<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-K/A
-------------------
Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File Number 0-20749
ASPECT DEVELOPMENT, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 25-1622857
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
1300 Charleston Road, Mountain View, CA 94043
(Address of principal executive offices) (Zip code)
(650) 428-2700
(Registrant's Telephone Number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant (based on the closing sale price of the Common Stock as reported
on the Nasdaq National Market on April 15, 1999) was approximately $178,685,608.
The number of outstanding shares of the Registrant's Common Stock as of the
close of business on April 15, 1999 was 31,225,425.
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<PAGE>
PART III
All share and per share numbers in this Form 10-K/A have been adjusted to give
effect to a stock dividend paid on August 13, 1998.
Item 10. Directors and Executive Officers of the Registrant
The names of the current directors and executive officers, their ages
and certain information about them are set forth below:
<TABLE>
<CAPTION>
Name Age Position Held With the Company
<S> <C> <C>
Dr. Romesh Wadhwani.............. 51 Chairman of the Board of Directors and
Chief Executive Officer
Robert L. Evans.................. 46 President, Chief Operating Officer and Director
James C. Althoff................. 45 Executive Vice President and Chief Technical Officer
David S. Dury.................... 50 Vice President and Chief Financial Officer
Kenneth B. Belanger.............. 43 Vice President, Content Business Development
David Horne...................... 46 Vice President, Marketing
Philip G. Nutburn................ 49 Vice President, European Operations
Craig Palmer..................... 38 Vice President, Strategic Sourcing Group
Patrick Quirk.................... 42 Vice President, Americas and Asia/Pacific Sales
William Zierolf.................. 40 Vice President and General Manager, Knowledge Services
Steven Goldby.................... 58 Director
Joseph Prang..................... 43 Director
Dennis Sisco..................... 52 Director
Mark A. Stevens.................. 39 Director
</TABLE>
Dr. Wadhwani founded Aspect in 1990 and has served as Chairman of the Board of
Directors and Chief Executive Officer since January 1991. From January 1982 to
March 1989, Dr. Wadhwani served as Chief Executive Officer of Cimflex
Teknowledge, Corp., a provider of factory automation products and systems. Dr.
Wadhwani continued to serve as Chairman of the Board of Cimflex until July 1990.
From 1973 to 1981, Dr. Wadhwani was Chief Executive Officer of Compuguard
Corporation, a provider of building automation systems. Dr. Wadhwani received
his M.S. and Ph.D. in Electrical Engineering from Carnegie-Mellon University.
Mr. Evans was elected President and Chief Operating Officer and Director of
Aspect in April 1999. From September 1995 to April 1999, Mr. Evans was Partner
at Arthur Andersen Consulting responsible for Supply Chain Practices, Americas.
From November 1993 to September 1995, Mr. Evans was Associate Partner at Arthur
Andersen Consulting responsible for Logistics Strategy Practice. From September
1990 to August 1993, Mr. Evans was Vice President, Customer Support for Mazda
Motor of America, Inc. Mr. Evans holds a B.A. in Economics from MacMurray
College and an M.A. in Economics from Western Illinois University.
Mr. Althoff joined Aspect as Vice President, Software Operations in December
1991 and was appointed Senior Vice President and Chief Technical Officer in
January 1997. From October 1981 to December 1991, Mr. Althoff served as Vice
President of Engineering and General Manager of the Japan Business Unit of VLSI
Technology/Compass Design & Automation, as ASIC developer. Mr. Althoff holds a
B.S. in mathematics from Florida State University and an M.S. in computer
science from California Institute of Technology.
Mr. Dury joined Aspect in April 1996 as Vice President and Chief Financial
Officer. Mr. Dury served as Chief Financial Officer of NetFrame Systems, Inc., a
network server manufacturer, from March 1992 to April 1996. From August 1991 to
February 1992, Mr. Dury served as Senior Vice President and Chief Financial
Officer of Maxtor Corporation, a disk drive manufacturer. From December 1989 to
August 1991, Mr. Dury served as Executive Vice President and Chief Financial
Officer of Boole & Babbage, a software developer. Mr. Dury was employed by Priam
Corporation from February 1983 to February 1989, serving first as Vice President
and Chief Financial Officer, and then as President and Chief Operating Officer.
Mr. Dury had several financial and operating management positions at Intel
Corporation from 1979 to 1983. Mr. Dury holds a B.A. in psychology from Duke
University and an M.B.A. from Cornell University.
Mr. Belanger joined Aspect as Vice President, Data Operations in March 1992.
Mr. Belanger served as Director of Development at ExpertViews, Inc., a component
information systems provider, from September 1989 to October 1991. Mr. Belanger
holds a B.S. in engineering technology from the University of Massachusetts.
<PAGE>
Mr. Horne joined Aspect in September 1996 as Vice President of Marketing. Mr.
Horne was Vice President of Marketing for Concentra Corporation, a sales process
automation software company, from July 1994 to September 1996. From September
1982 to June 1994 he held a variety of sales and marketing management positions
at Computervision Corporation, a software development company, most recently
Director of Worldwide Marketing operations. Mr. Horne holds a B.S. from the
University of Massachusetts and an M.B.A. from Northeastern University.
Mr. Nutburn joined Aspect as Director of European Operations in November 1992.
In January 1997, he was appointed as Vice President, European Operations. Mr.
Nutburn worked as a consultant to Aspect from July 1992 to November 1992. He
served as director of worldwide sales for the electronics design automation
division of GenRad from June 1991 to June 1992. Prior to that time Mr. Nutburn
held various management positions at Silicon Valley Research, Inc. (formerly,
Silvar-Lisco) and with a division of Schlumberger Technologies, Inc. Mr. Nutburn
holds a B.S. in electrical engineering from the University of Northumberland.
Mr. Palmer joined Aspect as Vice President of Marketing in September 1994. In
September 1996 he became Vice President, Online Services. In January 1998 he
became Vice President, Strategic Sourcing Group. From February 1989 to
September 1, 1994, Mr. Palmer was employed at Cadence, most recently as Director
of Marketing from January 1993 to August 1, 1994. Mr. Palmer also worked at
Hewlett-Packard Company from February 1982 to February 1989, where he held
several marketing management positions. Mr. Palmer holds a B.S. in electrical
engineering from the University of Wisconsin.
Mr. Quirk joined Aspect in May 1997 as Vice President of Americas and
Asia/Pacific Sales. From July 1995 to May 1997, he served as Vice President-
Worldwide Sales at Connect, Inc., an electronic commerce software company. From
June 1993 to July 1995, Mr. Quirk served as Vice President-Americas at Avalon
Software, Inc., an enterprise resource planning software company. From April
1989 to May 1993, he served as Group Sales Manager and National Account Manager
at Oracle Corporation. From January 1983 to April 1989, Mr. Quirk held various
sales management positions at Control Data Corporation. Mr. Quirk holds a B.S.
in industrial engineering from the University of Wisconsin-Madison.
Mr. Zierolf joined Aspect as Vice President and General Manager Knowledge
Services in March 1997. From October 1994 to March 1997 Mr. Zierolf served as
President, Chief Executive Officer and Director of Teltech Resource Network,
Inc., an information services and software provider. From February 1982 to
October 1994 he was Vice President of Venture Development for Dun and
Bradstreet. Mr. Zierolf holds a B.S. in Business Administration and Marketing
and a B.S. in Communication Arts from Wittenberg University in Springfield, OH.
Mr. Goldby was elected to Aspect's Board of Directors in March 1993. Mr. Goldby
has been Chairman and Chief Executive officer of Symyx Technologies Inc., a
chemical and electrical materials research and development company, since July
1998. Mr. Goldby was the Chairman of the Board of Directors and Chief Executive
Officer of MDL Information Systems, Inc., an enterprise software company, where
he has been employed since January 1982.
Mr. Prang served as Aspect's President and Chief Operating Officer from May 1994
through April 1999. Mr. Prang has also served as a Director of Aspect since
October 1995. From January 1986 to May 1994, he served in numerous capacities
at Cadence Design Systems, Inc., an electronic design automation software
developer, including Vice President of Marketing, Vice President and General
Manager of System Design Division and President of Systems Division. From June
1979 to January 1986, Mr. Prang served as Vice President of GenRad, Inc., a
company specializing in simulation and test systems. Mr. Prang holds a B.S. in
engineering technology and an M.S.M. from Purdue University. Mr. Prang is also
a director of EPIC Design Technology, Inc., an electronic design automation
software developer.
Mr. Sisco was elected to Aspect's Board of Directors in September 1994. Mr.
Sisco has been a partner in Behrman Capital, a private equity investment firm,
since January 1998. Mr. Sisco was an Executive Vice President at Cognizant
Corporation, an information services company, from February 1995 until February
1997. Prior to that time, beginning in July 1993, Mr. Sisco was a Senior Vice
President at the Dun & Bradstreet Corporation. Mr. Sisco was also the President
of Cognizant Enterprises, a venture capital firm, from December 1988 until
February 1997. Mr. Sisco also serves as a director of TSI Software
International, Inc., a software products firm, Oasis Healthcare Systems, a
software firm specializing in clinical information systems, and Gartner Group,
Inc., a market research firm.
Mr. Stevens was elected to Aspect's Board of Directors in March 1993. Mr.
Stevens has been a general partner of Sequoia Capital, a venture capital firm,
since March 1993. Prior to that time, beginning in July 1989, Mr. Stevens was
an associate at Sequoia Capital. Mr. Stevens is a director of Teragon
Communication Systems and Nvidia Corporation and several privately held
companies. Mr. Stevens holds a B.S. in electrical engineering, a B.A. in
economics and an M.S. in computer engineering from the University of Southern
California and an M.B.A. from the Harvard Business School.
<PAGE>
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
During fiscal 1998, Dr. Wadhwani timely reported all transactions but
reported an incorrect number of shares owned due to an error made in a previous
year. This error was corrected on a Form 5 and by amending Forms 4.
Item 11. Executive Compensation
COMPENSATION OF DIRECTORS
Directors of Aspect receive no compensation for their services as directors.
All directors are eligible for reimbursement for their expenses incurred in
connection with attendance at Board meetings in accordance with company policy.
Each non-employee director also receives nonstatutory stock options under the
1996 Outside Directors' Stock Option Plan (the "Directors' Plan").
Option grants under the Directors' Plan are non-discretionary. On May 23, 1996,
each individual then serving as a non-employee director received an initial
option grant of 10,000 shares of common stock. Each individual subsequently
elected for the first time to serve as a non-employee director receives an
option grant covering 30,000 shares (an "Initial Option"). On the first
business day following each of Aspect's annual meetings of stockholders, each
non-employee director is automatically granted an option to purchase an
additional 10,000 shares of Aspect common stock (an "Annual Option"). No other
options may be granted at any time under the Directors' Plan. The exercise price
of options granted under the Directors' Plan is 100% of the fair market value of
Aspect's common stock on the date of the option grant. Initial Options vest at a
rate of 25% one year after grant date and 1/48 each month thereafter of
optionee's continuous service until fully vested. Annual Options vest at a rate
of 1/12 37 months after grant date and 1/12 each month thereafter of optionee's
continuous service until fully vested.
During the last fiscal year, options covering 10,000 shares were granted to each
non-employee director at an exercise price per share of $31.594. As of April 1,
1999, no options had been exercised under the Directors' Plan.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table shows for the fiscal years ended December 31, 1998,
1997 and 1996, compensation awarded or paid to, or earned by, (i) all
individuals who have served as the Company's Chief Executive Officer during 1998
and (ii) the Company's four other most highly compensated executive officers at
December 31, 1998 (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------
Securities
----------
Underlying
-----------
Salary Bonus Options All Other
Name and Principal ------ ----- ------- ---------
Position Year ($) ($) ($) Compensation ($)
- --------------------------------- ---- --- --- --- ----------------
<S> <C> <C> <C> <C> <C>
Romesh Wadhwani 1998 200,000 100,000 750,000 ----
Chief Executive Officer 1997 200,000 100,000 125,000 4,337 (1)
1996 200,000 90,000 125,000 9,640 (1)
James C. Althoff 1998 182,771 73,298 70,000 ----
Executive Vice President and 1997 159,597 48,373 35,063 ----
Chief Technical Officer 1996 145,000 45,000 25,000 ----
Joseph A. Prang 1998 168,991 85,000 ---- ----
President and Chief Operating Officer 1997 185,000 85,000 35,000 ----
1996 185,000 76,500 50,000 ----
Patrick Quirk (2) 1998 125,000 97,098 ---- 4,200 (3)
Vice President, North America Sales 1997 72,916 79,869 280,000 2,450 (3)
1996 ---- ---- ---- ----
David S. Dury (4) 1998 170,000 51,350 30,000 ----
Vice President and Chief Financial 1997 169,209 37,500 10,000 ----
Officer 1996 114,968 10,000 10,000 ----
- ------------------------
</TABLE>
(1) Represents amounts paid by the Company for executive life insurance
for which Dr. Wadhwani's estate is the beneficiary.
(2) Mr. Quirk joined the Company in May 1997.
(3) Represents amount paid by the Company for a car allowance to Mr.
Quirk.
(4) Mr. Dury joined the Company in April 1996.
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its Amended and
Restated 1992 Stock Option Plan (the "1992 Plan"). The following tables show,
for the fiscal year ended December 31, 1998, certain information regarding
options granted to, exercised by, and held at year-end by, the Named Executive
Officers:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
------------------------------
Number of % of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted to Annual Rates of
Options Employees Exercise Stock Price
Granted In Fiscal Price Expiration Appreciation for Option
(#) (1) Year(2) ($/Sh) Date Term(3)
------- ------ ------ ---- ------------------------
Name 5% ($) 10% ($)
------ -------
<S> <C> <C> <C> <C> <C> <C>
Dr. Wadhwani 750,000 30.00% 29.125 08/31/08 13,737,714 34,813,312
Mr. Althoff 70,000 2.80% 21.844 02/19/08 961,630 2,436,960
Mr. Prang ---- ---- ---- ---- ---- ----
Mr. Quirk ---- ---- ---- ---- ---- ----
Mr. Dury 30,000 1.20% 21.844 02/19/08 412,127 1,044,411
</TABLE>
- -------------------------------
(1) Options generally vest over four years. In the event of a sale, merger or
consolidation, sale of substantially all the assets or dissolution of
Aspect (each a "Change of Control"), the surviving corporation may either
assume outstanding options or substitute similar options for those
outstanding under the 1992 Plan. Options that are not assumed, substituted
or exercised prior to a Change of Control shall terminate on the
occurrence of the Change of Control.
(2) Based on options to purchase an aggregate of 2,469,724 shares granted to
employees (including employee directors) during the fiscal year ended
December 31, 1998. The foregoing total excludes options granted to
consultants and nonemployee directors. There were no stock appreciation
rights granted during 1998.
(3) The potential realizable value is based on the term of the option at its
time of grant. It is calculated by assuming that the stock price on the
date of grant appreciates at the indicated annual rate, compounded
annually for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated stock
price. These amounts represent certain assumed rates of appreciation only,
in accordance with the rules of the SEC, and do not reflect Aspect's
estimate or projection of future stock price performance. Actual gains, if
any, are dependent on the actual further performance of the common stock,
and no gain to the optionee is possible unless the stock price increases
over the option term.
<PAGE>
Aggregated Option Exercises in Last Fiscal Year, and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities
Underlying
Unexercised Options Value of Unexercised
Shares at FY-End (#) In-the-Money Options at
Acquired on Value Realized Exercisable/ FY-End ($) Exercisable/
Name Exercise (#) ($)/(1)/ Unexercisable/(2)/ Unexercisable/(3)/
--------------- -------------- ------------------- -----------------------
<S> <C> <C> <C> <C>
Dr. Wadhwani ---- ---- 468,054/781,946 11,645,921/43,745,329
Mr. Althoff 260,000 7,438,507 61,223/128,903 780,953/7,644,100
Mr. Prang 36,377 914,928 26,260/107,363 878,082/5,043,154
Mr. Quirk 60,000 1,258,476 31,041/188,959 1,037,949/8,710,911
Mr. Dury 104,600 2,830,904 43,232/114,168 1,696,828/5,278,038
</TABLE>
- --------------------------
(1) Market value of the underlying securities on the exercise date minus the
exercise price of such options.
(2) Unvested options to purchase shares granted under Aspect's stock option
plans are immediately exercisable subject to a right of repurchase by
Aspect which lapses over time.
(3) Based on the $44.313 per share closing price of Aspect's common stock on
the Nasdaq National Market on December 31, 1998, less the exercise prices.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Change-in-Control Arrangements
In addition to the provisions in the 1992 Plan relating to Changes of
Control, the agreements with respect to certain options granted to Dr. Wadhwani
and Mr. Prang, provide that, in the event of a Change of Control, the options
will vest immediately upon the effective date of the Change of Control. The
agreement with respect to certain options granted to Mr. Quirk provides that, in
the event Aspect is acquired by another entity and Mr. Quirk's new duties,
responsibilities and status with the new company are inconsistent with his
duties, responsibilities and status with Aspect prior to the change in control
or acquisition, the vesting of Mr. Quirk's options will be accelerated by one
year. Agreements with respect to certain options granted to Mr. Dury provide
that, in the event of a Change of Control after which he is not the Chief
Financial Officer, he shall receive 12 months of additional vesting.
Termination Arrangements
Mr. Quirk's employment offer letter contains an agreement by Aspect to pay
Mr. Quirk 90 days base salary if Aspect involuntarily terminates his employment.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the ownership
of the Company's common stock as of April 1, 1999 by: (i) each director; (ii)
each of the Named Executive Officers; (iii) all current executive officers and
directors as a group; and (iv) all those known to be beneficial owners of more
than five percent of Aspect's common stock.
<TABLE>
<CAPTION>
Beneficial Ownership (2)
Beneficial Owner/(1)/ Number of Shares Percent of Total
<S> <C> <C>
Romesh Wadhwani (3)
1300 Charleston Road
Mountain View, CA 94043 6,390,500 20.54%
Putnam Investments, Inc. (4)
One Post Office Square
Boston, MA 02109 4,330,447 13.91%
FMR Corp. (5)
82 Devonshire Street
Boston, MA 02019 1,910,800 6.14%
Pilgrim Baxter & Associates, Ltd. (6)
825 Duportail Road
Wayne, PA 19087 1,899,800 6.10%
Joseph A. Prang (7) 399,002 *
James Althoff (8) 314,888 *
Steven Goldby (9) 5,200 *
Mark Stevens (10) 34,286 *
David S. Dury (11) 99,402 *
Dennis G. Sisco (12) 25,541 *
Patrick Quirk (13) 66,254 *
All directors and current executive officers as a group
(11 persons) (14) 7,747,078 23.04%
- -----------------------------------
</TABLE>
*Less than 1%.
(1) Unless otherwise indicated, the address of each of the named individuals
is: c/o Aspect Development, Inc., 1300 Charleston Road, Mountain View, CA
94043.
(2) Beneficial ownership is determined in accordance with the rules of the SEC,
based on factors including voting and investment power. Shares of common
stock subject to options currently exercisable or exercisable within 60
days after April 1, 1999 are deemed outstanding for computing the
percentage ownership of the person or entity holding such securities, but
are not deemed outstanding for computing the percentage ownership of any
other person or entity. To the Company's knowledge, the persons named in
this table have sole voting and investment power with respect to all shares
of common stock shown as beneficially owned by them, subject to community
property laws where applicable and except as indicated in the other
footnotes to this table. Applicable percentage of beneficial ownership is
based on 31,112,043 shares of common stock outstanding as of April 1, 1999.
(3) Includes 1,250,000 shares subject to immediately exercisable options held
by Dr. Wadhwani, 643,056 of which are subject to a right to repurchase by
the Company which right lapses over time.
(4) Consists of 3,776,447 shares held by Putnam Investment Management, Inc.
("PIM"); 554,000 shares held by Putnam Advisory Company, Inc. ("PAC");
251,900 of such shares have shared voting power with Putnam Investments
Inc. PIM is an Investment Advisor to Putnam Investments Inc. PAC is a
wholly-owned subsidiary of Putnam Investments Inc.
(5) Consists of 1,727,400 shares held by Fidelity Management & Research Company
("Fidelity"), which is a wholly-owned subsidiary of FMR Corp.; 139,800
shares held by Fidelity Management Trust company, a wholly-owned subsidiary
of FMR Corp.; 43,600 shares held by Fidelity International Limited and
various foreign-based subsidiaries which provide investment advisory and
management services to a number of non-U.S. investment companies.
<PAGE>
(6) Consists of 1,826,199 shares held by Pilgrim Baxter & Associates with sole
voting power by Pilgrim Baxter & Associates and 72,900 shares held by
various clients of Pilgrim Baxter & Associates who did not grant voting
power to Pilgrim Baxter & Associates.
(7) Includes 98,087 shares subject to immediately exercisable options held by
Mr. Prang, 78,898 of which are subject to a right to repurchase by the
Company which right lapses over time.
(8) Includes 160,126 shares subject to immediately exercisable options held by
Mr. Althoff, 104,885 of which are subject to a right to repurchase by the
Company which right lapses over time.
(9) Includes 27,700 shares subject to immediately exercisable options held by
Mr. Goldby, 24,167 of which are subject to a right to repurchase by the
Company which right lapses over time.
(10) Includes 30,000 shares subject to immediately exercisable options held by
Mr. Stevens, 22,500 of which are subject to a right to repurchase by the
Company which right lapses over time.
(11) Includes 157,400 shares subject to immediately exercisable options held by
Mr. Dury, 87,088 of which are subject to a right to repurchase by the
Company which right lapses over time.
(12) Includes 50,000 shares subject to immediately exercisable options held by
Mr. Sisco, 28,125 of which are subject to a right to repurchase by the
Company which right lapses over time.
(13) Includes 220,000 shares subject to immediately exercisable options held by
Mr. Quirk, 165,000 of which are subject to a right to repurchase by the
Company which right lapses over time.
(14) Includes shares described in the notes above, as applicable. Includes
2,512,287 shares subject to stock options held by all executive officers
and directors, as a group, exercisable within 60 days of April 1, 1999.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following financial statements and supplemental data are
included in Item 8 of the Registrant's 1998 Annual Report on Form 10-K:
(1) Financial Statements
Report of Arthur Andersen LLP, Independent Public Accountants
Report of Ernst & Young LLP, Indepdendent Auditors
Report of Arthur Andersen LLP, Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Operations for each of the three fiscal years in
the period ended December 31, 1998
Consolidated Statements of Stockholders' Equity for each of the three fiscal
years in the period ended December 31, 1998
Consolidated Statements of Cash Flows for each of the three fiscal years in
the period ended December 31, 1998
Notes to the Consolidated Financial Statements
(2) Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable,
or not required, or because the required information was filed
by the Company's previously, or is included the consolidated
financial statements or notes thereto.
(3) Exhibits
The following exhibits are filed as part of, or incorporated by
reference into, this Report.
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- --------- -----------------------
<S> <C>
3.1 Restated Certificate of Incorporation, as amended to date.
3.2(1) By-Laws.
4.1(1) Restated Rights Agreement dated December 3, 1993.
*10.1(1) Amended and Restated 1992 Stock Option Plan and forms of agreement thereunder.
*10.2(1) 1996 Employee Stock Purchase Plan.
*10.3(1) 1996 Outside Directors Stock Option Plan and forms of agreement thereunder.
10.4 1997 Nonstatutory Stock Option Plan and forms of agreement thereunder.
10.5(1) Sublease Agreement between the Registrant and Insignia Solutions, Inc. dated December 9, 1995.
10.6(1) Agreement of Lease between the Registrant and Mareld Company, Inc. dated June 2, 1994.
10.7(1) Agreement of Lease between Aspect Development India and M.S. Janardhan Corporation dated September 18, 1995.
10.8(1) Agreement of Lease between Aspect-DCM Pvt. Ltd. and the co-owners of Leo Shopping Complex dated February
10, 1994.
10.9(1) Master Lease Agreement between the Registrant and Comdisco, Inc. dated July 2, 1992.
10.10(1) Business Loan Agreement between the Registrant and Silicon Valley Bank dated November 14, 1995.
10.11(2) Agreement and Plan of Reorganization dated November 18, 1997 among Aspect Development, Inc., Hawaii
Acquisition Corporation and Cadis, Inc.
10.12(2) Amendment to Agreement and Plan of Reorganization dated November 21, 1997 among Aspect Development, Inc.,
Hawaii Acquisition Corporation and Cadis, Inc.
10.13(3) Rights Agreement dated as of October 7, 1998 between the Registrant and U.S. Stock Transfer Corporation.
21.1 (4) List of Subsidiaries.
23.1 (4) Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 (4) Consent of Ernst & Young LLP, Independent Auditors.
23.3 (4) Consent of Arthur Andersen LLP, Independent Public Accountants.
27.1 (4) Financial Data Schedule.
</TABLE>
********
* Constitutes a management contract or compensatory plan required to be
filed pursuant to Item 13(a) of Form 10-K.
(1) Incorporated by reference to Registrant's Registration Statement on Form
SB-2 (file no. 333-3840-LA) filed on April 19, 1996.
(2) Incorporated by reference to Registrant's Current Report on Form 8-K
filed December 10, 1997.
(3) Incorporated by reference to Registrant's Current Report on Form 8-K
filed October 7, 1998.
(4) Incorporated by reference to Registrant's Annual Report on Form 10-K
filed March 31, 1999.
<PAGE>
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K during the fourth
quarter of the fiscal year 1998.
On November 12, 1998, the Registrant filed a Report on Form 8-K
reporting that Ernst & Young LLP had resigned as the Registrant's
independent auditors. The Registrant announced that a marketing
relationship had been established whereby Ernst & Young LLP would market
the Registrant's products. In connection with the audits of the
Registrant's financial statements for each of the two fiscal years ended
December 31, 1997 and in the subsequent interim period, there were no
disagreements with Ernst & Young LLP on any matters of accounting
principles or practice, financial statement disclosure, or auditing scope
and procedures which, if not resolved to the satisfaction of Ernst &
Young LLP would have caused Ernst & Young LLP to make reference to the
matter in their report. The reports of Ernst & Young LLP for the past two
years did not contain an adverse opinion or a disclaimer of opinion and
these reports were not qualified or modified as to uncertainty, audit
scope, or accounting principles. Effective November 13, 1998, the
Registrant engaged Arthur Andersen LLP to audit the Registrant's
consolidated financial statements for the fiscal year ending December 31,
1998.
On September 1, 1998 the Board of Directors approved the adoption of
a Share Purchase Rights Plan (the "Rights Plan"). Terms of the Rights
Plan provide for a dividend distribution of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value
$.001 per share (the "Common Shares"), of the Registrant. The dividend is
payable on October 22, 1998 (the "Record Date") to the stockholders of
record on that date. Each Right entitles the registered holder to
purchase from the Registrant one one-hundredth of a share of Series A
Junior Participating Preferred Stock, par value $.001 per share (the
"Preferred Shares"), at a price of $187.50 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment. Each one
one-hundredth of a share of Preferred Shares has designations and powers,
preferences and rights, and the qualifications, limitations and
restrictions which make its value approximately equal to the value of a
Common Share.
Rights will not be distributed upon the earlier of (i) the date of a
public announcement that a person, entity or group of affiliated or
associated persons have acquired beneficial ownership of 15% or more of
the outstanding Common Shares (an "Acquiring Person") or (ii) 10 business
days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person or entity becomes an Acquiring
Person) following the commencement of, or announcement of an intention to
commence, a tender offer or exchange offer the consummation of which
would result in any person or entity becoming an Acquiring Person. The
Rights will expire on October 7, 2008 unless the Rights are earlier
redeemed or exchanged by the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized.
ASPECT DEVELOPMENT, INC.
Date: April 30, 1999 By: /s/ David S. Dury
-------------------------
David S. Dury
Vice President and
Chief Financial Officer
<PAGE>
Exhibit Index
Exhibit Description
- ------- -----------
3.1 Restated Certificate of Incorporation, as amended to date.
10.4 1997 Nonstatutory Stock Option Plan and forms of agreement
thereunder.
<PAGE>
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION OF
ASPECT DEVELOPMENT, INC.
The undersigned, Romesh Wadhwani, Chief Executive Officer, and William
Feichtmann, Secretary, of Aspect Development, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), do hereby
certify:
The date of filing of the Corporation's original Certificate of
Incorporation was March 26, 1993. This Restated Certificate of Incorporation
was duly adopted by the board of directors, without a vote of the stockholders,
in the manner and by the vote prescribed by Section 245(c) of the Delaware
General Corporation Law and that the following provisions only restate and
integrate and do not further amend, the provisions of the Aspect Development,
Inc. Certificate of Incorporation.
The Certificate of Incorporation of the Corporation is amended and restated to
read in its entirety as follows:
FIRST: The name of the Corporation is Aspect Development, Inc.
(hereinafter sometimes referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Incorporating Services, Ltd., 15 East North
Street, in the City of Dover, County of Kent. The name of the
registered agent at that address is Incorporating Services, Ltd.
THIRD: The purpose of the Corporation is to engage in any lawful set or
activity for which a corporation may be organized under the
General Corporation Law of Delaware.
FOURTH:
(A) Classes of Stock. The Corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock"
and "Preferred Stock." The total number of shares which the
Corporation is authorized to issue is Twenty Two Million
(22,000,000) shares. Twenty Million (20,000,000) shares shall be
Common Stock, $0.001 par value per share, and Two Million
(2,000,000) shares shall be Preferred Stock, $0.001 par value per
share.
(B) Rights, Preferences and Restrictions of Preferred Stock. The
Stock authorized by this Certificate of Incorporation may be
issued from time to time in one or more series. The Board of
Directors is authorized to determine, alter or eliminate any or
all of the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series of
Preferred Stock, and to fix, increase or decrease the number of
shares
<PAGE>
comprising any such series (but not below the number of such
shares then outstanding) and the designation thereof, or any of
them, and to provide for the rights and terms of redemption or
conversion of the shares of any such series.
(C) Common Stock:
1. Dividend Rights. Subject to the prior rights of holders of
all classes of stock at the time outstanding having prior
rights as to dividends, holders of the Common Stock shall be
entitled to receive, when and as declared by the Board of
Directors, out of any assets of the Corporation legally
available therefor, such dividends as may be declared from
to time by the Board of Directors.
2. Liquidation Rights. Subject to the prior rights of holders
of all classes of stock at the time outstanding, upon the
liquidation, dissolution or winding up of the Corporation,
the assets of the Corporation shall be distributed pro rata
among the holders of Common Stock.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock
shall have the right to one vote, and shall be entitled to
notice of any stockholders' meeting in accordance with the
Bylaws of the Corporation, and shall be entitled to vote
upon such matters and in such manner as may be provided by
law.
FIFTH: The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors. In addition
to the powers and authority expressly conferred upon them by
statute or by this Certificate of Incorporation or the Bylaws
of the Corporation, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may
be exercised or done by the Corporation. Election of directors
need not be by written ballot, unless the Bylaws so provide.
SIXTH: The Board of Directors is authorized to make, adopt, amend, alter
or repeal the Bylaws of the Corporation; provided that any
amendment, alteration or repeal of the Corporation's Bylaws which
would increase or decrease the authorized number of directors
shall be approved by not less than that number of directors as
shall equal the then authorized number of directors, minus one.
The stockholders shall also have power to make, adopt, amend,
alter or repeal the Bylaws of the corporation.
SEVENTH: The Corporation reserves the right to amend or repeal any of the
provisions contained in this Certificate of Incorporation in any
manner now or hereafter permitted by law, and the rights of the
stockholders of the Corporation are granted subject to this
reservation.
<PAGE>
EIGHTH: To the fullest extent permitted by the Delaware General
Corporation Law, a director of the Corporation shall not be
liable to the Corporation or its Stockholders for monetary
damages for breach of fiduciary duty as a director. Any repeal
or modification of the foregoing provisions of this Article EIGHT
by the stockholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation existing
at the time of such repeal or modification.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of
Incorporation to be signed by its President and attested by its Secretary this
18th day of September, 1996.
/s/ Romesh Wadhwani
-------------------
Romesh Wadhwani, President
Attest:
/s/ William Feichtmann
- ----------------------
William Feichtmann, Secretary
<PAGE>
CERTIFICATE OF
AMENDMENT OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
ASPECT DEVELOPMENT, INC.
Romesh Wadhwani and William Feichtmann, Hereby Certify That:
First: They are the duly elected and acting Chief Executive Officer and
Secretary, respectively, of Aspect Development, Inc., a Delaware corporation.
Second: The name of this corporation is Aspect Development, Inc. (the
"Corporation").
Third: The date on which the Certificate of Incorporation of the
Corporation was originally filed with the Secretary of State of the State of
Delaware (the "Secretary of State") is March 26, 1993. The date on which the
Certificate of Amendment of Amended and Restated Certificate of Incorporation
was filed with the Secretary of State is May 1, 1996.
Fourth: The amendment to the Corporation's Amended and Restated
Certificate of Incorporation set forth below was duly adopted by the Board of
Directors of the Corporation, and approved by the Stockholders in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
Fifth: The Section titled "Fourth" of the Corporation's Amended and
Restated Certificate of Incorporation is amended to read in its entirety as
follows:
"(A) Classes of Stock. The Corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and
"Preferred Stock." The total number of shares which the Corporation
is authorized to issue is One Hundred Two Million (102,000,000)
shares. One Hundred Million (100,000,000) shares shall be Common
Stock, $0.001 par value per share, and Two Million (2,000,000)
shares shall be Preferred Stock, $0.001 par value per share.
(B) Rights, Preferences and Restrictions of Preferred Stock. The
Preferred Stock authorized by this Certificate of Incorporation may
be issued from time to time in one or more series. The Board of
Directors is authorized to determine, alter or eliminate any or all
of the rights, preferences, privileges and restrictions granted to
or imposed upon any wholly unissued series of Preferred Stock, and
to fix, increase or decrease the number of shares comprising any
such series (but not below the number of such shares then
outstanding) and the designation thereof, or any of them, and to
provide for the rights and terms of redemption or conversion of the
shares of any such series.
(C) Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights
as to dividends, the
<PAGE>
holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets
of the Corporation legally available therefor, such dividends
as may be declared from time to time by the Board of
Directors.
2. Liquidation Rights. Subject to the prior rights of holders of
all classes of stock at the time outstanding, upon the
liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation shall be distributed pro rata among
the holders of Common Stock.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of
any stockholders' meeting in accordance with the Bylaws of the
Corporation, and shall be entitled to vote upon such matters and
in such manner as may be provided by law."
In Witness Whereof, the undersigned have signed this Certificate of
Amendment of Amended and Restated Certificate of Incorporation this 31st day of
July, 1998, and hereby affirm and acknowledge under penalty of perjury that the
filing of this Certificate of Amendment and Amended and Restated Certificate of
Incorporation of Aspect Development, Inc. is the act and deed of Aspect
Development, Inc.
Aspect Development, Inc.
By: /s/ Romesh Wadhwani
-------------------------------------------
Romesh Wadhwani, Chief Executive Officer
Attest:
/s/ William Feichtman
- -----------------------------
William Feichtmann, Secretary
<PAGE>
Certificate of Designation
of
Series A Junior Participating Preferred Stock
(Pursuant to Section 151 of the
Delaware General Corporation Law)
ASPECT DEVELOPMENT, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Company"), hereby certifies that the following resolution was adopted by the
Board of Directors of the Corporation as required by Section 151 of the General
Corporation Law at a meeting of the Board of Directors which occurred on
September 1, 1998:
Resolved, that pursuant to the authority granted to and vested in the
Board of Directors of the Company in accordance with the provisions of
its Restated Certificate of Incorporation, the Board of Directors
hereby creates a series of Preferred Stock, par value $.001 per share,
of the Company and hereby states the designation and number of shares,
and fixes the relative designations and the powers, preferences and
rights, and the qualifications, limitations and restrictions thereof
(in addition to the provisions set forth in the Certificate of
Incorporation of the Company, which are applicable to the Preferred
Stock of all classes and series), as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. Six Hundred Thousand (600,000) shares
of Preferred Stock, $.001 par value, are designated "Series A Junior
Participating Preferred Stock" with the designations and the powers,
preferences and rights, and the qualifications, limitations and restrictions
specified herein (the "Junior Preferred Stock"). Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Junior Preferred Stock to a
number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by the
Company convertible into Junior Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Junior Preferred Stock with respect
<PAGE>
to dividends, the holders of shares of Junior Preferred Stock, in preference
to the holders of Common Stock, par value $.001 per share (the "Common
Stock"), of the Company, and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first day of April, July, October and January in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Junior Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $l.00 or (b) subject
to the provision for adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Junior
Preferred Stock. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Company shall declare a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, that in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share
on the Junior Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Junior Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Junior
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Junior Preferred
<PAGE>
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Junior Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Junior Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of the
Company. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which holders
of shares of Junior Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
of Designation creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Junior Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Company having
general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Junior Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except dividends paid ratably on the Junior Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;
<PAGE>
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Junior Preferred Stock,
provided that the Company may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Company ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Junior Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Junior Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in
the Restated Certificate of Incorporation, or in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made (1) to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of shares of Junior Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Junior Preferred Stock shall be entitled
to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Junior
<PAGE>
Preferred Stock were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share
of Junior Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Junior Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Junior Preferred Stock shall not
be redeemable.
Section 9. Rank. The Junior Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series
of any other class of the Company's Preferred Stock.
Section 10. Amendment. The Restated Certificate of Incorporation of the
Company shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Junior Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of
at least two-thirds of the outstanding shares of Junior Preferred Stock,
voting together as a single class.
<PAGE>
In Witness Whereof, the undersigned have executed this certificate as of
October 13, 1998.
By: /s/ David S. Dury
--------------------------------------------
David S. Dury
Vice President and Chief Financial Officer
By: /s/ William H. Feichtmann
--------------------------------------------
William H. Feichtmann
Secretary
<PAGE>
Exhibit 10.4
1997 NONSTATUTORY STOCK OPTION PLAN
(As Amended by the Board Through April 1, 1999)
1. Establishment, Purpose and Term of Plan.
---------------------------------------
1.1 Establishment. The Aspect Development, Inc. 1997
Nonstatutory Stock Option Plan is hereby established effective as of June 4,
1997.
1.2 Purpose. The purpose of the Plan is to advance the interests
of the Participating Company Group and its stockholders by providing an
incentive to attract, retain and reward persons performing services for the
Participating Company Group and by motivating such persons to contribute to
the growth and profitability of the Participating Company Group.
1.3 Term of Plan. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed.
2. Definitions and Construction.
----------------------------
2.1 Definitions. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company. If
one or more Committees have been appointed by the Board to administer the
Plan, "Board" also means such Committee(s).
(b) "Code" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.
(c) "Committee" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.
(d) "Company" means Aspect Development, Inc., a Delaware
corporation, or any successor corporation thereto.
<PAGE>
(e) "Consultant" means any person, including an advisor,
engaged by a Participating Company to render services other than as an
Employee or a Director.
(f) "Director" means a member of the Board or of the board
of directors of any other Participating Company.
(g) "Employee" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in the
records of a Participating Company; provided, however, that neither service as
a Director nor payment of a director's fee shall be sufficient to constitute
employment for purposes of the Plan.
(h) "Fair Market Value" means, as of any date, the value of
a share of stock or other property as determined by the Board, in its sole
discretion, or by the Company, in its sole discretion, if such determination
is expressly allocated to the Company herein.
(i) "Option" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. Options are intended to be nonstatutory stock options and shall not
be treated as incentive stock options within the meaning of Section 422(b) of
the Code.
(j) "Option Agreement" means a written agreement between
the Company and an Optionee setting forth the terms, conditions and
restrictions of the Option granted to the Optionee and any shares acquired
upon the exercise thereof.
(k) "Optionee" means a person who has been granted one or
more Options.
(l) "Parent Corporation" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.
(m) "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation.
(n) "Participating Company Group" means, at any point in
time, all corporations collectively which are then Participating Companies.
(o) "Stock" means the common stock, par value $0.001, of
the Company, as adjusted from time to time in accordance with Section 4.2.
(p) "Subsidiary Corporation" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
2.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when
<PAGE>
otherwise indicated by the context, the singular shall include the plural, the
plural shall include the singular, and the term "or" shall include the
conjunctive as well as the disjunctive.
3. Administration.
--------------
3.1 Administration by the Board. The Plan shall be
administered by the Board. All questions of interpretation of the Plan or of
any Option shall be determined by the Board, and such determinations shall be
final and binding upon all persons having an interest in the Plan or such
Option. Any officer of a Participating Company shall have the authority to act
on behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the officer has apparent authority with
respect to such matter, right, obligation, determination or election.
3.2 Powers of the Board. In addition to any other powers
set forth in the Plan and subject to the provisions of the Plan, the Board
shall have the full and final power and authority, in its sole discretion:
(a) to determine the persons to whom, and the time
or times at which, Options shall be granted and the number of shares of Stock
to be subject to each Option;
(b) to determine the Fair Market Value of shares of
Stock or other property;
(c) to determine the terms, conditions and
restrictions applicable to each Option (which need not be identical) and any
shares acquired upon the exercise thereof, including, without limitation, (i)
the exercise price of the Option, (ii) the method of payment for shares
purchased upon the exercise of the Option, (iii) the method for satisfaction
of any tax withholding obligation arising in connection with the Option or
such shares, including by the withholding or delivery of shares of stock, (iv)
the timing, terms and conditions of the exercisability of the Option or the
vesting of any shares acquired upon the exercise thereof, (v) the time of the
expiration of the Option, (vi) the effect of the Optionee's termination of
employment or service with the Participating Company Group on any of the
foregoing, and (vii) all other terms, conditions and restrictions applicable
to the Option or such shares not inconsistent with the terms of the Plan;
(d) to approve one or more forms of Option Agreement;
(e) to amend, modify, extend, or renew, or grant a
new Option in substitution for, any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the exercise
thereof;
(f) to accelerate, continue, extend or defer the
exercisability of any Option or the vesting of any shares acquired upon the
exercise thereof, including with respect to the period following an Optionee's
termination of employment or service with the Participating Company Group;
<PAGE>
(g) to prescribe, amend or rescind rules, guidelines
and policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may be granted
Options; and
(h) to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Option Agreement and to make
all other determinations and take such other actions with respect to the Plan
or any Option as the Board may deem advisable to the extent consistent with
the Plan and applicable law.
4. Shares Subject to Plan.
----------------------
4.1 Maximum Number of Shares Issuable. Subject to
adjustment as provided in Section 4.2, the maximum aggregate number of shares
of Stock that may be issued under the Plan shall be Five Million Four Hundred
Thousand (5,400,000) and shall consist of authorized but unissued or
reacquired shares of Stock or any combination thereof. If an outstanding
Option for any reason expires or is terminated or canceled or shares of Stock
acquired, subject to repurchase, upon the exercise of an Option are
repurchased by the Company, the shares of Stock allocable to the unexercised
portion of such Option, or such repurchased shares of Stock, shall again be
available for issuance under the Plan.
4.2 Adjustments for Changes in Capital Structure. In the
event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification or similar change in the
capital structure of the Company, appropriate adjustments shall be made in the
number and class of shares subject to the Plan and to any outstanding Options,
and in the exercise price per share of any outstanding Options. If a majority
of the shares which are of the same class as the shares that are subject to
outstanding Options are exchanged for, converted into, or otherwise become
(whether or not pursuant to an Ownership Change Event, as defined in Section
8.1) shares of another corporation (the "New Shares"), the Board may
unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number of
shares subject to, and the exercise price per share of, the outstanding
Options shall be adjusted in a fair and equitable manner as determined by the
Board, in its sole discretion. Notwithstanding the foregoing, any fractional
share resulting from an adjustment pursuant to this Section 4.2 shall be
rounded up or down to the nearest whole number, as determined by the Board,
and in no event may the exercise price of any Option be decreased to an amount
less than the par value, if any, of the stock subject to the Option. The
adjustments determined by the Board pursuant to this Section 4.2 shall be
final, binding and conclusive.
<PAGE>
5. Eligibility. Options may be granted only to Employees and
-----------
Consultants; provided, however, no Option shall be granted to any person whose
eligibility to receive an Option under the Plan would require the approval of
the Company's stockholders pursuant to any applicable law, regulation or rule,
including, without limitation, the rules applicable to the listing of the
Company's securities on the Nasdaq National Market System. For purposes of the
foregoing sentence, "Employees" shall include prospective Employees to whom
Options are granted in connection with written offers of employment with the
Participating Company Group, and "Consultants" shall include prospective
Consultants to whom Options are granted in connection with written offers of
engagement with the Participating Company Group. Eligible persons may be
granted more than one (1) Option.
6. Terms and Conditions of Options. Options shall be evidenced
-------------------------------
by Option Agreements specifying the number of shares of Stock covered thereby,
in such form as the Board shall from time to time establish. Option Agreements
may incorporate all or any of the terms of the Plan by reference and shall
comply with and be subject to the following terms and conditions:
6.1 Exercise Price. The exercise price for each Option
shall be established in the sole discretion of the Board; provided, however,
that the exercise price per share for an Option shall be not less than eighty-
five percent (85%) of the Fair Market Value of a share of Stock on the
effective date of grant of the Option. Notwithstanding the foregoing, an
Option may be granted with an exercise price lower than the minimum exercise
price set forth above if such Option is granted pursuant to an assumption or
substitution for another option in a manner qualifying under the provisions of
Section 424(a) of the Code.
6.2 Exercise Period. Options shall be exercisable at such
time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria, and restrictions as shall be determined by
the Board and set forth in the Option Agreement evidencing such Option;
provided, however, that no Option granted to a prospective Employee or
prospective Consultant may become exercisable prior to the date on which such
person commences service with a Participating Company.
6.3 Payment of Exercise Price.
(a) Forms of Consideration Authorized. Except as
otherwise provided below, payment of the exercise price for the number of
shares of Stock being purchased pursuant to any Option shall be made (i) in
cash, by check, or cash equivalent, (ii) by tender to the Company of shares of
Stock owned by the Optionee having a Fair Market Value (as determined by the
Company without regard to any restrictions on transferability applicable to
such stock by reason of federal or state securities laws or agreements with an
underwriter for the Company) not less than the exercise price, (iii) by the
assignment of the proceeds of a sale or loan with respect to some or all of
the shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T
as promulgated from time to time by the Board of Governors of the Federal
Reserve System) (a "Cashless Exercise"), (iv) by the Optionee's promissory
note in a form
<PAGE>
approved by the Company, (v) by such other consideration as may be approved by
the Board from time to time to the extent permitted by applicable law, or (vi)
by any combination thereof. The Board may at any time or from time to time, by
adoption of or by amendment to the standard forms of Option Agreement
described in Section 7, or by other means, grant Options which do not permit
all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.
(b) Tender of Stock. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company of shares of Stock to the
extent such tender of Stock would constitute a violation of the provisions of
any law, regulation or agreement restricting the redemption of the Company's
stock. Unless otherwise provided by the Board, an Option may not be exercised
by tender to the Company of shares of Stock unless such shares either have
been owned by the Optionee for more than six (6) months or were not acquired,
directly or indirectly, from the Company.
(c) Cashless Exercise. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.
(d) Payment by Promissory Note. No promissory note shall
be permitted if the exercise of an Option using a promissory note would be a
violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject
to the regulations promulgated by the Board of Governors of the Federal
Reserve System or any other governmental entity affecting the extension of
credit in connection with the Company's securities, any promissory note shall
comply with such applicable regulations, and the Optionee shall pay the unpaid
principal and accrued interest, if any, to the extent necessary to comply with
such applicable regulations.
6.4 Tax Withholding. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Option or the shares acquired upon the exercise thereof. Alternatively or in
addition, in its sole discretion, the Company shall have the right to require
the Optionee, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof. The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock
<PAGE>
from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied
by the Optionee.
7. Standard Form of Option Agreement.
---------------------------------
7.1 General. Unless otherwise provided by the Board at
the time the Option is granted, an Option shall comply with and be subject to
the terms and conditions set forth in the form of Immediately Exercisable
Nonstatutory Stock Option Agreement adopted by the Board concurrently with its
adoption of the Plan and as amended from time to time.
7.2 Standard Term of Options. Except as otherwise
provided by the Board in the grant of an Option, any Option granted hereunder
shall have a term of ten (10) years from the effective date of grant of the
Option.
7.3 Authority to Vary Terms. The Board shall have the
authority from time to time to vary the terms of any of the standard forms of
Option Agreement described in this Section 7 either in connection with the
grant or amendment of an individual Option or in connection with the
authorization of a new standard form or forms; provided, however, that the
terms and conditions of any such new, revised or amended standard form or
forms of Option Agreement are not inconsistent with the terms of the Plan.
8. Transfer of Control.
-------------------
8.1 Definitions.
(a) An "Ownership Change Event" shall be deemed to
have occurred if any of the following occurs with respect to the Company:
(i) the direct or indirect sale or exchange in
a single or series of related transactions by the stockholders of the Company
of more than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the
Company is a party;
(iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of the
Company.
(b) A "Transfer of Control" shall mean an Ownership
Change Event or a series of related Ownership Change Events (collectively, the
"Transaction") wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting
stock immediately before the Transaction, direct or indirect beneficial
ownership of more than fifty percent (50%) of the total combined voting power
of the
<PAGE>
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "Transferee
Corporation(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations
which, as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
8.2 Effect of Transfer of Control on Options. In the event of a
Transfer of Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "Acquiring
Corporation"), may either assume the Company's rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control shall terminate and cease to be outstanding effective as
of the date of the Transfer of Control. Notwithstanding the foregoing, shares
acquired upon exercise of an Option prior to the Transfer of Control and any
consideration received pursuant to the Transfer of Control with respect to
such shares shall continue to be subject to all applicable provisions of the
Option Agreement evidencing such Option except as otherwise provided in such
Option Agreement. Furthermore, notwithstanding the foregoing, if the
corporation the stock of which is subject to the outstanding Options
immediately prior to an Ownership Change Event described in Section 8.1(a)(i)
constituting a Transfer of Control is the surviving or continuing corporation
and immediately after such Ownership Change Event less than fifty percent
(50%) of the total combined voting power of its voting stock is held by
another corporation or by other corporations that are members of an affiliated
group within the meaning of Section 1504(a) of the Code without regard to the
provisions of Section 1504(b) of the Code, the outstanding Options shall not
terminate unless the Board otherwise provides in its sole discretion.
9. Provision of Information. Each Optionee shall be given access
------------------------
to information concerning the Company equivalent to that information generally
made available to the Company's common stockholders.
10. Nontransferability of Options. During the lifetime of the
-----------------------------
Optionee, an Option shall be exercisable only by the Optionee or the
Optionee's guardian or legal representative. No Option shall be assignable or
transferable by the Optionee, except by will or by the laws of descent and
distribution.
11. Indemnification. In addition to such other rights of
---------------
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection
<PAGE>
with the defense of any action, suit or proceeding, or in connection with any
appeal therein, to which they or any of them may be a party by reason of any
action taken or failure to act under or in connection with the Plan, or any
right granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such person is
liable for gross negligence, bad faith or intentional misconduct in duties;
provided, however, that within sixty (60) days after the institution of such
action, suit or proceeding, such person shall offer to the Company, in
writing, the opportunity at its own expense to handle and defend the same.
12. Termination or Amendment of Plan. The Board may terminate or
--------------------------------
amend the Plan at any time. However, no termination or amendment of the Plan
may adversely affect any then outstanding Option or any unexercised portion
thereof, without the consent of the Optionee, unless such termination or
amendment is necessary to comply with any applicable law or government
regulation.
IN WITNESS WHEREOF, the undersigned Secretary of the Company
certifies that the foregoing is the Aspect Development, Inc. 1997 Nonstatutory
Stock Option Plan as duly adopted by the Board on June 4, 1997 and amended by
the Board through December 2, 1997.
/s/ William Feichtman
______________________________________
Secretary
