1997 as described in notes (4) through (12)
above.
EXECUTIVE OFFICER COMPENSATION
The following table sets forth in summary form certain information with
respect to the annual and long-term compensation paid by the Company and its
subsidiaries to the Chief Executive Officer and each of its four other most
highly compensated executive officers (collectively, the "Named Executive
Officers") for services rendered in all capacities to the Company and its
subsidiaries for the past three fiscal years:
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SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
------------------------------------------------------- -------------------
Securities
Other Annual Underlying
Name and Principal Position(1) Year Salary ($) Bonus ($) Compensation (2) Options (#)
- ------------------------------ ---- ---------- --------- ---------------- -----------
Lawrence B. Evans 1997 $265,000 $ 0 $174 80,000(3)
Chairman of the Board 1996 $239,000 $133,000 $348 50,000(4)
and Chief Executive Officer 1995 $200,000 $ 85,000 $360
Joseph F. Boston 1997 $210,000 $ 0 $174 40,000(3)
President 1996 $190,000 $ 88,000 $348 32,000(4)
1995 $160,000 $ 70,000 $360
Joel B. Rosen 1997 $210,000 $ 0 $174 50,000(3)
Executive Vice President 1996 $190,000 $ 77,000 $348 40,000(4)
1995 $160,000 $ 60,000 $360
Herbert I. Britt 1997 $190,000 $ 0 $174 30,000(3)
Senior Vice President 1996 $181,000 $ 77,000 $348 32,000(4)
and Chief Technical Officer 1995 $160,000 $ 60,000 $360
Mary A. Palermo 1997 $190,000 $ 0 $174 50,000(3)
Executive Vice President, 1996 $166,000 $ 83,000 $348 40,000(4)
Finance and Chief 1995 $135,000 $ 60,000 $360
Financial Officer
(1) David L. McQuillin joined the Company June 5, 1997 as Executive Vice
President, Worldwide Sales & Marketing and, based on his annual salary,
would have been included in the table above had he been employed for a
significant proportion of fiscal 1997.
(2) Represents long-term insurance premiums paid by the Company on behalf
of the Named Executive Officers. Insurance coverage was changed in
mid-fiscal 1997 such that the premiums paid for the insurance are no
longer considered taxable income to the employee.
(3) Options were granted on August 2, 1996 under the 1995 Stock Option
Plan. One-sixteenth of the options granted vest at the end of each
calendar quarter. Each option has a maximum term of 10 years, subject
to earlier termination in the event of the optionee's cessation of
service with the Company. All of these options are exercisable during
the holder's lifetime only by the holder; they are exercisable by the
holder only while the holder is an employee or advisor of the Company
and for certain limited periods of time thereafter in the event of
termination of employment. The exercise price may be paid in cash or in
shares of Common Stock valued at fair market value on the exercise
date.
(4) Options were granted on October 24, 1995 and January 8, 1997 under the
1988 Non-Qualified Stock Option Plan and the 1995 Stock Option Plan,
respectively. One-sixteenth of the options granted will vest at the end
of each calendar quarter. Each option has a maximum term of 10 years,
subject to earlier termination in the event of the optionee's cessation
of service with the Company. All of these options are exercisable
during the holder's lifetime only by the holder; they are exercisable
by the holder only while the holder is an employee or advisor of the
Company and for certain limited periods of time thereafter in the event
of termination of employment. The exercise price may be paid in cash or
in shares of Common Stock valued at fair market value on the exercise
date.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to grants
of options made to the Named Executive Officers during the fiscal year ended
June 30, 1997.
Potential
Realizable
Individual Grants Value at Assumed
--------------------------------------------------------- Annual Rates
Number of Percent of of Stock Price
Securities Total Options Appreciation
Underlying Granted to Exercise for Option Term(2)
Options Employees in Price Expiration ------------------------
Name Granted(#) Fiscal Year ($/sh) Date(1) 5%($) 10%($)
---- ---------- ------------- -------- ---------- --------- ---------
Lawrence B. Evans 80,000 11.76% $28.625 08/02/06 $1,554,182 $3,831,225
Joseph F. Boston 40,000 5.88% $28.625 08/02/06 $ 777,091 $1,915,612
Joel B. Rosen 50,000 7.35% $28.625 08/02/06 $ 971,363 $2,394,516
Herbert I. Britt 30,000 4.41% $28.625 08/02/06 $ 582,818 $1,436,709
Mary Dean Palermo 50,000 7.35% $28.625 08/02/06 $ 971,363 $2,394,516
- -------------
(1) Option grant pursuant to the Company's 1995 Stock Option Plan. Each option
grant is exercisable in increments of 6.25% at the end of each calendar
quarter. The exercisability of these options is accelerated upon the
occurrence of a change in control of the Company.
(2) The amounts shown represent hypothetical gains that could be achieved for
the respective options if exercised at the end of their option terms. These
gains are based on assumed rates of stock appreciation of 5% and 10%,
compounded annually from the date the respective options were granted to
the date of their expiration. The gains shown are net of the option price,
but do not include deductions for taxes or other expenses that may be
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on future performance of the Common Stock, the
optionholders' continued employment through the option period, and the date
on which the options are exercised.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information as to options exercised during
the fiscal year ended June 30, 1997, and unexercised options held at the end of
such fiscal year, by the Named Executive Officers.
Shares of Common Stock
Shares Underlying Value of Unexercised
Acquired Unexercised Options at June In-The-Money Options at June 30,
on Value 30, 1997 (#) 1997 ($)(1)
Name Exercise Realized Exercisable/unexercisable Exercisable/unexercisable
- ---- -------- -------- --------------------------- --------------------------------
Lawrence B. Evans -- -- 31,937/98,063 $506,543/$1,289,516
Joseph F. Boston -- -- 18,339/53,661 $306,153/$ 747,329
Joel B. Rosen 12,000 $410,998 151,106/76,076 $4,866,763/$1,238,874
Herbert I. Britt -- -- 16,463/45,537 $290,090/$ 677,768
Mary Dean Palermo 8,000 $263,022 163,254/76,076 $5,291,741/$1,238,874
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(1) The closing sale price for the Common Stock as reported by the NASDAQ
National Market System on June 30, 1997 was $37.625. Value is calculated on the
basis of the difference between the option exercise price and $37.625,
multiplied by the number of shares of Common Stock underlying the option.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND CHANGE OF
CONTROL AGREEMENTS
On August 12, 1997, the Company entered into Change in Control Agreements
with Lawrence B. Evans, Chairman and Chief Executive Officer, Joseph F. Boston,
President, David McQuillin, Executive Vice President, Worldwide Sales and
Marketing, Mary A. Palermo, Executive Vice President, Finance and Chief
Financial Officer, Joel B. Rosen, Executive Vice President, and Stephen J.
Doyle, Vice President, General Counsel and Clerk. Each agreement is for an
initial term of five years and is automatically renewed thereafter on a yearly
basis unless the Board of Directors ends the self-renewing feature at least 60
days before the next renewal. In the event of both a change in control and
termination of employment (excluding termination for cause but including
constructive termination) the executive will be entitled to a severance payment
equal to three times salary plus bonus plus cost of benefits. The severance
payment would not be limited by the provisions of Section 280G of the Internal
Revenue Code of 1986. A change of control is generally defined as any one person
or group purchasing 25% of the outstanding stock.
REPORT OF THE COMPENSATION COMMITTEE
The following is the Report of the Compensation Committee of the Board of
Directors (the "Committee"), describing the compensation policies and rationale
applicable to the Company's executive officers with respect to the compensation
paid to such executive officers for the year ended June 30, 1997.
Purpose of the Committee
The Committee is responsible for determining compensation levels for the
executive officers for each fiscal year based upon a consistent set of policies
and procedures.
Elements of the Compensation Program
Each executive officer's compensation package is comprised of three
elements: base compensation, which reflects individual performance and is
designed primarily to be competitive with salary levels in a comparative group;
bonus compensation, payable in cash and based on achievement of financial
performance goals established by the Committee; and stock options, designed to
assure long-term alignment with the interests of stockholders. Both the base
compensation and the bonus compensation were established off of the prior year's
compensation, which was established after review of a report from Towers,
Perrin, Forster & Crosby, Inc. ("TPF&C"), consultants in management
compensation. TPF&C had analyzed the base compensation and bonus compensation of
executive officers of the Company against similar amounts paid by comparable
corporations. TPF&C noted in that report for fiscal 1996 that the base
compensation and bonus compensation of the executive officers of the Company
were generally below the averages for executives of the comparable group of
corporations. In assessing the information contained in the report, the
Committee considered the nature of the business, the size and the profitability
of comparable companies. Stock options were granted in amounts deemed by the
Committee to be appropriate to increase alignment with stockholder interests and
to serve as a means to retain the services of the executive officers. The
Company did not pay bonuses to its executive officers with respect to fiscal
1997 because it did not achieve the internal financial targets set by the
Compensation Committee.
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Section 162(m) Limitations
The cash compensation to be paid to the Company's executive officers for the
fiscal year ending June 30, 1998 is not expected to exceed the $1 million limit
per officer imposed on the tax deductibility of such compensation by Section
162(m) of the Internal Revenue Code. Because the Company's 1995 Stock Option
Plan limits the maximum number of shares of Common Stock for which any one
participant may be granted stock options, has been approved by the stockholders,
and is administered by the Committee, any compensation deemed paid to an
executive officer when he or she exercises an outstanding option under that Plan
will qualify as performance-based compensation and will not count toward (or
beyond) the $1 million limitation. This shall also apply to the grant of stock
options under the amended 1995 Stock Option Plan if "Proposal Three - Amendment
to Company's 1995 Stock Option Plan" is passed at the Meeting.
COMPENSATION COMMITTEE
Gresham T. Brebach, Jr.
Douglas R. Brown
Joan C. McArdle
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Committee consists of Gresham T. Brebach, Jr., Douglas R. Brown and Joan C.
McArdle, none of whom has ever been an employee of the Company. The Committee is
advised by Richard M. Harter, an advisor and the Assistant Clerk of the Company,
who participates in the deliberations but does not vote on actions taken by the
Committee. No executive officer of the Company serves as a member of the Board
of Directors or Compensation Committee of any entity which has one or more
executive officers serving as members of the Company's Board of Directors or its
Compensation Committee.
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PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders of the
Common Stock for the period from November 1, 1994 (the initial date of the
registration of the Company's Common Stock under the Securities Exchange Act of
1934) to June 30, 1997, to the cumulative total return of the NASDAQ Stock
Market-US Index and the NASDAQ Computer & Data Processing Index for the same
period.
COMPARISON OF 32 MONTH CUMULATIVE TOTAL RETURN*
AMONG ASPEN TECHNOLOGY INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
[GRAPHIC OMITTED]
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CERTAIN TRANSACTIONS
On September 13, 1994, the Company adopted a policy that transactions with
affiliated entities or persons will be on terms no less favorable than could be
obtained from unrelated parties and that all transactions between the Company
and its officers, directors, principal stockholders and affiliates will be
approved by a majority of the Company's independent directors.
Since April 1995, Smart Finance & Co., an investment banking consulting firm
founded and operated by Alison Ross, has provided certain consulting services to
the Company. Ms. Ross has been a director of the Company since February 1996 and
was reelected as a Class III director at the 1996 Annual Shareholders Meeting.
During fiscal 1997 the Company paid consulting fees to Smart Finance & Co. of
$64,725 (excluding expense reimbursements) for services rendered during fiscal
1997 under the Company's standard consulting agreement and $132,690 of fees that
were paid to Smart Finance & Co. for services provided in connection with the
Company's public offering of June 1996 and were previously described in the 1996
proxy statement.
II. PROPOSAL TWO - CHANGE IN THE STATE OF INCORPORATION FROM MASSACHUSETTS TO
DELAWARE
The Board of Directors has unanimously approved a proposal to change the
Company's state of incorporation from Massachusetts to Delaware (the
"Reincorporation"). In recent years, a number of major public corporations have
obtained the approval of their stockholders to reincorporate in Delaware. The
Board believes it is beneficial and important that the Company also obtain the
advantages of Delaware law. The Board believes the proposed change in domicile
is in the best interests of the Company and its stockholders for several
reasons, including: (i) the greater predictability and flexibility afforded by
Delaware corporate law and its greater responsiveness to corporate needs, (ii)
the more favorable and predictable corporate environment afforded by Delaware to
corporate directors and officers, and (iii) the greater certainty afforded by
Delaware law with respect to directors' duties in the face of takeover offers
and with respect to anti-takeover measures.
AN AFFIRMATIVE VOTE OF AT LEAST TWO-THIRDS OF THE COMMON STOCK
REPRESENTED IN PERSON OR BY PROXY AT THE MEETING IS NECESSARY TO CHANGE THE
STATE OF INCORPORATION. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE PROPOSAL TO CHANGE THE COMPANY'S STATE OF INCORPORATION FROM
MASSACHUSETTS TO DELAWARE.
REASONS FOR REINCORPORATION
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Predictability, Flexibility and Responsiveness to Corporate Needs.
Delaware has adopted comprehensive and flexible corporate laws which are revised
regularly to meet changing business circumstances. The Delaware Legislature is
particularly sensitive to issues regarding corporate law and is especially
responsive to developments in modern corporate law. In addition, Delaware offers
a system of specialized chancery courts to deal with corporate law questions.
These courts have developed considerable expertise in dealing with corporate
issues as well as a substantial and influential body of case law construing
Delaware's corporate law. In addition, the Delaware Secretary of State is
particularly flexible, expert and responsive in its administration of the
filings required for mergers, acquisitions and other corporate transactions.
Delaware has become a preferred domicile for most major American corporations
and Delaware law and administrative practices have become comparatively
well-known and widely understood. As a result of these factors, it is
anticipated that Delaware law will provide greater efficiency, predictability
and flexibility in Company's legal affairs than is presently available under
Massachusetts law.
Directors and Officers. The Board believes that reincorporation under
Delaware law will enhance the Company's ability to attract and retain qualified
directors and officers as well as encourage directors and officers to continue
to make independent decisions in good faith on behalf of the Company. The law of
Delaware offers reduced risk and greater certainty and stability from the
perspective of those who serve as corporate officers and directors. The intense
competition that has characterized the software industry has greatly expanded
the challenges and risks facing the directors and officers of companies within
the software industry. To date, the Company has not experienced difficulty in
retaining directors or officers. However, as a result of the significant
potential liability and relatively small compensation associated with service as
a director, the Company believes that the better understood, more favorable, and
comparatively stable corporate environment afforded by Delaware will enable it
to compete more effectively with other public companies, most of which are
incorporated in Delaware, in the recruitment of talented and experienced
directors and officers.
The parameters of director and officer liability are more extensively
addressed in Delaware court decisions and are therefore better defined and
better understood than under Massachusetts law. In addition, the protection from
liability and ability to provide indemnification for directors and officers is
somewhat greater under Delaware law than under existing Massachusetts law.
Accordingly, the Board believes that the Company's corporate objectives can be
better achieved by reincorporating in Delaware, and by including provisions in
the certificate of incorporation and by-laws of the Delaware company to
eliminate personal liability of directors and officers and to provide for their
indemnification to the maximum extent permitted by Delaware law.
The Board believes that Delaware law strikes an appropriate balance with
respect to personal liability of directors and officers, and that
reincorporation in Delaware will enhance the Company's ability to recruit and
retain directors and officers in the future, while providing appropriate
protection for stockholders from possible abuses by directors and officers. In
this regard, it should be noted that directors' personal liability is not, and
cannot be, eliminated under Delaware law for intentional misconduct, bad faith
conduct or any transaction from which the director derives an improper personal
benefit, or for violations of federal laws such as the federal securities laws.
Takeover Response. The Company currently has in place a number of
measures designed to protect stockholder interests in the event of a hostile
takeover attempt against the Company. The Company proposes to include similar
measures in the charter and by-laws of AspenTech Delaware. Many of these
measures have not been as fully tested in the Massachusetts courts as in the
Delaware
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courts. As a result, Delaware law affords greater certainty that these measures
will be interpreted, sustained and applied in accordance with the intentions of
the Board. In general, Delaware case law provides a well developed body of law
defining the proper duties and decision making process expected of a board of
directors in evaluating potential and proposed corporate takeover offers and
business combinations. The Board believes that these measures and related
Delaware law will help the Board to protect the Company's corporate strategies,
to consider fully any proposed takeover and alternatives, and, if appropriate,
to negotiate terms that maximize the benefit to the Company's stockholders.
REINCORPORATION PROCEDURE
The proposed Reincorporation would be accomplished by merging the Company
into "AspenTech Delaware", a new wholly-owned Delaware subsidiary of the Company
(the "Reincorporation Merger"), pursuant to an Agreement and Plan of Merger and
Reincorporation (the "Reincorporation Agreement"). When the Reincorporation
Merger becomes effective, AspenTech Delaware's name will automatically be
changed to Aspen Technology, Inc. The Reincorporation will not result in any
change in the Company's business, assets or liabilities, will not cause its
corporate headquarters to be moved and will not result in any relocation of
management or other employees.
On the effective date of the proposed Reincorporation, each outstanding
share of Common Stock of the Company will automatically convert into one share
of Common Stock of AspenTech Delaware, and stockholders of the Company will
automatically become stockholders of AspenTech Delaware. At the effective time
of the Reincorporation, the number of outstanding shares of common stock of
AspenTech Delaware will be equal to the number of shares of Common Stock of the
Company outstanding immediately prior to the effective time of the
Reincorporation. In addition, each outstanding option or right to acquire shares
of Common Stock of the Company will be converted into an option or right to
acquire an equal number of shares of Common Stock of AspenTech Delaware, under
the same terms and conditions as the original options or rights. All of the
Company's employee benefit plans, including the 1995 Stock Option Plan, 1995
Directors Stock Option Plan, 1996 Special Stock Option Plan, 1995 Employees
Stock Purchase Plan, and, upon approval of the stockholders, the 1998 Employees
Stock Purchase Plan, will be adopted and continued by AspenTech Delaware
following the Reincorporation. For a description of the 1998 Employees Stock
Purchase Plan see Proposal Five. The Company's stockholders should recognize
that approval of the proposed Reincorporation will constitute approval of the
adoption and assumption of those plans by AspenTech Delaware.
No action need be taken by the Company's stockholders to exchange their
stock certificates as a result of the Reincorporation. Certificates for shares
of the Company's stock will automatically represent an equal number of shares of
AspenTech Delaware stock upon completion of the Reincorporation. The Company
intends to apply for the listing and registration of AspenTech Delaware Common
Stock on the NASDAQ National Market.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The following discussion addresses certain federal income tax
considerations that are generally applicable to holders of Common Stock of the
Company who receive Common Stock of AspenTech Delaware in exchange for their
Common Stock of the Company in the Reincorporation. This discussion does not
address all of the tax consequences of the Reincorporation that may be relevant
to particular the Company's stockholders in light of their particular
circumstances, such as stockholders who are dealers in securities, who are
foreign persons or who acquired their Common Stock of the Company through stock
option or stock purchase programs or in other compensatory transactions. In
addition, the following discussion does not address the tax consequences of
transactions effected prior to or after the Reincorporation (whether or not such
transactions are in connection with the Reincorporation). Finally, no foreign,
state or local tax considerations are addressed herein. Accordingly, the
Company's Shareholders are urged to consult their own tax advisors as to the
specific tax consequences to them of the reincorporation and related
transactions, including the applicable federal, state, local and foreign tax
consequences to them of the reincorporation and such related transactions.
The following discussion is based on the interpretation of the Code,
applicable Treasury Regulations, judicial authority and administrative rulings
and practice, all as of the date hereof. The Internal Revenue Service (the
"IRS") is not precluded from adopting a contrary position. In addition, there
can be no assurance that future legislative, judicial or administrative changes
or interpretations will not adversely affect the accuracy of the statements and
conclusions set forth herein. Any such changes or interpretations could be
applied retroactively and could affect the tax consequences of the
Reincorporation to the Company, AspenTech Delaware and/or the Company's
stockholders.
Subject to the limitations, qualifications and exceptions described
herein, and assuming the Reincorporation qualifies as a reorganization within
the meaning of Section 368(a) of the Code (a "Reorganization"), the following
federal income tax consequences will generally result:
(a) No gain or loss will be recognized by holders of the Common Stock of
the Company upon receipt of Common Stock of AspenTech Delaware
pursuant to the Reincorporation;
(b) The aggregate tax basis of the Common Stock of AspenTech Delaware
received by each stockholder of the Company in the Reincorporation
will be equal to the aggregate tax basis of the Common Stock of the
Company surrendered in exchange therefor;
(c) The holding period of the Common Stock of AspenTech Delaware
received by each stockholder of the Company will include the period
for which such stockholder held the Common Stock of the Company
surrendered in exchange therefor, provided that such Common Stock of
the Company was held by such stockholder as a capital asset at the
time of the Reincorporation; and
(d) No gain or loss will be recognized by the Company or AspenTech
Delaware as a result of the Reincorporation.
Neither the Company nor AspenTech Delaware has requested a ruling from
the IRS with respect to the federal income tax consequences of the
Reincorporation. The Company will, however, obtain an opinion from Foley, Hoag &
Eliott, LLP to the effect that the Reincorporation will constitute a
Reorganization (the "Tax Opinion"). The Tax Opinion will neither bind the IRS
nor preclude the IRS
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from asserting a contrary position. In addition, the Tax Opinion will be subject
to certain assumptions, exceptions and qualifications and will be based upon the
truth and accuracy of representations made by the Company, AspenTech Delaware
and possibly certain stockholders of the Company.
A successful IRS challenge to the Reorganization status of the
Reincorporation would result in a stockholder recognizing gain or loss with
respect to each share of Common Stock of the Company exchanged in the
Reincorporation equal to the difference between the stockholder's basis in such
share and the fair market value, as of the time of the Reincorporation, of the
Common Stock of AspenTech Delaware received in exchange therefor. In such event,
a stockholder's aggregate basis in the shares of Common Stock of AspenTech
Delaware received in the exchange would equal their fair market value on such
date, and the stockholder's holding period for such shares would not include the
period during which the stockholder held Common Stock of the Company.
Even if the Reincorporation qualifies as a Reorganization, a stockholder
would recognize gain if, and to the extent that, the stockholder received
(directly or indirectly) consideration other than Common Stock of AspenTech
Delaware in exchange for the stockholder's Common Stock of the Company or to the
extent that the Common Stock of AspenTech Delaware were considered to be
received in exchange for services or property other than solely for Common Stock
of the Company. All or a portion of such gain could be taxable as ordinary
income. Under the terms of the Reincorporation Agreement, no such consideration
other than Common Stock of AspenTech Delaware will be issued in the
Reincorporation.
The Company's stockholders will be required to attach a statement to
their tax returns for the year of the Reincorporation that contains the
information listed in Treasury Regulation Section 1.368-3(b). Such statement
must include the stockholder's tax basis in the stockholder's Common Stock of
the Company and a description of the Common Stock of AspenTech Delaware
received.
INTERESTS OF THE COMPANY'S DIRECTORS AND OFFICERS
The Company's stockholders should be aware that reincorporation in
Delaware may be of benefit to the Company's directors by reducing the directors'
potential personal liability and increasing the scope of permitted
indemnification, by strengthening the directors' ability to resist a takeover
bid, by limiting the ability of stockholders to remove directors, and in other
respects. The Reincorporation is not intended to and will not affect the rights
of any of the parties to any of the lawsuits to which the Company is a party.
The interests of the Board in recommending the Reincorporation may therefore be
in conflict with the interests of the stockholders, and the interests of the
Board, management and affiliated stockholders in voting on the Reincorporation
proposal may not be the same as those of unaffiliated stockholders. For a more
complete discussion of the principal differences between Massachusetts and
Delaware law and the charters and bylaws of the Company and AspenTech Delaware
as they affect stockholders, see "Significant Changes Caused by the
Reincorporation".
In considering the Reincorporation proposal, the Company's stockholders
should be aware that the overall effect of the Reincorporation may be to make it
more difficult for holders of a majority of the outstanding shares of the
Company's Common Stock to replace directors or to remove existing management in
circumstances where a majority of the stockholders may be dissatisfied with the
performance of the incumbent directors and management or otherwise desire to
make changes. In particular, the Reincorporation could make a proxy contest a
less effective means of removing or replacing existing directors or could make
it more difficult to make a change in control of the Company which is opposed by
the Board. This in turn could enable the Board to resist the desires of a
majority of
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the stockholders. However, the Board believes that the Company's directors will
be committed to, and will act in, the interests of the Company and its
stockholders, and not for self-entrenchment.
SIGNIFICANT CHANGES CAUSED BY THE REINCORPORATION
In general, the Company's corporate affairs are governed at present by
the corporate law of Massachusetts, the Company's state of incorporation, and by
the Articles of Organization and By-Laws of the Company (the "Massachusetts
Articles" and the "Massachusetts Bylaws," respectively, and the "Massachusetts
Articles and Bylaws" collectively), which have been adopted pursuant to
Massachusetts law. The Massachusetts Articles and Massachusetts Bylaws are
available for inspection during business hours at the principal executive
offices of the Company. In addition, copies may be obtained by writing to Aspen
Technology, Inc., Ten Canal Park, Cambridge, Massachusetts, 02141. Attention:
Vice President, General Counsel and Clerk.
If the Reincorporation Agreement is adopted and approved, the Company
will merge into, and its business will be continued by, AspenTech Delaware.
Following the Reincorporation, issues of corporate governance and control would
be determined under Delaware rather than Massachusetts law. The Massachusetts
Articles and Bylaws, will, in effect, be replaced by the Certificate of
Incorporation and By-Laws of AspenTech Delaware (the "Delaware Certificate" and
the "Delaware Bylaws," respectively, and the "Delaware Certificate and Bylaws"
collectively). Accordingly, it is important for stockholders to understand the
differences among these documents and between Delaware and Massachusetts law in
deciding whether to approve the Reincorporation.
A number of differences between Massachusetts and Delaware law and among
the various charter documents of the Company and AspenTech Delaware are
summarized below. The following discussion summarizes the more important
differences in the corporation laws of Delaware and Massachusetts and does not
purport to be an exhaustive discussion of all of the differences. Such
differences can only be determined in full by reference to the Massachusetts
General Laws Annotated (the "MGLA") and to the Delaware General Corporation Law
(the "DGCL") and to the case law interpreting these statutes. In addition, both
Massachusetts and Delaware law provide that many of the statutory provisions as
they affect various rights of holders of shares may be modified by provisions in
the charter or bylaws of the corporation.
SPECIAL MEETING OF STOCKHOLDERS
The DGCL provides that special meetings of stockholders may be called
only by the directors or by any other person or persons as may be authorized by
the corporation's certificate of incorporation or bylaws. The Delaware Bylaws
provide that special meetings may be called at any time by the Chairman of the
Board of Directors, the Chief Executive Officer (or, if there is not a Chief
Executive Officer, the President) or the AspenTech Delaware board of directors.
Under the MGLA, special meetings of stockholders of a corporation with a
class of voting stock registered under the Securities Exchange Act of 1934,
unless otherwise provided in the articles of organization or bylaws, must be
called by the Clerk (or, in certain circumstances, any other officer) upon
written application by stockholders who hold at least 40% in interest of the
capital stock entitled to vote thereon. The Massachusetts Bylaws provide that
special meetings of stockholders may be called by the President or by the board
of directors of the Company, and shall be called by the Clerk or, in case of
death, absence, incapacity or refusal of the Clerk, by any other officer upon
written application of stockholders who hold at least 40% in interest of the
capital stock entitled to be voted at the proposed meeting.
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VOTING REQUIREMENTS AND QUORUMS FOR STOCKHOLDER MEETINGS
Under the DGCL, a majority of the issued and outstanding stock entitled to
vote at any meeting of stockholders shall constitute a quorum for the
transaction of business at such meeting, unless the certificate of incorporation
or bylaws specify a different percentage, but in no event may a quorum consist
of less than one-third of the shares entitled to vote at the meeting. Under the
DGCL, the affirmative vote of the majority of shares present in person or
represented by proxy at a duly held meeting at which a quorum is present and
entitled to vote on the subject matter is deemed to be the act of the
stockholders, unless the DGCL, the certificate of incorporation or the bylaws
specify a different voting requirement.
The Delaware Bylaws provide that, except as otherwise provided by law or
in the Delaware Certificate or Delaware Bylaws, the holders of a majority of the
issued and outstanding stock of AspenTech Delaware entitled to vote shall
constitute a quorum for the transaction of business. The Delaware Bylaws provide
that when a quorum is present, action on a matter is approved by the affirmative
vote of a majority of the total vote cast, unless the Delaware Certificate,
Delaware Bylaws or DGCL requires a higher percentage of affirmative votes.
Under the MGLA, unless the articles of organization or bylaws provide
otherwise, a majority of the issued and outstanding stock entitled to vote at
any meeting constitutes a quorum. Except for the election of directors and other
fundamental matters, the MGLA does not prescribe the percentage vote required
for stockholder action.
Under the Massachusetts Bylaws, a majority of the shares of the Company
then outstanding and entitled to vote constitutes a quorum for the transaction
of business. The Massachusetts Bylaws provide, except where a different vote is
required by law, the Massachusetts Articles or the Massachusetts Bylaws, all
questions shall be determined by a vote of a majority of each class voting.
BUSINESS CONDUCTED AT STOCKHOLDER MEETINGS
The Delaware Bylaws provide that at an annual meeting, subject to any
other applicable requirements, only such business may be conducted as has been
either specified in the notice of meeting, proposed at the time of the meeting
by or at the direction of the AspenTech Delaware board of directors, or proposed
at such time by a stockholder who had given timely prior written notice to the
Secretary of AspenTech Delaware of such stockholder's intention to bring such
business before the meeting. In all cases, to be timely, notice must be received
by AspenTech Delaware not less than sixty days nor more than ninety days prior
to the meeting (or if fewer than seventy days' notice or prior public disclosure
of the meeting date is given or made to stockholders, not later than the tenth
day following the day on which the notice of the date of the meeting was mailed
or such public disclosure was made, whichever first occurs). The notice must
contain certain information about such business and the stockholder who proposes
to bring the business before the meeting, including a brief description of the
business the stockholder proposes to bring before the meeting, the name and
address of the stockholder proposing such business, the reasons for conducting
the business at the meeting, the class and number of shares of stock of
AspenTech Delaware beneficially owned by such stockholder, and any material
interest of such stockholder in the business so proposed. If the Chairman of a
meeting of AspenTech Delaware stockholders determines that business was not
properly brought before the meeting in accordance with the foregoing procedures,
such business will not be conducted at the meeting. Nothing in the Delaware
Bylaws precludes discussion by any stockholder of any business properly brought
before the annual meeting in accordance with the above-mentioned procedures.
The Massachusetts Bylaws contain provisions substantially similar to the
provisions of the Delaware Bylaws described above.
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NOMINATION AND ELECTION OF DIRECTORS
The Delaware Bylaws provide that, except as otherwise provided by law,
directors are elected by the vote of the holders of a plurality of the shares of
stock present, in person or by proxy, at the meeting and entitled to vote.
Neither the AspenTech Delaware Certificate nor the Delaware Bylaws allows
cumulative voting for the election of directors. The Delaware Bylaws provide
that notice of proposed stockholder nominations of candidates for election as
directors must be received by the Secretary of AspenTech Delaware not less than
sixty days nor more than ninety days prior to the meeting. In the event that
less than seventy days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice from the stockholder must be
mailed or delivered to the Secretary not later than the tenth day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever occurs first. The notice must contain certain
information about the proposed nominee, including age, business and residence
addresses and principal occupation, the number of shares of stock of AspenTech
Delaware beneficially owned and such other information as would be required to
be included in a proxy statement soliciting proxies for the election of the
proposed nominee, and certain information about the stockholder proposing to
nominate that person. AspenTech Delaware may also require any proposed nominee
to furnish other information reasonably required by AspenTech Delaware to
determine the proposed nominee's eligibility to serve as a director. If the
Chairman of a meeting of AspenTech Delaware stockholders determines that a
person was not nominated in accordance with the foregoing procedures, such
person shall not be eligible for election as a director.
The Massachusetts Bylaws contain provisions substantially similar to the
provisions of the Delaware Bylaws described above.
INSPECTION RIGHTS
Under the DGCL, every stockholder has a right to examine, in person or by
agent or attorney, during the usual hours for business, and for any proper
purpose, the corporation's stock ledger, a list of its stockholders and its
other books and records, and to make copies or extracts therefrom. In order to
exercise the foregoing right, a stockholder must submit a written demand to the
corporation, under oath, stating the purpose of the inspection. Upon refusal of
the corporation (or its agent or an officer of the corporation) to permit an
inspection demanded by a stockholder, or of a failure to reply to a
stockholder's demand within five business days after such demand has been made,
a stockholder may apply to the Delaware Court of Chancery to compel the
inspection. Where a stockholder seeks to have the Chancery Court compel an
inspection of the corporation's books and records, other than its stock ledger
or list of stockholders, the stockholder must first establish that it has
complied with the formal requirements of making a demand for inspection and that
the inspection is for a proper purpose. For purposes of this provision of the
DGCL, a "proper purpose" is one that is reasonably related to such person's
interest as a stockholder. The Delaware Bylaws provide that AspenTech Delaware
shall prepare a complete list of stockholders entitled to vote at a given
meeting, at least ten days before such meeting. Such list shall be open for
examination by any stockholder for any purpose germane to the relevant meeting,
during ordinary business hours, for a period of at least ten days prior to such
meeting.
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The MGLA requires that every domestic corporation maintain in
Massachusetts, and make available for inspection by its stockholders, the
original, or attested copies of, the corporation's articles of organization,
bylaws, records of all meetings of incorporators and stockholders, and the stock
and transfer records listing the names of all stockholders and their record
addresses and the amount of stock held by each. The MGLA further provides that
if any officer or agent of a corporation having charge of such corporate records
(or copies thereof) refuses or neglects to exhibit them in legible form or to
produce for examination a list of stockholder names, record addresses and amount
of stock held by each, such officer or agent or the corporation will be liable
to any stockholder for actual damages sustained by reason of such refusal or
neglect. In an action for damages or a proceeding in equity under the foregoing
provision, however, it is a defense to such action that the actual purpose and
reason for the inspection being sought is to secure a list of stockholders or
other information for the purpose of selling the list or other information or of
using them for purposes other than in the interest of the person seeking them,
as a stockholder, relative to the affairs of the corporation. The foregoing
rights relating to inspection are deemed to include the right to copy materials
and to be represented by agent or counsel in exercising these rights. In
addition to the rights of inspection provided by the MGLA, a stockholder of a
Massachusetts corporation has a common law right to inspect additional documents
which, if such request is refused by the corporation, may be obtained by
petitioning a court for the appropriate order. In petitioning a court for such
an order, the granting of which is discretionary, the stockholder has the burden
of demonstrating (i) that such holder is acting in good faith and for the
purposes of advancing the interests of the corporation and protecting such
holder's own interest as a stockholder and (ii) that the requested documents are
relevant to those purposes.
The Massachusetts Bylaws provide that the original or attested copies of
the Massachusetts Articles, the Massachusetts Bylaws and records of all meetings
of incorporators and stockholders, and the stock and transfer records, shall be
kept in Massachusetts at the principal office of the Company, or at an office of
its Clerk, resident agent or transfer agent. The Massachusetts Bylaws also
provide that such corporate documents shall be available at all reasonable times
for inspection by any stockholder for any proper purpose but not to secure a
list of stockholders or other information for the purpose of selling such list
or information or copies thereof or of using the same for a purpose other than
in the interest of the applicant, as a stockholder, relative to the affairs of
the Company.
ACTION BY CONSENT OF STOCKHOLDERS
Under the DGCL, unless the certificate of incorporation provides
otherwise, any action required or permitted to be taken by stockholders at any
annual or special meeting may be taken without a meeting and without prior
notice, if the stockholders having the number of votes that would be necessary
to take such action at a meeting at which all stockholders were present and
voted, consent to the action in writing and the written consents are filed with
the records of the meetings of stockholders. All such consents must, in order to
be effective, be signed and delivered to the corporation within sixty days after
the earliest dated consent is delivered to the corporation. The Delaware
Certificate and Bylaws prohibit stockholder action by written consent in lieu of
a meeting and require the affirmative vote of the holders of at least 75% of the
voting power of all then outstanding shares of stock, voting together as a
single class, to amend this restriction.
Under the MGLA, any action required or permitted to be taken by
stockholders at a meeting may be taken without a meeting if all stockholders
entitled to vote on the matter consent to the action in writing and the written
consents are filed with the records of the meetings of stockholders. The
Massachusetts Bylaws provide that any action by stockholders may be taken
without a meeting if all stockholders entitled to vote on the matter consent to
the action by writing.
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CUMULATIVE VOTING
Under the DGCL, a corporation may provide in its certificate of
incorporation for cumulative voting by stockholders in the election of
directors. The Delaware Certificate does not provide for cumulative voting.
The MGLA has no cumulative voting provision, and the Massachusetts
Articles do not provide for cumulative voting.
DIVIDENDS AND STOCK REPURCHASES
Under the DGCL, a corporation generally is permitted to declare and pay
dividends out of surplus or out of net profits for the current and/or preceding
fiscal year, provided that the capital of the corporation is not less than the
aggregate amount of capital represented by the issued and outstanding stock of
all classes having a preference upon the distribution of assets. In addition,
under the DGCL a corporation may generally redeem or repurchase shares of its
stock if the capital of the corporation is not impaired and if such redemption
or repurchase will not impair the capital of the corporation. Under the DGCL,
the directors of a corporation are jointly and severally liable for negligently
or willfully making improper dividend payments, stock repurchases or
redemptions. Directors held to be liable pursuant to this provision of the DGCL
are entitled to be subrogated to the rights of the corporation against
stockholders receiving dividends on, or assets for the sale or redemption of,
their stock with knowledge that such dividend, repurchase or redemption was
unlawful.
The Delaware Certificate provides that dividends may be declared and paid
on the AspenTech Delaware Common Stock from funds lawfully available therefor as
and when determined by the AspenTech Delaware board of directors and subject to
any preferential dividend rights of any then outstanding Preferred Stock. No
shares of Preferred Stock of AspenTech Delaware are currently outstanding.
Under the MGLA, the directors of a corporation will be jointly and
severally liable if a payment of dividends or a repurchase of a corporation's
stock is (i) made when the corporation is insolvent, (ii) renders the
corporation insolvent or (iii) violates the corporation's articles of
organization. Stockholders to whom a corporation makes any distribution (except
a distribution of stock of the corporation) if the corporation is, or is thereby
rendered, insolvent, are liable to the corporation for the amount of such
distribution made, or for the amount of such distribution which exceeds that
which could have been made without rendering the corporation insolvent, but in
either event only to the extent of the amount paid or distribution to them,
respectively. In such event, a stockholder who pays more than such holder's
proportionate share of such distribution or excess shall have a claim for
contribution against the other stockholders.
The Massachusetts Articles do not contain any additional provisions with
respect to the payment of dividends on the Company's Common Stock. The Company
has never declared or paid cash dividends on its capital stock. No shares of
Preferred Stock of the Company are outstanding.
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CLASSIFICATION, NUMBER AND QUALIFICATION OF THE BOARD OF DIRECTORS
The DGCL permits (but does not require) classification of a corporation's
board of directors into one, two or three classes. Under the DGCL, the number of
directors shall be fixed or determined in the manner the bylaws provide, unless
the corporation's certificate of incorporation fixes the number of directors, in
which case the number of directors may only be changed by amending the
certificate of incorporation. The Delaware Certificate and Bylaws provide for
the classification of the AspenTech Delaware board of directors into three
classes, with the terms of the classes staggered so that only one class is
elected each year, in each case for a three-year term or until a successor to
each director in each such class is duly elected and qualified. The Delaware
Certificate provides that the number of directors will be fixed from time to
time by the AspenTech Delaware board of directors, but shall not be less than
three. The size of the AspenTech Delaware board of directors is currently fixed
at six members. Neither the Delaware Certificate nor the Delaware Bylaws set
forth specific qualification requirements for directors. Any vacancy on the
AspenTech Delaware board of directors, however occurring, including a vacancy
resulting from an enlargement of the AspenTech Delaware board of directors, may
only be filled by vote of a majority of the directors then in office.
The MGLA requires classification of a public corporation's board of
directors into three classes (each having a three-year term) and imposes certain
other obligations, unless the directors of such public corporation elect by vote
to be exempt from such requirement or the stockholders of such public
corporation, at a meeting duly called for such purpose, elect to be exempt from
such requirement by a vote of two-thirds of each class of stock outstanding. The
Massachusetts Articles and Bylaws provide for the classification of the
Company's board of directors into three classes, as nearly equal in number as
possible, with the terms of the classes staggered so that only one class is
elected each year, in each case for a three-year term or until a successor to
each director in each such class is duly elected and qualified. The MGLA
requires that the number of directors be fixed or determined in the
corporation's bylaws but shall not be less than three directors whenever there
are more than two stockholders of record. The Massachusetts Bylaws provide that
the number of directors of the Company shall consist of at least three but not
more than seven members. The Massachusetts Bylaws provide that the number of
directors may be increased or decreased by the affirmative vote of not less than
two-thirds of all outstanding shares of stock of the Company entitled to vote
thereon. Neither the Massachusetts Articles nor the Massachusetts Bylaws set
forth specific qualification requirements for directors.
REMOVAL OF DIRECTORS
Under the DGCL, stockholders may generally remove directors with or
without cause by a majority vote; however, stockholders may remove members of a
classified board only for cause, unless the certificate of incorporation
provides otherwise. The Delaware Certificate states that any director may be
removed only for cause by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of AspenTech Delaware entitled
to vote at a meeting of the stockholders called for that purpose.
The Massachusetts Bylaws provide that a director may be removed from
office at any time, but only for cause and only by either the vote of not less
than two-thirds of the holders of the shares then entitled to vote or by the
vote of a majority of the directors then in office.
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VACANCIES ON THE BOARD OF DIRECTORS
Under the DGCL, unless otherwise provided in the certificate of
incorporation or bylaws, vacancies on the board of directors and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by the vote of a majority of directors then in office, even though
less than a quorum. The DGCL also provides that where directors are elected by
classes or series of stock, vacancies are to be filled by the remaining
directors elected by the class or series in whose directorships the vacancy
occurs. The Delaware Certificate and Bylaws provide that newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies in the AspenTech Delaware board of directors for any other
reason may be filled only by a majority vote of the directors then in office,
although less than a quorum, or by a sole remaining director. A director elected
to fill a vacancy shall be elected to hold office until the next election of the
class for which such director shall have been chosen, subject to the election
and qualification of his or her successor and to his or her earlier death,
resignation or removal.
The MGLA provides that in the case of a classified board (such as the
Company's), any vacancy in the board of directors, including a vacancy resulting
from the enlargement of the board of directors, shall be filled solely by the
affirmative vote of a majority of the directors then in office, even though less
than a quorum. The Massachusetts Bylaws also provide that newly created
directorships resulting from any increase in the number of directors or any
vacancy shall be filled solely by the Company's board of directors.
EXCULPATION OF DIRECTORS
The DGCL permits a corporation to provide in its certificate of
incorporation that a director shall not be personally liable for monetary
damages stemming from breaches of fiduciary duties. Under the DGCL, a charter
provision limiting directorial liability cannot relieve a director of personal
liability for (i) any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
unlawful payment of dividends or unlawful repurchases or redemptions of stock or
(iv) any transactions from which the director derived an improper personal
benefit.
In Massachusetts, a corporation's articles of organization may limit the
personal liability of its directors for breaches of their fiduciary duties.
Under the MGLA, this limitation is generally unavailable for acts or omission by
a director which (i) were in violation of such director's duty of loyalty, (ii)
were in bad faith or which involved intentional misconduct or a knowing
violation of law or (iii) involved in a financial profit or other advantage to
which the director was not legally entitled. The MGLA also prohibits the
elimination or limitation of director liability for unauthorized loans to
insiders or distributions that occur when a corporation is, or which renders a
corporation, insolvent.
The Delaware Certificate and the Massachusetts Articles provide for
limitations on directors' liability as permitted by the DGCL and the MGLA,
respectively.
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INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Both the DGCL and the MGLA generally permit indemnification of directors,
officers, employees and certain others for expenses incurred by them by reason
of their position with the corporation, if such person has acted in good faith
and with the reasonable belief that his or her conduct was in or not opposed to
the best interest of the corporation. However, unlike the MGLA, the DGCL does
not permit a corporation to indemnify persons against judgments in actions
brought by or in the right of the corporation (although it does permit
indemnification in such situations if approved by the Delaware Court of
Chancery) and for expenses related to such actions.
The Delaware Certificate provides that no director shall be personally
liable for any monetary damages for any breach of fiduciary duty as a director
to the maximum extent permitted under Delaware law. The Delaware Certificate
also provides that AspenTech Delaware shall indemnify any director or officer of
AspenTech Delaware (i) against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement incurred in connection with any
litigation or other legal proceeding (other than an action by or in the right of
AspenTech Delaware) brought against him by virtue of his position as a director
or officer of AspenTech Delaware if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of AspenTech
Delaware, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (ii) against all
expenses (including attorneys' fees) and amounts paid in settlement incurred in
connection with any action by or in the right of AspenTech Delaware brought
against him by virtue of his position as a director or officer of AspenTech
Delaware if he acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interest of AspenTech Delaware, except that no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to AspenTech Delaware, unless a court
determines that he is entitled to indemnification of such expenses.
Notwithstanding the foregoing, to the extent that a director or officer has been
successful, on the merits or otherwise, including the dismissal of an action
without prejudice, he is required to be indemnified by AspenTech Delaware
against all expenses (including attorneys' fees) incurred in connection
therewith. Indemnification is required to be made unless AspenTech Delaware
determines that the applicable standard of conduct required for indemnification
has not been met. In the event of a determination by AspenTech Delaware that the
director or officer did not meet the applicable standard of conduct required for
indemnification, or if AspenTech Delaware fails to make an indemnification
payment within sixty days after such payment is claimed by such person, such
person is permitted to petition the court to make an independent determination
as to whether such person is entitled to indemnification. As a condition
precedent to the right of indemnification, the director or officer must give
AspenTech Delaware notice of the action for which indemnity is sought and
AspenTech Delaware has the right to participate in such action or assume the
defense thereof. The Delaware Certificate further provides that, in the event
that Delaware law is amended to expand the indemnification permitted to
directors or officers, AspenTech Delaware must indemnify those persons to the
fullest extent permitted by such law as so amended.
The Massachusetts Bylaws provide that the Company shall, to the fullest
extent legally permissible, indemnify each of its directors and officers
(including persons who were acting at its request as directors, trustees or
officers of another organization, including service with respect to any employee
benefit plan) against all expenses, liabilities and losses (including attorneys'
fees, judgments, fines, ERISA, excise taxes or penalties, and amounts paid in
settlement) reasonably incurred or suffered by such person in connection
therewith; provided, however, that the Company shall indemnify any such person
in connection with a proceeding initiated by such person only if such proceeding
was authorized by the Company's board of directors.
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TRANSACTIONS WITH INTERESTED PARTIES
The DGCL provides that no transaction between a corporation and one or
more of its directors or officers, or an entity in which one or more of its
directors or officers are directors or officers or have a financial or other
interest, shall be void or voidable solely for that reason, nor will such a
transaction be void or voidable solely because the director or officer is
present at or votes at the meeting of the board of directors or committee which
authorizes the transaction or solely because his or her votes are counted for
such purpose, provided that (i) the material facts as to the relationship or
interest and as to the transaction are disclosed or are known to the board of
directors or a committee thereof and the board or committee authorizes the
transaction by the affirmative vote of a majority of the disinterested directors
even though the disinterested directors number less than a quorum, (ii) the
material facts as to the interested director's or officer's relationship or
interest and as to the transaction are disclosed or are known to the
stockholders entitled to vote thereon and the transaction is specifically
approved in good faith by vote of those stockholders or (iii) the transaction is
fair as to the corporation as of the time it is authorized, approved or ratified
by the board of directors or committee or the stockholders. The DGCL permits
common or interested directors to be counted in determining the presence of a
quorum at a meeting of the board or of a committee that authorizes an interested
director or officer transaction. The Delaware Bylaws contain a provision
regarding transactions with interested parties which substantially tracks the
provisions of the DGCL summarized above.
The MGLA contains no provision comparable to that of the DGCL. The
Massachusetts Bylaws provide that no transaction of the Company shall, in the
absence of fraud, be affected or invalidated by the fact that any stockholder,
director or officer of the Company or any organization of which he may be a
director, officer, stockholder or a member may be a party to or may have an
interest in such transaction, provided that the nature and extent of such
interest was disclosed to, or known by, the entire board of directors of the
Company before acting on such transaction.
FUNDAMENTAL TRANSACTIONS
The DGCL generally requires that mergers and consolidations, and sales,
leases or exchanges of all or substantially all of a corporation's property and
assets, be approved both by the directors and by a vote of the holders of a
majority of the outstanding stock entitled to vote, though a corporation's
certificate of incorporation may require a greater-than-majority vote. Under the
DGCL, a corporation that is the surviving corporation in a merger need not have
stockholder approval for the merger if (i) each share of the surviving
corporation's stock outstanding prior to the merger remains outstanding in
identical form after the merger, (ii) there is no amendment to its certificate
of incorporation and (iii) the consideration going to stockholders of the
non-surviving corporation is not common stock (or securities convertible into
common stock) of the surviving corporation or, if it is such stock or securities
convertible into such stock, the aggregate number of shares of common stock
actually issued or delivered, or initially issuable upon conversion, does not
exceed twenty percent of the shares of the surviving corporation's common stock
outstanding immediately prior to the effective date of the merger. The Delaware
Certificate does not provide anything different from the DGCL requirements.
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The MGLA generally requires approval of mergers and consolidations and
sales, mortgages, leases or exchanges of all or substantially all of a
corporation's property by a vote of two-thirds of the shares of each class of
stock outstanding and entitled to vote thereon, except that (i) the articles of
organization may provide (which the Massachusetts Articles do not) for a vote of
a lesser proportion but not less than a majority of each such class and (ii)
unless required by the corporation's articles of incorporation (which the
Massachusetts Articles do not), an agreement providing for a merger need not be
submitted to the stockholders of a corporation surviving a merger but may be
approved by vote of its directors if (a) the agreement of merger does not change
the name, the amount of shares authorized of any class of stock or other
provisions of the articles of organization of such corporation, (b) the
authorized unissued shares or shares held in the treasury of such corporation of
any class of stock of such corporation to be issued or delivered pursuant to the
agreement of merger do not exceed 15% of the shares of such corporation of the
same class outstanding immediately prior to the effective date of the merger,
and (c) the issue by vote of the directors of any unissued stock to be issued
pursuant to the agreement of merger has been authorized in accordance with the
provision of the MGLA governing the issue of authorized but unissued capital
stock.
The Company is subject to the provisions of Chapter 110F of the MGLA, an
antitakeover law. In general, this statute prohibits a Massachusetts corporation
with more than 200 stockholders from engaging in a "business combination" with
"interested stockholders" for a period of three years after the date of the
transaction in which the person becomes an interested stockholder, unless (i)
the interested stockholder obtains the approval of the board of directors prior
to becoming an interested stockholder, (ii) the interested stockholder acquires
ninety percent of the outstanding voting stock of the corporation (excluding
shares held by certain affiliates of the corporation) at the time the
stockholder becomes an interested stockholder, or (iii) the business combination
is approved by both the board of directors and holders of two-thirds of the
outstanding voting stock of the corporation (excluding shares held by the
interested stockholder). An "interested stockholder" is a person who, together
with affiliates and associates, owns (or at any time within the prior three
years did own) five percent or more of the corporation's voting stock. A
"business combination" includes a merger, consolidation, certain stock or asset
sales, and certain other specified transactions resulting in a financial benefit
to the interested stockholder. The Company may at any time elect not to be
governed by Chapter 110F by amending its Restated Articles of Organization and
By-Laws by a vote of a majority of the stockholders entitled to vote, but such
an amendment would not be effective for twelve months and would not apply to a
business combination with any person who became an interested stockholder prior
to the adoption of the amendment.
In addition, MGLA Chapter 110D, entitled "Regulation of Control Shares
Acquisitions," applies to the Company and provides, in general, that any
stockholder of a corporation subject to this statute who acquires twenty percent
or more of the outstanding voting stock of such corporation may not vote such
stock unless the other stockholders of such corporation so authorize.
MGLA Chapter 156B, Section 50A, requires that publicly held Massachusetts
corporations that have not "opted out" of Secion 50A have a classified board of
directors consisting of three classes as nearly equal in size as possible.
Section 50A also provides that directors who are so classified shall be subject
to removal by the stockholders only for cause. The Company's Amended and
Restated by-Laws contain provisions which reflect Section 50A.
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ANTI-TAKEOVER MEASURES
The Board believes that a hostile takeover attempt may have a negative
effect on the Company and its stockholders. Takeover attempts that have not been
negotiated or approved by the board of a corporation can seriously disrupt the
business and management of a corporation and generally present the risk of terms
which are less favorable to all of the stockholders than would be available in a
negotiated, board-approved transaction. By contrast, board-approved transactions
can be carefully planned and undertaken at an opportune time in order to obtain
maximum value for the corporation and all of its stockholders, with due
consideration to matters such as capturing the value from longer term
strategies, the recognition or postponement of gain or loss for tax purposes and
the management and business of the acquiring corporation.
The Massachusetts Articles and Bylaws already include certain provisions
available to the Company under Massachusetts law to deter hostile takeover
attempts and to help provide adequate opportunity for the board to consider and
respond to a takeover offer. These provisions include a classified board,
elimination of cumulative voting, and an advance notice requirement for
stockholder
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proposals. These provisions will also be included in the Delaware Certificate
and Bylaws following the Reincorporation.
In addition, the Company currently has a rights plan (the "AspenTech
Rights Plan"), which would be adopted by the Board of AspenTech Delaware upon
completion of the Reincorporation. For a description of the AspenTech Rights
Plan, see "AspenTech Rights Plan."
AspenTech Delaware would also retain the rights currently available to
the Company under Massachusetts law to issue shares of its authorized but
unissued capital stock. Following the effectiveness of the proposed
Reincorporation, shares of authorized and unissued common stock and preferred
stock of AspenTech Delaware could (within the limits imposed by applicable law)
be issued, or preferred stock could be created and issued with terms, provisions
and rights, to make more difficult, and therefore less likely, a takeover of
AspenTech Delaware. See "Capitalization; Blank Check Preferred" below. Any such
issuance of additional stock could have the effect of diluting the earnings per
share and book value per share of existing shares of Common Stock and Preferred
Stock, and such additional shares could be used to dilute the stock ownership of
persons seeking to obtain control of AspenTech Delaware.
In addition to specific anti-takeover measures, a number of differences
between Massachusetts and Delaware law, which are effective without action by
AspenTech Delaware, could have a bearing on unapproved takeover attempts. One
such difference is the existence of a DGCL provision regulating tender offers by
restricting permitted business combinations with "interested stockholders,"
which provision is intended to limit coercive takeovers of companies. Any
corporation may decide to opt out of the statute in its original certificate of
incorporation or, at anytime, by action of its stockholders. The Company has no
present intention of opting out of the statute. The MGLA has a comparable
provision which prohibits a Massachusetts corporation from engaging in a
business combination with an interested stockholder (a person owning 5% or more
of the outstanding voting stock) for three years following the date on which the
person becomes an interested stockholder.
The Massachusetts Articles also contain provisions regarding takeover
attempts that are comparable to the Delaware statutory provisions. The
Massachusetts Articles provide that certain mergers or other specified
transactions ("Business Combinations") involving the Company or a subsidiary and
another corporation or individual which owns or controls 5% or more of the
Company's capital stock (an "Interested Shareholder") require approval by
two-thirds of the outstanding capital stock of the Company and approval of
holders of a majority of the outstanding shares excluding shares held by an
Interested Shareholder and its affiliates and associates unless a majority of
the members of the Board who are unaffiliated with the Interested Shareholder
approve the Business Combination.
More generally, Delaware law may permit a corporation greater flexibility
in governing its internal affairs and its relationships with stockholders and
other parties, including various anti-takeover measures, than do the laws of
many other states, including Massachusetts. In addition to the measures
described above, certain types of "poison pill" defenses (such as stockholder
rights plans) have been upheld by Delaware courts, but have not yet been
dispositively addressed by Massachusetts courts, thus rendering their
effectiveness and interpretation in Massachusetts less certain.
There can be no assurance that the Board would or would not adopt any
further anti-takeover measures available under Delaware law (some of which may
not require stockholder approval). The availability of such measures under
Delaware law, whether or not implemented, may have the effect of discouraging a
future takeover attempt which a majority of AspenTech Delaware's stockholders
may deem to be in their best interests or in which stockholders may receive a
premium for their shares over
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the then current market price. As a result, stockholders who might desire to
participate in such transactions may not have the opportunity to do so. Although
the Company already has in place a number of anti-takeover measures, the
Company's stockholders should recognize that, if the Reincorporation is adopted,
the effect of such measures, along with the possibility of further discouraging
takeover attempts, may be to limit in certain respects the rights of
stockholders of AspenTech Delaware compared with the rights of stockholders of
the Company.
The Board recognizes that hostile takeover attempts do not always have
the unfavorable consequences or effects described above and may frequently be
beneficial to the stockholders, providing all of the stockholders with
considerable value for their shares. To the extent that the Reincorporation may
provide greater deterrence to takeover offers and greater defenses against
takeovers, the Reincorporation may have the effect of discouraging or defeating
future takeover attempts which a substantial number or majority of AspenTech
Delaware's stockholders might wish to accept and which might provide a
substantial premium over market prices. However, the Board believes that the
potential suddenness and disadvantages of unapproved takeover attempts (such as
disruption of the Company's business and the possibility of terms which may be
less favorable to all of the stockholders than would be available in a
board-approved transaction) are sufficiently great that, on balance, prudent
steps to reduce the likelihood of such takeover attempts and to help ensure that
the Board has adequate opportunity to fully consider and respond to any takeover
attempt and actively negotiate its terms, are in the best interests of the
Company and its stockholders. The Board also believes that any additional
defenses and deterrence provided by the Reincorporation are incremental in light
of the Company's existing takeover defenses.
COMMON SHARE PURCHASE RIGHTS PLAN
The AspenTech Rights Plan will be adopted by the Board of AspenTech
Delaware and upon consummation of the Reincorporation the Rights will be
converted into rights to purchase shares of Common Stock of AspenTech Delaware.
Because of favorable court decisions in Delaware, and a lack of dispositive
court decisions in Massachusetts, the validity and interpretation of stockholder
rights plans comparable to the AspenTech Rights Plan is substantially more
certain under Delaware law. A vote in favor of the proposed Reincorporation will
result in the assumption of the AspenTech Rights Plan by AspenTech Delaware.
Terms of the AspenTech Rights Plan provide for a dividend distribution of
one common share purchase right (a "Right") for each outstanding share of common
stock of the Company. Each Right entitles the registered holder to purchase from
the Company one one-hundredths of a share of Series A Participating Cumulative
Preferred Stock, at an exercise price of $175 per share, subject to adjustment,
and a redemption price of $0.01 per Right. The principal terms of the AspenTech
Rights Plan are set forth in the Stockholder Rights Plan, dated as of October 9,
1997, between the Company and American Stock Transfer and Trust Company, as
Rights Agent. See "AspenTech Rights Plan."
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CHARTER AMENDMENTS
Under the DGCL, charter amendments require the approval of the board of
directors and both a general vote of a majority of all outstanding shares
entitled to vote thereon, and a class vote of a majority of outstanding shares
of each class entitled to vote as a class. In addition, the DGCL requires a
class vote when, among other things, an amendment will adversely affect the
powers, preferences or special rights of a particular class of stock. Under the
DGCL, a provision in a corporation's certificate of incorporation requiring a
supermajority vote of the Board of Directors or stockholders may be amended only
by such supermajority vote. The Delaware Certificate provides that,
notwithstanding the provisions of the DGCL, the affirmative vote of the holders
of at least 75% of the shares of AspenTech Delaware capital stock issued,
outstanding and entitled to vote shall be required for any amendment to the
Delaware Certificate with regards to the election, removal and powers of the
AspenTech Delaware board of directors, actions of the stockholders by written
consent and special meetings of stockholders. In addition, any amendment, repeal
or modification of the indemnification provisions of the Delaware Certificate
shall be prospective only.
Under the MGLA, a majority vote of each class of stock outstanding and
entitled to vote thereon is required to authorize an amendment of the articles
of organization effecting one or more of the following: (i) an increase or
reduction of the capital stock of any authorized class; (ii) a change in the par
value of authorized shares with par value, or any class thereof; (iii) a change
of authorized shares (or any class thereof) from shares with par value to shares
without par value, or from shares without par value to shares with par value;
(iv) certain changes in the number of authorized shares (or any class thereof);
or (v) a corporate name change. Subject to certain conditions, a two-thirds vote
of each class of stock outstanding and entitled to vote thereon is required to
authorize any other amendment of the articles of organization, or, if the
articles of organization so provide for a vote of a lesser proportion but not
less than a majority of each class of stock outstanding and entitled to vote
thereon. If any amendment requiring a two-thirds vote would adversely affect the
rights of any class or series of stock a two-thirds vote of such class voting
separately, or a two-thirds vote of such series, voting together with any other
series of the same class adversely affected in the same manner, is also
necessary to authorize such amendment. The Massachusetts Articles and Bylaws do
not contain any additional provisions with respect to the amendment of the
Massachusetts Articles.
AMENDMENTS TO BYLAWS
The DGCL provides that stockholders may amend a corporation's bylaws and,
if so provided in its charter, the board of directors may also have this power.
Under the DGCL, the power to adopt, amend or repeal bylaws lies in the
stockholders entitled to vote; provided, however, that any corporation may, in
its certificate of incorporation, confer the power to adopt, amend or repeal
bylaws upon the directors.
The Delaware Bylaws grant the AspenTech Delaware board of directors the
authority to amend or repeal the Delaware Bylaws by the affirmative vote of a
majority of the directors present at any regular or special meeting of the
AspenTech Delaware board of directors at which a quorum is present. The
stockholders may amend or repeal the Delaware Bylaws by the affirmative vote of
the holders of a majority of the outstanding shares of capital stock of
AspenTech Delaware entitled to vote at a meeting of the stockholders, provided
the notice of such meeting sent to stockholders contained notice of such
amendment or repeal. The affirmative vote of the holders of at least 75% of the
outstanding shares of capital stock of AspenTech Delaware entitled to vote is
required to amend or repeal provisions (or adopt any inconsistent provision) of
the Delaware Bylaws relating to special meetings of stockholders, nomination of
directors, notice of business at annual meetings, stockholder action without
meetings, organization of stockholder meetings, amendment of the Bylaws and any
provisions relating to the election, powers, meetings and removal of directors.
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The MGLA provides that stockholders may amend a corporation's bylaws and,
if so provided in its charter, the board of directors may also have this power.
Under the MGLA, the power to make, amend or repeal bylaws also lies in the
stockholders entitled to vote; provided, that the directors may also make, amend
or repeal the bylaws, except with respect to any provision which by law, the
articles of organization, the bylaws may provide that the directors may also
make, amend or repeal the bylaws, except with respect to any provision which by
law, the articles of organization or the bylaws requires action by the
stockholders.
The Massachusetts Articles provide that the Company's board of directors
may amend or repeal the Massachusetts Bylaws, except as provided by law or the
Massachusetts Bylaws. The Massachusetts Bylaws provide that the Massachusetts
Bylaws may be amended or repealed by either the stockholders or a majority of
the directors then in office, except that no amendment may be made by the board
of directors on matters reserved to the stockholders by law or the Massachusetts
Articles or which changes the provisions of the Massachusetts Bylaws relating to
meetings of stockholders or removal of directors. The Massachusetts Bylaws
further provide that the provisions of the Massachusetts Bylaws relating to the
number, election and term of office of directors, removal of directors, director
vacancies or indemnification shall not be repealed, modified or amended in any
respect unless approved by (i) the board of directors and the stockholders or
(ii) the holders of not less than two-thirds of all outstanding shares of stock
of the Company entitled to vote thereon.
APPRAISAL RIGHTS
Under the DGCL, appraisal rights are available to dissenting stockholders
in connection with a statutory merger or consolidation in certain specified
situations. Appraisal rights are not available under the DGCL when a corporation
is to be the surviving corporation and no vote of its stockholders is required
in order to approve the merger. In addition, unless otherwise provided in a
corporation's charter, no appraisal rights are available under the DGCL to
holders of shares of any class of stock which is either (i) listed on a national
securities exchange or designated as a national market system security on an
inter-dealer quotation system by the National Association of Securities Dealers,
Inc. or (ii) held of record by more than 2,000 stockholders, unless such
stockholders (in (i) or (ii)) are required by the terms of the merger to accept
in exchange for their shares anything other than: (a) shares of stock of the
surviving corporation; (b) shares of stock of another corporation which are or
will be listed on a national securities exchange or designated as a national
market system security on an inter-dealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than 2,000
stockholders; (c) cash in lieu of fractional shares of such stock; or (d) any
combination thereof. Appraisal rights are not available under the DGCL in the
event of the sale, lease or exchange of all or substantially all of a
corporation's assets or the adoption of an amendment to its certificate of
incorporation, unless such rights are granted in the certificate of
incorporation. The Delaware Certificate does not grant such rights.
Under the MGLA, a properly dissenting stockholder is entitled to received
the appraised value of his shares when the corporation votes (i) to sell, lease
or exchange all or substantially all of its property and assets, (ii) to adopt
an amendment to its articles of organization which adversely affects the rights
of the stockholder, or (iii) to merge or consolidate with another corporation,
unless a vote of the stockholders was not required to approve such merger or
consolidation.
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III. PROPOSAL THREE - AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN
The Board of Directors has adopted an amendment to the Company's 1995
Stock Option Plan, subject to stockholder approval, providing for an increase in
the number of shares authorized for issuance thereunder on the first day of
fiscal years 1999, 2000 and 2001, in each case by an amount equal to 5% of the
Common Stock outstanding on the preceding June 30.
The amendment also clarifies the vesting schedule, adds a withholding tax
payment commitment from the optionees for exercising nonstatutory options,
clarifies the terms of termination with respect to non-employee consultant
optionees, and clarifies the anti-dilution provisions.
AN AFFIRMATIVE VOTE OF A MAJORITY OF THE COMMON STOCK REPRESENTED IN
PERSON OR BY PROXY AT THE MEETING IS NECESSARY TO APPROVE THE AMENDMENTS TO THE
1995 STOCK OPTION PLAN. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE PROPOSAL TO AMEND THE 1995 STOCK PLAN.
BACKGROUND
The Company currently has four plans which deal with the granting of
options, including (a) the 1995 Stock Option Plan (the "1995 Plan"), which
initially covered 1,600,000 shares of Common Stock (post-split) and was
automatically increased in July of 1996 and 1997, (b) the 1995 Employees' Stock
Purchase Plan (the "1995 Employees Plan"), which initially covered 500,000
shares of Common Stock (post-split) for issuance to employees participating in
the Company's stock purchase program, (c) the 1995 Directors Stock Option Plan,
which provides for a grant of 12,000 shares of Common Stock at fair market value
upon the initial election of a new director and subsequent options to purchase
4,000 shares, or, if approved under Proposal Three, 24,000 shares initially and
8,000 shares of Common Stock annually, ("1995 Directors Plan"), and (d) the 1997
Special Stock Option Plan ("1997 Special Plan") which covers 250,000 shares of
Common Stock for issuance to employees, consultants and directors of newly
acquired businesses. This proposal is to continue the automatic increase feature
of the 1995 Plan for an additional three years.
DESCRIPTION OF 1995 STOCK OPTION PLAN
The 1995 Plan replaced the 1988 Stock Option Plan and initially covered
1,600,000 shares (post-split) of Common Stock. At July 1, 1996 and July 1, 1997
the 1995 Plan expanded to cover an additional 5% of the Common Stock outstanding
on the preceding June 30. The present proposal is to extend the automatic
increase of 5% for the next three fiscal years.
The 1995 Plan is intended to advance the interests of the Company and its
stockholders by improving the Company's ability to attract and retain qualified
individuals who are in a position to contribute to the management and growth of
the Company and its subsidiaries and to provide additional incentive for such
individuals to contribute to the Company's future success.
The 1995 Plan provides that the Company may grant options for not more
than the stated number of shares of its Common Stock, subject to increase or
decrease in the event of subsequent stock splits or other capital changes. In
the event that any option expires or terminates for any reason without being
exercised in full, the unpurchased shares covered thereby will be available for
subsequent rants under the 1995 Plan. Options under the 1995 Plan may be granted
on or after December 18, 1995 but not later than November 30, 2005.
An option under the 1995 Plan may be granted only to a key employee or
key advisor of the Company or its subsidiaries. Key employees may receive either
incentive options or nonstatutory options, as decided by the Compensation
Committee, but key advisors may receive only nonstatutory options. The aggregate
fair market value of common stock for which incentive options held by any
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participant may first become exercisable in any calendar year (determined as of
the time the incentive option is granted) shall not exceed $100,000. No more
than 1,000,000 shares may be subject to options to any one key employee or key
advisor.
The exercise price under each incentive option granted pursuant to the
1995 Plan shall not be less than 100% of the fair market value on the date of
grant. The exercise price of each nonstatutory option is not so limited. An
option may be exercised in exchange for cash or shares of Common Stock equal in
value to the exercise price. An option may also be exercised through a cashless
exercise procedure pursuant to which the optionee provides irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of the
purchased shares and to remit to the Company, out of the sale proceeds, an
amount equal to the aggregate option price payable for the purchased shares plus
all applicable withholding taxes.
The 1995 Plan will continue to be administered by the Compensation
Committee. The Compensation Committee has complete authority, subject to the
limitations described herein, to determine which eligible employees and advisors
will be granted options, the time at which options will be granted, the number
of shares covered by each option, and the option period.
Each option under the 1995 Plan will be evidenced by a written option
agreement in such form as may be approved by the Compensation Committee. Each
option will be exercisable in one or more installments at the time provided in
the option agreement, generally one-sixteenth at the end of each calendar
quarter, except that no incentive option may be exercised later than 10 years
from the date of its grant. Each option will provide that the option will become
immediately exercisable in full in the event of a change of control. Options
granted under the 1995 Plan are not transferable other than by will or the laws
of descent and distribution, and may be exercised during the life of an optionee
only by the optionee. All rights to purchase shares will cease to accrue upon
the death or other termination of employment of an optionee, and any accrued
rights not then exercised are exercisable only within a limited period
thereafter.
The 1995 Plan is intended to qualify as an "incentive stock option plan"
within the meaning of Section 422 of the Internal Revenue Code of 1986, but not
all options granted under the 1995 Plan are required to be incentive options.
Under the applicable Code provisions, an employee will not recognize income
subject to federal income taxation upon either the grant or exercise of an
incentive option under the 1995 Plan, and the Company will not be entitled to a
deduction for federal income tax purposes as a result of the grant or exercise
of the incentive option. Generally, if an optionee disposes of the incentive
option shares more than two years after the date the option was granted and more
than one year after the exercise of the option, the gain or loss on a sale of
the incentive option shares, equal to the difference between the sales price and
the option exercise price, will be treated as long-term capital gain or loss. In
that case, the Company will not be entitled to a deduction at the time the
optionee sells the option shares. If the optionee sells the incentive option
shares within two years after the date the option is granted or within one year
after the date the option is exercised, the optionee will generally be taxed on
an ordinary income basis on the sale of the shares on an amount equal to the
difference between the fair market value at exercise and the incentive option
exercise price. The Company will be allowed a deduction at that time in an
amount equal to the ordinary income realized by the employee. In addition, some
optionees may be subject to a minimum tax on tax preference income. No taxable
income will be recognized by an individual upon the grant of a nonstatutory
option under the 1995 Plan. Upon the exercise of the nonstatutory option,
however, the amount, if any, by which the fair market value of the shares at
exercise exceeds the option exercise price will be treated as ordinary income to
the individual in the year of exercise. In that case, the Company will be
allowed an income tax deduction in an amount equal to the amount the individual
recognizes as ordinary income.
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IV. PROPOSAL FOUR - AMENDMENT TO THE COMPANY'S 1995 DIRECTORS STOCK OPTION
PLAN
The Board of Directors has adopted a proposal to approve an amendment to
the Company's 1995 Directors Stock Option Plan (the "1995 Directors Plan")
increasing the number of share options automatically granted to each director
upon becoming a director from 12,000 to 24,000 shares of Common Stock, and on
the annual meeting date from 4,000 to 8,000 shares of Common Stock, each subject
to adjustment for stock splits, stock dividends, or other capital changes. This
amendment supercedes a provision in the plan which sets forth 12,000 and 4,000
respectively as the number of shares for which an option is to be granted to
each director initially and annually, but does not provide for an adjustment in
such number in the event of capital changes.
AN AFFIRMATIVE VOTE OF A MAJORITY OF THE COMMON STOCK REPRESENTED IN
PERSON OR BY PROXY AT THE MEETING IS NECESSARY TO APPROVE THE AMENDMENTS TO THE
1995 DIRECTORS STOCK OPTION PLAN. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE PROPOSAL TO AMEND THE 1995 DIRECTORS STOCK OPTION
PLAN.
DESCRIPTION OF 1995 DIRECTORS STOCK OPTION PLAN
The 1995 Directors Plan as adopted by the Board of Directors and approved
by the stockholders covers 240,000 shares (post-split) of Common Stock of the
Company. It is intended to improve the ability of the Company to attract and
retain qualified directors and is intended to provide additional incentive for
them to promote the Company's success. (See "Proposal Three - Amendment to the
Company's 1995 Stock Option Plan - Background" for a description of the other
stock option plans.)
Under the 1995 Directors Plan, options are automatically granted without
any discretionary action by the Compensation Committee or the Board. The 1995
Directors Plan provides that each non-employee director is to be granted an
option to purchase 12,000 shares of Common Stock at fair market value upon his
or her initial election as a director and an option to purchase 4,000 shares of
Common Stock at fair market value following any annual meeting if such director
continues as a non-employee director. Options under the 1995 Directors Plan may
be granted on or after December 18, 1995 but not later than November 30, 2005.
An option may be exercised in exchange for cash or shares of Common Stock
equal in value to the exercise price. An option may also be exercised through a
cashless exercise procedure pursuant to which the optionee provides irrevocable
written instructions to a designated brokerage firm to effect the immediate sale
of the purchased shares and to remit to the Company, out of the sale proceeds,
an amount equal to the aggregate option price payable for the purchased shares.
Each option will become immediately exercisable in full in the event of a
change of control. Options granted under the 1995 Directors Plan are not
transferable other than by will or the laws of descent and distribution, and may
be exercised during the life of an optionee only by the optionee. All rights to
purchase shares will cease to accrue upon the death or other termination of
service of an optionee, and any accrued rights not then exercised are
exercisable only within a limited period thereafter.
The amount, if any, by which the fair market value of the shares at
exercise exceeds the option exercise price will be treated as ordinary income to
the optionee in the year of exercise, and the Company will be allowed an income
tax deduction in an amount equal to the amount the optionee recognizes as
ordinary income.
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V. PROPOSAL FIVE - PROPOSAL TO ADOPT THE COMPANY'S 1998 EMPLOYEE
STOCK PURCHASE PLAN
The Company maintains an Employee Stock Purchase Program (the "Stock
Purchase Program") that permits employees to purchase the Company's Common Stock
at a discounted price. The Board believes that the Stock Purchase Program is an
important benefit in recruiting and retaining employees. The Stock Purchase
Program is designed to encourage and assist employees of the Company and its
subsidiaries in acquiring an equity interest in the Company through the purchase
of Common Stock.
The Board of Directors has adopted a new 1998 Employee Stock Purchase
Plan (the "1998 Employee Plan"), subject to approval by the stockholders, which
covers 1,000,000 shares of Common Stock issuable upon payment for the shares
under options granted solely to employees. This plan would replace the Company's
current 1995 Employees' Stock Purchase Plan (the "1995 Employee Plan") after the
end of the current enrollment period ending December 31, 1997. As of June 30,
1997 there were 231,570 shares available for issuance under the 1995 Employee
Plan. Enrollment under the 1995 Employee Plan has increased with 498
participants in the ESPP12 offering which ended December 31, 1996; and 670
participants in the ESPP13 offering which ended June 30, 1997. The Board
believes that it is necessary to adopt the 1998 Employee Plan in order to ensure
that there are sufficient shares for all stock purchases under the Stock
Purchase Program through calendar 1998.
The terms of the 1998 Employee Plan are substantially identical to the
terms of the 1995 Employee Plan, except that the new 1998 Employee Plan provides
for 1,000,000 shares, and requires employees to give notice of premature
disposition of shares to allow the Company to determine withholding tax
requirements. All other changes were made for purposes of clarifying the terms
and provisions of the plan.
AN AFFIRMATIVE VOTE OF A MAJORITY OF THE COMMON STOCK REPRESENTED IN
PERSON OR BY PROXY AT THE MEETING IS NECESSARY TO APPROVE THE ADOPTION OF THE
1998 EMPLOYEE STOCK PURCHASE PLAN. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE PROPOSAL TO ADOPT THE 1998 EMPLOYEES STOCK PURCHASE
PLAN.
DESCRIPTION OF PLAN
All employees of the Company and its subsidiaries who have been employed
for at least one month, for at least twenty hours per week and for more than
five months per year are eligible to participate in the 1998 Employee Plan as of
the first enrollment date following employment. Participants may elect to make
contributions up to a maximum of 10% of base compensation. On the last trading
date of each purchase period, the Company applies the funds then in each
participant's account to the purchase of shares. The trading dates may be
determined by the Compensation Committee of the Board of Directors. Typically
the Compensation Committee designates December 31 and June 30 as the trading
dates. The cost of each share purchased is 85% of the lower of the closing
prices for the Company's Common Stock on (i) the first trading day in the
enrollment period in which the purchase is made and (ii) the exercise date. The
exercise date means a date not more than 27 months after the Grant Date. In
addition the employee's rights to purchase stock will not accrue at a rate which
exceeds $25,000 of fair market value of the stock (determined as of the grant
date) for each calendar year in which the option is outstanding. (See "Proposal
Three - Amendment To The Company's 1995 Stock Option Plan - Background" for a
description of the other stock option plans.)
The 1998 Employee Plan is administered by the Compensation Committee
which may determine whether to grant options under the plan and may specify the
dates which shall be grant date and exercise dates under the plan. The
Compensation Committee may also determine the maximum percentage of each
employee's compensation which may be withheld for the purpose of purchasing
shares of stock, provided that the maximum percentage does not exceed ten
percent. The Compensation Committee may terminate or amend the plan at any time
provided that the Compensation Committee may not, without approval by a majority
of the stockholders, increase the maximum number
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of shares of stock purchasable under the plan, change the description of
employees or classes of employees eligible to receive options, change the manner
of determining the exercise price of option, or extend the period during which
options may be granted or exercised.
VII. ADDITIONAL INFORMATION
INFORMATION CONCERNING AUDITORS
Arthur Andersen LLP, who have been selected by the Board of Directors as
independent public accountants to audit the financial statements of the Company
for the 1998 fiscal year, have served as auditors for the Company since 1982.
Representatives of Arthur Andersen LLP are expected to be at the Meeting and
will have an opportunity to make a statement if they desire to do so. Such
representatives are also expected to be available to respond to appropriate
questions.
PROPOSALS OF STOCKHOLDERS
A stockholder who intends to present a proposal at the 1998 Annual Meeting of
Stockholders for inclusion in the Company's 1998 proxy statement and proxy card
relating to that meeting must submit such proposal by June 30, 1998. In order
for the proposal to be included in the proxy statement, the stockholder
submitting the proposal must meet certain eligibility standards and comply with
certain procedures established by the Securities and Exchange Commission, and
the proposal must comply with the requirements as to form and substance
established by applicable laws and regulations. The proposal must be mailed to
the Company's principal executive office, at the address stated herein, and
should be directed to the attention of the Legal Department.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or 5 with the Securities
and Exchange Commission ( the "SEC"). Such officers, directors and ten-percent
stockholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) reports they file. Based solely on its review of the copies
of such forms received by it, or written representation from certain reporting
persons that no Forms 5 were required for such persons, the Company believes
that all Section 16(a) reports applicable to its officers, directors and
ten-percent stockholders with respect to reportable transactions during the
fiscal year ended June 30, 1997, were filed on a timely basis.
ASPENTECH RIGHTS PLAN
On October 9, 1997, the Board declared a dividend of one Right for each
outstanding share of Common Stock, par value $.10 per share, of the Company (the
"Common Shares"). The Rights will be issued to the holders of record of Common
Shares outstanding on October 9, 1997, and with respect to Common Shares issued
thereafter until the Distribution Date (as defined below) and, in certain
circumstances, with respect to Common Shares issued after the Distribution Date.
Each Right, when it becomes exercisable as described below, will entitle the
registered holder to purchase from the Company one one-hundredth (1/100th) of a
share of Series A Participating Cumulative Preferred Stock, par value $.10 per
share, of the Company (the "Preferred Shares") at a price of $175.00 (the
"Purchase
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Price"). The description and terms of the Rights are set forth in a Rights
Agreement dated as of October 9, 1997 (the "Rights Agreement") between the
Company and American Stock Transfer and Trust Company, as Rights Agent (the
"Rights Agent").
Until the earlier of (i) such time as the Company learns that a person or
group (including any affiliate or associate of such person or group) acquired,
or obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Common Shares (such person or group being called an "Acquiring
Person") or (ii) such date, if any, as may be designated by the Board of
Directors of the Company following the commencement of, or first public
disclosure of an intent to commence, a tender or exchange offer for outstanding
Common Shares which could result in the offeror becoming the beneficial owner of
15% or more of the outstanding Common Shares (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates for Common Shares shall also be deemed to be Right
Certificates, as defined below) and not by separate Right Certificates.
Therefore, until the Distribution Date, the Rights will be transferred with and
only with the Common Shares.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Shares
originally issued after the Distribution Date), and such separate Right
Certificates alone will thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire on October 9, 2007 (the "Expiration Date"), unless earlier redeemed by
the Company as described below.
To preserve the actual or potential economic value of the Rights, the
number of Preferred Shares or other securities issuable upon exercise of a
Right, the Purchase Price and Redemption Price and the number of Rights
associated with each outstanding Common Share are all subject to adjustment by
the Board of Directors as provided in the Rights Agreement in the event of any
change in the Common Shares or Preferred Shares, whether by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Shares or Preferred Shares, as the case
may be (other than distribution of the Rights or regular quarterly cash
dividends) or otherwise.
The Preferred Shares are authorized to be issued in fractions which are
an integral multiple of one one-hundredth (1/100th) of a Preferred Share. The
Company may, but is not required to, issue fractions of shares upon the exercise
of Rights, and, in lieu of fractional shares, the Company may issue certificates
or utilize a depository arrangement as provided by the terms of the Preferred
Shares and, in the case of fractions other than one one-hundredth (1/100th) of a
Preferred Share or integral multiples thereof, may make a cash payment based on
the market price of such shares.
Upon a person or a group becoming an Acquiring Person, the Rights will
entitle each holder of a Right to purchase, for the Purchase Price, that number
of one one-hundredths (1/100ths) of a Preferred Share equivalent to the number
of Common Shares which at the time of the transaction would have a market value
of twice the Purchase Price.
In the event the Company is acquired in a merger or other business
combination or 50% or more of its assets or assets representing 50% or more of
its earning power are sold, leased, exchanged
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or otherwise transferred (in one or more transactions) to a publicly traded
corporation, each Right will entitle its holder to purchase, for the Purchase
Price, that number of common shares of such corporation which at the time of the
transaction would have a market value of twice the Purchase Price. In the event
the Company is acquired in a merger or other business combination or 50% or more
of its assets or assets representing 50% or more of the earning power of the
Company are sold, leased, exchanged or otherwise transferred (in one or more
transactions) to an entity that is not a publicly traded corporation, each Right
will entitle its holder to purchase, for the Purchase Price, at such holder's
option, (i) that number of shares of such entity (or, at such holder's option,
of the surviving corporation in such acquisition, which could be the Company)
which at the time of the transaction would have a book value of twice the
Purchase Price or (ii) if such entity has an affiliate which has publicly traded
common shares, that number of common shares of such affiliate which at the time
of the transaction would have a market value of twice the Purchase Price.
Any Rights that are at any time beneficially owned by an Acquiring Person
(or any affiliate or associate of an Acquiring Person) shall be null and void
and nontransferable, and any holder of any such Right (including any purported
transferee or subsequent holder) shall not have any right to exercise or
transfer any such right.
At any time after a person or a group becomes an Acquiring Person, the
Board of Directors of the Company may exchange all or part of the then
outstanding Rights (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the securities that otherwise would have been issuable to the holder
of each Right upon exercise thereof. The Board of Directors of the Company may
also issue, in substitution for Preferred Shares, Common Shares having an
equivalent market value to the Preferred Shares if, at such time, the Company
has a sufficient number of Common Shares issued but not outstanding or
authorized but unissued.
At any time prior to the earlier of (i) such time as a person becomes an
Acquiring Person and (ii) the Expiration Date, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price (in cash or
Common Shares or other securities of the Company deemed by the Board of
Directors to be at least equivalent in value) of $.01 per Right (the "Redemption
Price").
Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights, the Company shall make an announcement thereof,
and, upon such election, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights therefrom as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
At any time prior to the Distribution Date, the Company may, without
the approval of any holder of the Rights, supplement or amend any provision of
the Rights Agreement (including the date on which the Distribution Date shall
occur, the time during which the Rights may be redeemed or the terms of the
preferred Shares), except that no supplement or amendment shall be made which
reduces the Redemption Price or provides for an earlier Expiration Date.
A copy of the Rights Agreement, including the terms of the Preferred
Shares, has been filed with the Securities and Exchange Commission as an Exhibit
to a Registration Statement on Form 8-A. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by reference.
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FORM 10-K
The Company has filed an Annual Report on Form 10-K for the fiscal year ended
June 30, 1997, with the Securities and Exchange Commission. Stockholders may
obtain a copy of this Report, without charge, by writing to the Company's
principal executive office, at the address stated herein, attention Investor
Relations, or by calling the Investor Relations line at (617) 949-1113.
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OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those set forth in this proxy statement. If other
matters should properly come before the meeting, it is intended that the proxy
holders will vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
Stephen J. Doyle
Clerk
November 14, 1997
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SIDE 1
- ------
ASPEN TECHNOLOGY, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD DECEMBER 16, 1996
The undersigned hereby authorizes and appoints Stephen J. Doyle and Lisa W.
Zappala, and each of them, as proxies with full power of substitution in each,
to vote all shares of Common Stock, par value $.10 per share, of Aspen
Technology, Inc. held of record on Friday, November 10, 1997 by the undersigned
at the Annual Meeting of Stockholders to be held at 3:00 p.m., local time, on
Tuesday, December 16, 1997, at the Royal Sonesta Hotel, Riverfront Room, 2nd
Floor, East Tower, 5 Cambridge Parkway, Cambridge, Massachusetts, 02142, and at
any adjournments thereof, on all matters that may properly come before said
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED BELOW OR, IN
THE ABSENCE OF SUCH DIRECTION, FOR THE SPECIFIED NOMINEES IN PROPOSAL 1 AND FOR
PROPOSALS 2, 3, 4 AND 5 AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES UPON
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
THE DIRECTORS RECOMMEND A VOTE FOR EACH PROPOSAL.
PROPOSAL 1-Election of Lawrence B. Evans and Joan C. McArdle to the Board of
Directors to serve as Class I directors for three-year terms.
/ / FOR the nominees listed above / / WITHHOLD AUTHORITY to vote
(except as marked to the for the nominees listed
contrary below) above
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the name of such nominee on the line below.)
_______________________________________________________________________________
PROPOSAL 2-Approval of the proposal to change the Company's state of
incorporation from Massachusetts to Delaware.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 3-Approval of an amendment to the Company's 1995 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 4-Approval of an amendment to the Company's 1995 Directors Stock
Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 5-Approval of the Company's 1998 Employee Stock Purchase Plan.
/ / FOR / / AGAINST / / ABSTAIN
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SIDE 2
- ------
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THIS PROXY MUST BE SIGNED EXACTLY AS Dated:_________________1997
THE NAME OF THE STOCKHOLDER(S) APPEARS
ON THE LABEL TO THE LEFT.
Signature:_________________
Executors, administrators, trustees, etc.
should give full title as such. If the
signatory is a corporation, please sign Signature:_________________
full corporate name by duly authorized (If held jointly)
officer.
