<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 9, 1998
Registration No. 333-63483
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ASPEN TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2739697
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
TEN CANAL PARK
CAMBRIDGE, MASSACHUSETTS 02141
(617) 949-1000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------
LAWRENCE B. EVANS
Chairman of the Board and Chief Executive Officer
ASPEN TECHNOLOGY, INC.
Ten Canal Park
Cambridge, Massachusetts 02141
(617) 949-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
STEPHEN J. DOYLE, ESQ. MARK L. JOHNSON, ESQ.
Vice President, General Counsel, FOLEY, HOAG & ELIOT LLP
Chief Legal Officer and Secretary One Post Office Square
ASPEN TECHNOLOGY, INC. Boston, Massachusetts 02109
Ten Canal Park
Cambridge, Massachusetts 02141
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.10 par value:
Previously filed...................... 114,000 shares $25.4375 $2,899,875 $ 856
To be registered pursuant to this
Amendment............................ 207,532 shares 7.0000(1) 1,452,724(1) 429
_________________________________________________________________________________________________________________
Totals 321,532 shares $1,285
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee. In
accordance with Rule 457(c) under the Securities Act of 1933, the above
calculation is based on the average of the high and low sale prices
reported in the consolidated reporting system of the Nasdaq National Market
on October 5, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED OCTOBER 9, 1998
321,532 SHARES
ASPEN TECHNOLOGY, INC.
COMMON STOCK
All of the 321,532 shares of common stock, $.10 par value ("Common Stock"),
of Aspen Technology, Inc. ("AspenTech" or the "Company") offered hereby are
being sold by the Selling Stockholders named under "Selling Stockholders." The
Company will not receive any of the proceeds from sales of shares by the
Selling Stockholders.
The Common Stock trades on the Nasdaq National Market under the symbol
"AZPN." On October 6, 1998, the closing sale price of the Common Stock, as
reported by the Nasdaq National Market, was $7.0625 per share.
The shares of Common Stock offered hereby may be sold from time to time by
the Selling Stockholders, or by pledges, donees, transferees or other successors
in interest of the Selling Stockholders. Such sales may be made on the Nasdaq
National Market, or otherwise, at prices and on terms then prevailing or at
prices related to the then-current market prices, or in negotiated transactions
at negotiated prices. The shares may be sold by one or a combination of the
following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. Brokers or dealers will
receive commissions or discounts from Selling Stockholders in amounts to be
negotiated immediately prior to the sale. The Selling Stockholders will be
responsible for any discounts, concessions, commissions or other compensation
due to any broker or dealer in connection with the sale of any of the shares
offered hereby. All of the other expenses of this offering, estimated at $8,000,
will be paid by the Company. See "Plan of Distribution."
-----------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF SHARES OF COMMON STOCK
OFFERED HEREBY.
-----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
, 1998
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No broker, dealer or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the Selling Stockholders. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any securities other than
the shares of Common Stock to which it relates or an offer to, or a solicitation
of, any person in any jurisdiction where such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that information
contained herein is correct as of any time subsequent to its date.
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TABLE OF CONTENTS
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Page
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Available Information....................... 3
Information Incorporated by Reference....... 3
Prospectus Summary.......................... 4
Risk Factors................................ 6
Litigation.................................. 13
Forward-Looking Information................. 13
Use of Proceeds............................. 13
Selling Stockholders........................ 14
Plan of Distribution........................ 15
Legal Matters............................... 15
Experts..................................... 15
2
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information may be
inspected and copies may be obtained (at prescribed rates) at the Commission's
Public Reference Section, 450 Fifth Street, N.W., Room 1024, Washington D.C.
20549, and at the Commission's Regional Offices at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World
Trade Center, Suite 1300, New York, New York 10048. Electronic filings made by
the Company through the Commission's Electronic Data Gathering, Analysis and
Retrieval System are publicly available through the Commission's world wide web
site (http://www.sec.gov).
This Prospectus constitutes part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all of the information contained in the Registration Statement,
and reference is hereby made to the Registration Statement and related exhibits
for further information with respect to the Company and the securities offered
hereby. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, in such instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference: (1) Annual
Report on Form 10-K for the fiscal year ended June 30, 1998; and (2) Current
Reports on Form 8-K dated October 2, 1998 and October 5, 1998.
All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
Any person to whom a copy of this Prospectus is delivered may obtain,
without charge, upon written or oral request, a copy of any of the documents
incorporated by reference herein, except for the exhibits to such documents
(other than exhibits expressly incorporated by reference into such documents).
Requests for such documents should be addressed to the Manager of Investor
Relations of the Company, Ten Canal Park, Cambridge, Massachusetts 02141 or
directed to the Manager of Investor Relations at either telephone number
(617) 949-0100 or e-mail address [email protected].
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus or incorporated by reference herein. This
Prospectus contains and incorporates by reference certain forward-looking
statements that involve risks and uncertainties. See "Risk Factors" and
"Forward-Looking Statements."
THE COMPANY
Aspen Technology, Inc. (the "Company" or "AspenTech") is the leading
supplier of software and service solutions used by companies in the process
industries to design, operate and manage their manufacturing processes. The
process industries include manufacturers of chemicals, petrochemicals, petroleum
products, pharmaceuticals, pulp and paper, electric power, food and beverages,
consumer products, and metals and minerals. AspenTech offers a comprehensive,
integrated suite of process manufacturing optimization solutions that help
process manufacturers enhance profitability by improving efficiency,
productivity, capacity utilization, safety and environmental compliance
throughout the entire manufacturing life-cycle, from research and development to
engineering, planning and scheduling, procurement, production and distribution.
In addition to its software solutions, AspenTech offers systems implementation,
advanced process control, real-time optimization and other consulting services
through its staff of more than 450 project engineers. As part of its strategy to
offer the broadest, most integrated suite of process manufacturing optimization
solutions, AspenTech has acquired businesses from time to time to obtain
technologies and expertise that complement or enhance its core solutions.
AspenTech currently has more than 750 customers worldwide, including 44 of the
50 largest chemical companies, 17 of the 20 largest petroleum refiners and 16 of
the 20 largest pharmaceutical companies.
AspenTech believes its customers increasingly view their investments in its
solutions as strategic because of the substantial potential economic benefits
these solutions offer and the broad range of production issues they address. The
Company's competitive advantage is based upon its technology leadership, broad
suite of integrated solutions and substantial process industry expertise.
AspenTech believes that, through its research and development and strategic
acquisitions and partnerships, it has established itself as the technology
leader among providers of process manufacturing optimization solutions. The
Company's technologies have been applied to create what the Company believes is
the most complete suite of integrated software and service solutions available
for the design, operation and management of manufacturing processes in the
process industries. Over the past 17 years, AspenTech has developed a
significant base of chemical engineering and process manufacturing experience
and knowledge, which it has enhanced through extensive interaction with
customers that have performed millions of simulations using AspenTech's
software. To complement its software expertise, AspenTech has assembled a large
engineering team that the Company believes provides an important source of
competitive differentiation.
AspenTech's principal objective is to extend its leadership in providing
process management optimization solutions to the process industries. Key
elements of the Company's strategy to achieve this objective are to: (i) extend
its technology leadership position by continuing to invest in research and
development and to identify and pursue opportunities for strategic acquisitions;
(ii) leverage its installed customer base in the chemical, petrochemicals,
petroleum products, and pharmaceuticals industries by increasing the number of
users of software currently licensed by its existing customers and by licensing
complementary software and services to those customers; (iii) increase its
penetration of other process industries, particularly the pulp and paper,
electric power, and food and beverage industries, as well as the semiconductor
industry; (iv) pursue strategic acquisitions of complementary technologies and
services capabilities; and (v) selectively partner with providers of
complementary products and services to supplement the Company's ability to offer
enterprise-wide solutions.
The Company was incorporated as a Massachusetts corporation on August 11,
1981 and was reincorporated in Delaware on March 12, 1998. AspenTech's principal
executive offices are located at Ten Canal Park, Cambridge, Massachusetts 02141,
and its telephone number at that address is (617) 949-1000.
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4
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THE OFFERING
All of the 321,532 shares of Common Stock offered hereby are being sold by
the Selling Stockholders. The offered shares were issued to the Selling
Stockholders pursuant to (i) the Agreement and Plan of Merger dated as of April
28, 1998 between the Company, AT Acquisition Corp., Chesapeake Decision
Sciences, Inc. ("Chesapeake") and Dr. Thomas E. Baker (the former principal
stockholder of Chesapeake), under which 307,532 of the offered shares were
issued as part of the consideration exchanged for the outstanding capital stock
of Chesapeake, and (ii) the Share Exchange Agreement dated as of May 29, 1998
(the "Treiber Agreement") between the Company, Treiber Controls Inc. ("Treiber")
and Dr. Steven Treiber (the sole former stockholder of Treiber), under which
14,000 of the offered shares were issued as part of the consideration exchanged
for the outstanding capital stock of Treiber. The 14,000 shares are currently
held in escrow pursuant to the indemnification provisions of the Treiber
Agreement, and the net proceeds of those shares will be deposited in escrow in
lieu of those shares.
Under an Amended and Restated Declaration of Registration Rights adopted by
the Company in favor of the former stockholders of Chesapeake (the "Chesapeake
Declaration") and the Company's agreement with Dr. Steven Treiber, the Company
is obligated to use its best efforts to keep the Registration Statement in
effect until (a) a period of ninety days has elapsed since the effective date of
the Registration Statement or (b) all of the shares offered hereby have been
sold hereunder. The Company may elect, in its sole discretion, to maintain the
effectiveness of the Registration Statement for more than ninety days in the
event a portion or all of the shares offered hereby have not been sold.
The Company will not receive any of the proceeds from sales of shares by
the Selling Stockholders. See "Use of Proceeds."
-----------------
"ASPENTECH" is a registered trademark of the Company.
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5
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RISK FACTORS
In addition to the other information in this Prospectus, the following risk
factors should be considered in evaluating the Company and its business.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS AND CASH FLOW
The Company's operating results and cash flow have fluctuated in the past
and may fluctuate significantly in the future as a result of a variety of
factors, including purchasing patterns, timing of introductions of new solutions
and enhancements by the Company and its competitors, and fluctuating economic
conditions. Because license fees for the Company's software products are
substantial and the implementation of the Company's solutions often requires the
services of the Company's engineers over an extended period of time, the sales
process for the Company's solutions is lengthy and can exceed one year.
Accordingly, software revenue is difficult to predict, and the delay of any
order could cause the Company's quarterly revenues to fall substantially below
expectations. Moreover, to the extent that the Company succeeds in shifting
customer purchases away from individual software solutions and toward integrated
suites of its software and service solutions, the likelihood of delays in
ordering may increase and the effect of any delay may become more pronounced.
The Company ships software products within a short period after receipt of
an order and usually does not have a material backlog of unfilled orders of
software products. Consequently, revenues from software licenses in any quarter
are substantially dependent on orders booked and shipped in that quarter.
Historically, a majority of each quarter's revenues from software licenses has
been derived from license agreements that have been consummated in the final
weeks of the quarter. Therefore, even a short delay in the consummation of an
agreement may cause revenues to fall below expectations for that quarter. Since
the Company's expense levels are based in part on anticipated revenues, the
Company may be unable to adjust spending in a timely manner to compensate for
any revenue shortfall and any revenue shortfalls would likely have a
disproportionately adverse effect on net income. The Company expects that these
factors will continue to affect its operating results for the foreseeable
future.
Prior to fiscal 1996, the Company experienced a net loss for the first
quarter of each fiscal year, in part because a substantial portion of the
Company's total revenues is derived from countries other than the United States
where business is slow during the summer months and also in part because of the
timing of renewals of software licenses. Although the Company generated a profit
for the first quarter of each of fiscal 1997 and fiscal 1998, it incurred a net
loss for the first quarter of fiscal 1999 and the Company expects that it will
continue to experience declines in total revenues and net income in the first
fiscal quarter as compared to the immediately preceding fiscal quarter. Because
of the foregoing factors, the Company believes that period-to-period comparisons
of its operating results are not necessarily meaningful and should not be relied
upon as indications of future performance.
Due to all of the foregoing factors, it is possible that in one or more
future quarters the Company's operating results will be below the expectations
of public market analysts and investors. In such event, the price of the Common
Stock would likely be materially adversely affected. As a result principally of
slower-than-anticipated growth in the Company's services revenue and higher-
than-expected levels of expenses throughout the AspenTech organization in the
fiscal quarter ended June 30, 1998, the Company's operating results for the
fiscal quarter and fiscal year ended June 30, 1998 were below the expectations
of certain public market analysts and investors. In addition, on October 5,
1998, the Company announced that its operating results for the fiscal quarter
ended September 30, 1998 were expected to be below its plan. The Company is in
the process of reassessing its business prospects for the remainder of fiscal
1999. The Company believes that revenue and earnings will be significantly
reduced from previously anticipated levels. From July 27, 1998, the date on
which the Company preliminarily announced its results for the fiscal quarter and
year ended June 30, 1998, through the close of business on October 6, 1998, the
price per share of Common Stock, as reported by the Nasdaq National Market,
decreased from $48.25 to $7.0625. See "Litigation."
The Company derives a substantial portion of its total revenues from
service engagements and a majority of these engagements have been undertaken on
a fixed-price basis. The Company bears the risk of cost overruns and inflation
in connection with fixed-price engagements, and as a result, any of these
engagements may be unprofitable.
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LIMITED SUPPLY OF QUALIFIED PROJECT ENGINEERS
The Company derives a substantial portion of its total revenues from
services, particularly projects involving advanced process control and
optimization and similar projects. These projects can be extremely complex and
in general only highly qualified, highly educated project engineers have the
necessary training and skills to complete these projects successfully. In order
to continue to staff its current and future projects, the Company will need to
attract, motivate and retain a significant number of highly qualified, highly
educated chemical and other project engineers. The Company primarily hires as
project engineers individuals who have obtained a doctoral or master's degree in
chemical engineering or a related discipline or who have significant relevant
industry experience. As a result, the pool of potential qualified employees is
relatively small, and the Company faces significant competition for these
employees, from not only the Company's direct competitors but also the Company's
clients, academic institutions and other enterprises. Many of these competing
employers are able to offer potential employees significantly greater
compensation and benefits or more attractive lifestyle choices, career paths or
geographic locations than the Company. The failure to recruit and retain a
significant number of qualified project engineers could have a material adverse
effect on the Company's business, operating results and financial condition.
Moreover, increasing competition for these engineers may also result in
significant increases in the Company's labor costs, which could have a material
adverse effect on the Company's business, operating results and financial
condition.
INTEGRATION OF CHESAPEAKE AND OTHER RECENTLY ACQUIRED COMPANIES
Through its acquisitions of Chesapeake and several smaller companies in
1998, the Company has expanded its product and service offerings, has entered
new markets and has increased its scope of operations and the number of its
employees. The successful and timely integration of Chesapeake and these other
companies into the Company's operations is critical to the Company's future
financial performance. This integration will require that the Company, among
other things, integrate the companies' software products and technologies,
retain key employees, assimilate diverse corporate cultures, integrate
management information systems, consolidate the acquired operations and manage
geographically dispersed operations, each of which could pose significant
challenges. To succeed in the market for supply chain management solutions, the
Company must also invest additional resources, primarily in the areas of sales
and marketing, to extend name recognition and increase market share. The
diversion of the attention of management created by the integration process, any
disruptions or other difficulties encountered in the integration process, and
unforeseen liabilities or unanticipated problems with the acquired businesses
could have a material adverse effect on the business, operating results and
financial condition of the Company. The difficulty of combining these companies
may be increased by the need to integrate personnel, and changes effected in the
combination may cause key employees to leave. There can be no assurance that
these acquisitions will provide the benefits expected by the Company or that the
Company will be able to integrate and develop the operations of Chesapeake and
these other companies successfully. Any failure to do so could have a material
adverse effect on the Company's business, operating results and financial
condition.
COMPETITION
The Company faces three primary sources of competition: commercial vendors
of software products for one or more elements in the design, operation and
management of manufacturing processes; vendors of hardware that offer software
solutions in order to add value to their proprietary DCS; and large companies in
the process industries that have developed their own proprietary software
solutions. Because of the breadth of its software and service offerings, the
Company faces competition from different vendors depending on the solution in
question. The Company competes with respect to the largest number of its
solutions with Simulation Sciences, Inc., a subsidiary of Siebe plc. With
respect to particular software solutions, the Company also competes with
Chemstations, Inc., Hyprotech, Ltd. (a subsidiary of AEA Technology plc), The
Foxboro Company and Wonderware Corporation (both of which are subsidiaries of
Siebe plc), OSI Software, Inc., the Simcon division of ABB Asea Brown Boveri
(Holding) Ltd., and several smaller competitors, such as Pavilion Technologies,
Inc.
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With the acquisition of Chesapeake, the Company now competes with established
commercial vendors of supply chain management software, including i2
Technologies, Inc. and Manugistics Group, Inc. A number of vendors of ERP
software products, such as Baan Company N.V., J.D. Edwards Inc., Oracle
Corporation, PeopleSoft, Inc., and SAP A.G., have announced their intentions to
enter or expand their existing presence in the market for supply chain
management solutions. The Company also expects to encounter increasing
competition from DCS solution vendors, such as Honeywell Inc., as they expand
their software and service offerings to include additional aspects of process
manufacturing. Moreover, in recent years, there has been consolidation in the
markets in which the Company competes that has expanded the breadth of product
and service offerings by certain of the Company's competitors, such as the
acquisitions by Siebe plc of Simulation Sciences, Inc. and Wonderware
Corporation. As a result of this consolidation and the expansion of DCS and ERP
vendors into additional markets, the Company from time to time may compete with
divisions of companies with which it collaborates on other occasions, such as
Honeywell Inc. and Siebe plc. There can be no assurance that the Company's
efforts to compete and cooperate simultaneously with these or other companies
will be successful. The further consolidation of existing competitors or the
emergence of new competitors could have a material adverse effect on the
Company's business, operating results and financial condition. Certain
competitors also supply related hardware products to existing and potential
customers of the Company and may have established relationships that afford
those competitors an advantage in supplying software and services to those
customers. The Company's continued success depends on its ability to compete
effectively with its commercial competitors and to persuade prospective
customers to use the Company's products and services instead of, or in addition
to, software developed internally or services provided by their own personnel.
In light of these factors, there can be no assurance that the Company will be
able to maintain its competitive position.
RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
An element of the Company's business strategy is to continue to pursue
strategic acquisitions that will provide it with complementary products,
services and technologies and with additional engineering personnel. The
identification and pursuit of these acquisition opportunities and the
integration of acquired personnel, products, technologies and businesses require
a significant amount of management time and skill. There can be no assurance
that the Company will be able to identify suitable acquisition candidates,
consummate any acquisition on acceptable terms or successfully integrate any
acquired business into the Company's operations. In light of the consolidation
trend in the Company's industry, the Company expects to face competition for
acquisition opportunities, which may substantially increase the cost of any
acquisition consummated by the Company. There can also be no assurance that any
future acquisition will not have a material adverse effect upon the Company's
operating results as a result of non-recurring charges associated with the
acquisition or as a result of integration problems in the fiscal quarters
following consummation of the acquisition. Acquisitions may also expose the
Company to additional risks, including diversion of management's attention,
failure to retain key acquired personnel, assumption of legal or other
liabilities and contingencies, and amortization of goodwill and other acquired
intangible assets, some or all of which could have a material adverse effect on
the Company's business, operating results and financial condition. Moreover,
customer dissatisfaction with, or problems caused by, the performance of any
acquired technologies could have a material adverse impact on the reputation of
the Company as a whole. In addition, there can be no assurance that acquired
businesses will achieve anticipated revenues and earnings. The Company may use
Common Stock or Preferred Stock or may incur long-term indebtedness or a
combination thereof for all or a portion of the consideration to be paid in
future acquisitions. The issuance of Common Stock or Preferred Stock in
acquisitions could result in dilution to existing stockholders, while the use of
cash reserves or significant debt financing to fund acquisitions could reduce
the Company's liquidity.
CONCENTRATION OF REVENUES IN THE CHEMICALS, PETROCHEMICALS AND PETROLEUM
INDUSTRIES
The Company derives a substantial majority of its total revenues from
companies in the chemicals, petrochemicals and petroleum industries.
Accordingly, the Company's future success depends upon the continued demand for
process manufacturing optimization software and services by companies in these
industries. The
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chemicals, petrochemicals and petroleum industries are highly cyclical. The
Company believes that worldwide economic downturns and pricing pressures
experienced by chemical, petrochemical and petroleum companies in connection
with cost-containment measures and environmental regulatory pressures have in
the past led to worldwide delays and reductions in certain capital and operating
expenditures by many of these companies. There can be no assurance that these
industry patterns, as well as general domestic and foreign economic conditions
and other factors affecting spending by companies in these industries, will not
have a material adverse effect on the Company's business, operating results and
financial condition.
PRODUCT DEVELOPMENT AND TECHNOLOGICAL CHANGE
The market for software and services for process manufacturing optimization
is characterized by rapidly changing technology and continuing improvements in
computer hardware, operating systems, programming tools, programming languages
and database technology. The Company's future success will depend on its ability
to enhance its current software products and services, integrate its current and
future software offerings, modify its products to operate on additional or new
operating platforms or systems, and develop in a timely and cost-effective
manner new software and services that meet changing market conditions, including
evolving customer needs, new competitive software and service offerings,
emerging industry standards and changing technology. The Company has announced
its intention to further integrate its software products with each other and to
integrate those products with ERP, DCS and other business software solutions.
The Company believes additional development will be necessary before its
products are fully integrated with each other and with these other solutions,
particularly with respect to ERP solutions. In the past, the Company has
experienced delays in the development and enhancement of new and existing
products, particularly the Windows version of Aspen Plus, and has on occasion
postponed scheduled delivery dates for certain of its products. There can be no
assurance that the Company will be able to meet customers' expectations with
respect to product development, enhancement and integration or that the
Company's software and services will otherwise address adequately the needs of
customers. Like many other software products, the Company's software has on
occasion contained undetected errors or "bugs." Because new releases of the
Company's software products are initially installed only by a selected group of
customers, any errors or "bugs" in those new releases may not be detected for a
number of months after the delivery of the software. If the Company's products
do not perform substantially as expected or are not accepted in the marketplace,
the Company's business, operating results and financial condition would be
materially adversely affected.
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends to a significant extent on Lawrence B.
Evans, the principal founder of the Company and its Chairman and Chief Executive
Officer, its other executive officers, and certain engineering, technical,
managerial and marketing personnel. The loss of the services of any of these
individuals or groups of individuals could have a material adverse effect on the
Company's business, operating results and financial condition. None of the
Company's executive officers has entered into an employment agreement with the
Company, and the Company does not have, and is not contemplating securing, any
significant amount of key-person life insurance on any of its executive officers
or other key employees. In addition to the need to recruit qualified project
engineers, the Company believes that its future success will also depend
significantly upon its ability to attract, motivate and retain additional highly
skilled technical, managerial and marketing personnel. Competition for such
personnel is intense, and there can be no assurance that the Company will be
successful in attracting, motivating and retaining the personnel it requires to
continue to grow and operate profitably.
PRODUCT LIABILITY
The sale and implementation of certain of the Company's software products
and services, particularly in the areas of advanced process control and
optimization, may entail the risk of product liability claims. The Company's
software products and services are used in the design, operation and management
of manufacturing processes at
9
<PAGE> 11
large facilities, and any failure of the software at those facilities could
result in significant claims for damages or for violations of environmental,
safety and other laws and regulations. The Company's agreements with its
customers generally contain provisions designed to limit the Company's exposure
to potential product liability claims. It is possible, however, that the
limitation of liability provisions in the Company's agreements may not be
effective as a result of federal, state or local laws or ordinances or
unfavorable judicial decisions. A substantial product liability claim against
the Company could have a material adverse effect upon the Company's business,
operating results and financial condition.
DEPENDENCE ON PROPRIETARY TECHNOLOGY
The Company regards its software as proprietary and relies on a combination
of copyright, patent, trademark and trade secret laws, license and
confidentiality agreements, and software security measures to protect its
proprietary rights. AspenTech has United States patents for the expert guidance
system in its proprietary graphical user interface, the simulation and
optimization methods in its optimization software, a process flow diagram
generator in its planning and scheduling software, and a process simulation
apparatus in its polymers software. The Company has registered or has applied to
register certain of its significant trademarks in the United States and in
certain other countries. The Company generally enters into non-disclosure
agreements with its employees and customers, and historically has restricted
access to its software products' source codes, which it regards as proprietary
information. In a few cases, the Company has provided copies of the source code
for certain products to customers solely for the purpose of special
customization of the products and has deposited copies of the source code for
certain products in third-party escrow accounts as security for on-going service
and license obligations. In these cases, the Company relies on nondisclosure and
other contractual provisions to protect its proprietary rights.
The laws of certain countries in which the Company's products are licensed
do not protect the Company's products and intellectual property rights to the
same extent as the laws of the United States. The laws of many countries in
which the Company licenses its products protect trademarks solely on the basis
of registration. The Company currently possesses a limited number of trademark
registrations in certain foreign jurisdictions and does not possess, and has not
applied for, any foreign copyright or patent registrations. In fiscal 1996,
fiscal 1997 and fiscal 1998, the Company derived approximately 42.0%, 50.0% and
45.4% of its total revenues, respectively, from customers outside the United
States. There can be no assurance that the steps taken by the Company to protect
its proprietary rights will be adequate to deter misappropriation of its
technology or independent development by others of technologies that are
substantially equivalent or superior to the Company's technology. Any such
misappropriation of the Company's technology or development of competitive
technologies could have a material adverse effect on the Company's business,
operating results and financial condition. The Company could incur substantial
costs in protecting and enforcing its intellectual property rights. Moreover,
from time to time third parties may assert patent, trademark, copyright and
other intellectual property rights to technologies that are important to the
Company. In such an event, the Company may be required to incur significant
costs in litigating a resolution to the asserted claims. There can be no
assurance that such a resolution would not require that the Company pay damages
or obtain a license of a third party's proprietary rights in order to continue
licensing its products as currently offered or, if such a license is required,
that it will be available on terms acceptable to the Company, if at all.
MANAGEMENT OF GROWTH
The Company has experienced substantial growth in recent years in the
number of its employees, the scope of its operating and financial systems, and
the geographic area of its operations. The Company's operations have expanded
significantly through both internally generated growth and acquisitions. This
growth has resulted in increased responsibilities for the Company's management.
To manage its growth effectively, the Company must continue to expand its
management team, attract, motivate and retain employees, including qualified
project engineers, and implement and improve its operating and financial
systems. There can be no assurance that the
10
<PAGE> 12
Company's current management systems will be adequate or that the Company will
be able to manage the Company's recent or future growth successfully. Any
failure to do so could have a material adverse effect on the Company's business,
operating results and financial condition.
INTERNATIONAL OPERATIONS
In fiscal 1996, fiscal 1997 and fiscal 1998, the Company derived
approximately 42.0%, 50.0% and 45.4% of its total revenues, respectively, from
customers outside the United States. The Company anticipates that revenues from
customers outside the United States will continue to account for a significant
portion of its total revenues for the foreseeable future. The Company's
operations outside the United States are subject to additional risks, including
unexpected changes in regulatory requirements, exchange rates, tariffs and other
barriers, political and economic instability, difficulties in managing
distributors or representatives, difficulties in staffing and managing foreign
subsidiary operations, difficulties or delays in translating products and
product documentation into foreign languages, and potentially adverse tax
consequences. In addition, the Company currently is unable to determine the
effect, if any, that recent economic downturns in Asia, particularly Japan, or
the adoption and use of the euro, the single European currency to be introduced
in January 1999, will have on the Company's business. There can be no assurance
that any of these factors will not have a material adverse effect on the
Company's business, operating results and financial condition.
The impact of future exchange rate fluctuations on the Company's financial
condition and operating results cannot be accurately predicted. In recent years,
the Company has increased the extent to which it denominates arrangements with
customers outside the United States in the currencies of the country in which
the software or services are provided. From time to time the Company has engaged
in, and may continue to engage in, hedges of a significant portion of
installment contracts denominated in foreign currencies. There can be no
assurance that any hedging policies implemented by the Company will be
successful or that the cost of such hedging techniques will not have a
significant impact on the Company's business, operating results and financial
condition.
DEPENDENCE ON INCREASED MARKET PENETRATION
Increased use in the process industries of software and services for
process manufacturing optimization in general and of the Company's software
products and services in particular is critical to the Company's future growth.
The Company believes that a number of factors will determine its ability to
increase market penetration. These factors include product performance, accuracy
of results, reliability, breadth and integration of product offerings, scope of
applications, and ease of implementation and use. Failure of the Company to
achieve increased market penetration in the process industries would
substantially restrict the future growth of the Company and could have a
material adverse effect on the Company's business, operating results and
financial condition.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software applications are
designed to accept only two digit entries in the date code field used to
identify years. These date code fields will need to be modified to recognize
twenty-first century years. As a result, computer systems and software
applications used by many companies may need to be upgraded to comply with "year
2000" requirements. Significant uncertainty exists in the software industry
concerning the potential effects of failure to comply with such requirements.
The Company has developed a testing and compliance program to ascertain
whether and to what extent the Company may need to update its software products
to become year 2000 compliant. The Company does not intend to test or modify all
prior versions of its software products, current products used on year 2000
non-compliant systems, custom applications developed by or for customers, or
certain current software products that the Company plans to replace with either
new software products or year 2000 compliant releases by the end of 1999.
Certain of the Company's software products are currently year 2000 compliant;
however, the Company
11
<PAGE> 13
has not completed testing on many of the other software products that it intends
to test. There can be no assurance that the Company will complete in a timely
manner the testing of such software products or the development of any updates
necessary to render such software products year 2000 compliant. Although the
Company has obtained representations as to year 2000 compliance from the sellers
of certain of its recently acquired technologies, there can be no assurance that
the Company will not encounter year 2000 problems arising from these
technologies or any other technologies that the Company may acquire in the
future. Moreover, the ability of the Company's software products to comply with
year 2000 requirements depends in part upon the availability of year 2000
compliant versions of operating systems and software applications used by or
with the Company's products. Any delay in developing or offering, or the failure
to develop or offer year 2000 compliant products or any necessary updates to
existing products, could result in delays in the purchasing of the Company's
products and services or in reduced demand for those products and services, and
could also result in errors that materially impair the utility of one or more of
the Company's products, any of which could have a material adverse effect on the
Company's business, operating results and financial condition. Although the
Company does not expect the costs associated with its year 2000 compliance
program to be material, there can be no assurance that unidentified year 2000
problems will not cause the Company to incur material expenses in responding to
such problems or otherwise have a material adverse effect on the Company's
business, operating results and financial condition. Moreover, customer
purchasing patterns may be affected by year 2000 issues as customers delay
purchases in anticipation of the future release of year 2000 compliant products
or releases, and as customers expend significant resources to upgrade their
current software systems and applications for year 2000 compliance. These
expenditures may result in reduced funds available to purchase software products
such as those offered by the Company.
The Company has reviewed certain internal systems and future system plans
on a preliminary basis to assess Year 2000 compliance. The Company expects that
its internal system development plans will address the Year 2000 issue and will
correct any existing non-compliant systems without the need to accelerate the
overall information systems implementation plans. The Company believes that the
cost of any modifications will not be material. The Company's ability to
implement its information systems plan and to make the necessary modifications
or replacements may be adversely affected by a number of factors outside the
control of the Company, including the availability and cost of trained personnel
and the ability of such personnel to acquire Year 2000 compliant systems and
otherwise to locate and correct all relevant computer codes. The Company is also
conducting an additional assessment of its systems and operations in order to
more fully identify and plan for any Year 2000 risks, although it believes that
its business would not be materially affected by the failure of any internal
systems to be Year 2000 compliant. If there are unidentified dependencies on
internal systems to operate the business, or if any required modifications are
not completed on a timely basis or are more costly to implement than currently
anticipated, the Company's business, financial condition or results of
operations could be materially adversely affected.
NEW ACCOUNTING STANDARD
In October 1997, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position No. 97-2 ("SOP 97-2"), "Software Revenue
Recognition," which the Company adopted for software license agreements entered
into with customers on or after January 1, 1998. This statement provides
accounting standards for software revenue recognition. The Company believes that
its revenue recognition policies comply with SOP 97-2; however, unanticipated
changes or new interpretations by the AICPA of SOP 97-2 could require changes in
the Company's revenue recognition practices, which could have a material adverse
effect on the Company's operating results and financial condition.
POTENTIAL VOLATILITY OF PRICE OF COMMON STOCK
The equity markets have from time to time experienced extreme price and
volume fluctuations, particularly in the high technology sector, and those
fluctuations have often been unrelated to the operating performance of
particular companies. In addition, factors such as the financial performance of
the Company, announcements of
12
<PAGE> 14
technological innovations or new products by the Company or its competitors, as
well as market conditions in the computer software or hardware industries, may
have a significant impact on the market price of the Common Stock. From July 27,
1998, the date on which the Company preliminarily announced its results for the
fiscal quarter and year ended June 30, 1998, through the close of business on
October 6, 1998, the price per share of Common Stock, as reported by the Nasdaq
National Market, decreased from $48.25 to $7.0625. See "--Fluctuations in
Quarterly Operating Results and Cash Flow" and "Litigation."
EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS AND ANTI-TAKEOVER PROVISIONS;
POSSIBLE ISSUANCES OF PREFERRED STOCK; STOCKHOLDER RIGHTS PLAN
The Company's Certificate of Incorporation, its By-Laws and certain
Delaware laws contain provisions that may discourage acquisition bids for the
Company and that may deprive stockholders of certain opportunities to receive a
premium for their shares as part of an acquisition of the Company. Preferred
Stock may be issued by the Company in the future without stockholder approval
and upon such terms as the Board of Directors may determine. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of the outstanding stock
of the Company. The Company has adopted a stockholder rights plan, which may
deter or delay attempts to acquire the Company or accumulate shares of Common
Stock. Except for the stockholder rights plan, the Company has no present plans
to designate or issue any shares of Preferred Stock.
LITIGATION
On October 5, 1998, a purported class action lawsuit was filed in the
United States District Court for the District of Massachusetts against the
Company and certain of its officers and directors on behalf of purchasers of
the Company's common stock between April 28, 1998 and October 2, 1998. The
lawsuit seeks an unspecified amount of damages and claims violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, alleging that the
defendants issued a series of materially false and misleading statements
concerning the Company's financial condition, its operations and integration of
several acquisitions. The Company believes it has meritorious legal defenses to
the lawsuit and intends to defend vigorously against this action. The Company is
currently unable, however, to determine whether resolution of this matter will
have a material adverse impact on the Company's financial position or results of
operations, or reasonably estimate the amount of the loss, if any, that may
result from resolution of this matter.
FORWARD-LOOKING STATEMENTS
This Prospectus contains and incorporates by reference certain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act, which are intended to be covered by the
safe harbors created thereby. For this purpose, any statements contained or
incorporated by reference herein that are not statements of historical fact may
be deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects," and similar expressions are
intended to identify forward-looking statements. Readers are cautioned that all
forward-looking statements involve risks and uncertainties, many of which are
beyond the Company's control, including the factors set forth under "Risk
Factors." Although the Company believes that the assumptions underlying the
forward-looking statements contained or incorporated by reference herein are
reasonable, any of the assumptions could be inaccurate and there can be no
assurance that actual results will be the same as those indicated by the
forward-looking statements included or incorporated by reference in this
Prospectus. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion or incorporation by
reference of such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved. Moreover, the Company assumes no obligation to update these
forward-looking statements to reflect actual results, changes in assumptions or
changes in other factors affecting such forward-looking statements.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders, nor will any such proceeds be available for use by the
Company or otherwise for the Company's benefit. See "Selling Stockholders."
13
<PAGE> 15
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock by the Selling Stockholders as of September
1, 1998 and as adjusted to reflect the sale of the shares of Common Stock
offered hereby.
<TABLE>
<CAPTION>
SHARES SHARES TO BE
BENEFICIALLY NUMBER BENEFICIALLY OWNED
OWNED OF AFTER OFFERING IF
PRIOR TO OFFERING(1) SHARES ALL SHARES SOLD(1)
--------------------- BEING ---------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
- ---- --------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
Thomas E. Baker....... 1,927,820(2) 7.7% 200,000 1,727,820(2) 6.9%
Donald E. Shobrys..... 233,725(3) * 53,466 180,259(3) *
Steven Treiber........ 140,000 * 14,000(4) 126,000(5) *
David L. Linkin....... 113,214(6) * 15,843 97,371(6) *
Dwight E. Collins..... 88,852(7) * 9,901 78,951(7) *
Jeffrey B. Howard..... 82,337(8) * 11,881 70,456(8) *
Laura H. Rhoden....... 60,168(9) * 3,960 56,208(9) *
Christopher V. Jones.. 35,644 * 11,881 23,763 *
Joseph F. Faccenda.... 2,942(10) * 600 2,342(10) *
</TABLE>
- ------------
* Percentage of shares beneficially owned is less than 1.0%.
(1) 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. As of
September 1, 1998, there were 24,902,218 shares of Common Stock
outstanding.
(2) Includes 17,822 shares held by Mr. Baker's wife and 71,287 shares held by a
trust for the benefit of Mr. Baker's children. Also includes 103,034 shares
and 24,782 shares held in the Chesapeake Decision Sciences, Inc. Employee
Stock Ownership Plan and Trust effective January 1, 1987, as amended and
restated effective January 1, 1989 (the "Chesapeake ESOP") on behalf of Mr.
Baker and Mr. Baker's wife, respectively. All such shares were acquired on
May 27, 1998 in exchange for shares of capital stock of Chesapeake.
(3) Includes 73,329 shares held in on behalf of Mr. Shobrys.
(4) All of these 14,000 shares are currently held in escrow pursuant to the
indemnification provisions of the Treiber Agreement, and the net proceeds
of those shares will be deposited in escrow in lieu of those shares.
(5) All of these 126,000 shares have been registered under a registration
statement on Form S-3 (registration no. 333-61121) declared effective by
the Commission on August 25, 1998.
(6) Includes 65,689 shares held in the Chesapeake ESOP on behalf of Mr. Linkin.
(7) Includes 59,149 shares held in the Chesapeake ESOP on behalf of
Mr. Collins.
(8) Includes 46,693 shares held in the Chesapeake ESOP on behalf of Mr. Howard.
(9) Includes 48,287 shares held in the Chesapeake ESOP on behalf of Ms. Rhoden.
(10) Includes 1,141 shares held in the Chesapeake ESOP on behalf of
Mr. Faccenda.
14
<PAGE> 16
PLAN OF DISTRIBUTION
This Prospectus and the Registration Statement are in furtherance of a
"shelf" registration pursuant to Rule 415 promulgated by the Commission under
the Securities Act. Under the Chesapeake Declaration and the Company's agreement
with Dr. Steven Treiber,, the Company is obligated to use its best efforts to
keep the shelf registration in effect until (a) a period of ninety days has
elapsed since the effective date of the Registration Statement or (b) all of the
shares offered hereby have been sold hereunder. The Company may elect, in its
sole discretion, to maintain the effectiveness of the Registration Statement for
more than ninety days in the event a portion or all of the shares offered hereby
have not been sold.
The shares offered hereby may be sold from time to time by the Selling
Stockholders, or by pledges, donees, transferees or other successors in interest
of the Selling Stockholders. Such sales may be made on the Nasdaq National
Market, or otherwise, at prices and on terms then prevailing or at prices
related to the then-current market prices, or in negotiated transactions at
negotiated prices. The shares may be sold by one or a combination of the
following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. In effecting sales,
brokers or dealers engaged by the Selling Stockholders may arrange for other
brokers or dealers to participate. Brokers or dealers will receive commissions
or discounts from Selling Stockholders in amounts to be negotiated immediately
prior to the sale. The Selling Stockholders and any broker-dealers that
participate in the distribution may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commission received by
them and any profit on the resale of shares sold by them may be deemed to be
underwriting discounts and commissions.
Upon the Company being notified by the Selling Stockholders that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplemented
prospectus will be filed, if required, pursuant to Rule 424(c) under the
Securities Act, setting forth (i) the name of each of the participating
broker-dealers, (ii) the number of shares involved, (iii) the price at which
such shares were sold, (iv) the commissions paid or discounts or concessions
allowed to such broker-dealers, where applicable, (v) a statement to the effect
that such broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this Prospectus, and (vi)
other facts material to the transaction.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been passed
upon for the Company by Foley, Hoag & Eliot LLP, Boston, Massachusetts.
EXPERTS
The consolidated balance sheets of the Company as of June 30, 1997 and 1998
and the related consolidated statements of operations, stockholders' equity and
cash flows for the years ended June 30, 1996, 1997 and 1998 incorporated by
reference herein from the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1998 have been audited by Arthur Andersen LLP, independent
public accountants, to the extent and for the periods indicated in their reports
included in such Form 10-K, and are incorporated by reference herein in reliance
upon the authority of that firm as experts in giving those reports.
15
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses to be paid by the
Registrant in connection with the issuance and distribution of the shares of
Common Stock being registered. All amounts shown are estimates except for the
Securities and Exchange Commission registration fee. The Registrant will pay all
expenses in connection with the distribution of the shares of Common Stock being
sold by the Selling Stockholders (including fees and expenses of counsel for the
Company), except for any discounts, concessions, commissions or other
compensation due to any broker or dealer in connection with the sale of any of
the shares offered hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........... $1,285
Accounting fees and expenses.................................. 1,000
Legal fees and expenses....................................... 4,500
Printing, EDGAR formatting and mailing expenses............... 500
Miscellaneous................................................. 715
------
Total.................................................... $8,000
======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article SEVENTH of the Registrant's Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), provides that no director of the
Registrant shall be personally liable for any monetary damages for any breach of
fiduciary duty as a director, except to the extent that the Delaware General
Corporation Law prohibits the elimination or limitation of liability of
directors for breach of fiduciary duty.
Article EIGHTH of the Certificate of Incorporation provides that a director
or officer of the Registrant shall be indemnified by the Registrant against (a)
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 the Registrant) brought against him
or her by virtue of his or her position as a director or officer of the
Registrant if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the Registrant, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful and (b) all expenses (including
attorneys' fees) and amounts paid in settlement incurred in connection with any
action by or in the right of the Registrant brought against him or her by virtue
of his or her position as a director or officer of the Registrant if he or she
acted in good faith and in a manner he or she reasonably believed to be in, or
not opposed to, the best interests of the Registrant, 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 the Registrant, unless a court
determines that, despite such adjudication but in view of all of the
circumstances, he or she 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 or she is required to be indemnified by the Registrant
against all expenses (including attorneys' fees) incurred in connection
therewith. Expenses shall be advanced to a director or officer at his or her
request, provided that he or she undertakes to repay the amount advanced if it
is ultimately determined that he or she is not entitled to indemnification for
such expenses.
Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct required for
indemnification, or if the Registrant fails to make an indemnification payment
within sixty days after such payment is claimed by such person, such person
II-1
<PAGE> 18
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 the Registrant
notice of the action for which indemnity is sought and the Registrant has the
right to participate in such action or assume the defense thereof.
Article EIGHTH of the Certificate of Incorporation further provides that
the indemnification provided therein is not exclusive, and provides that in the
event that the Delaware General Corporation Law is amended to expand the
indemnification permitted to directors or officers the Registrant must indemnify
those persons to the fullest extent permitted by such law as so amended.
Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he or she is or is threatened
to be made a party by reason of such position, if such person shall have acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and, in any criminal
proceeding, if such person had no reasonable cause to believe his or her conduct
was unlawful; provided that, in the case of actions brought by or in the right
of the corporation, no indemnification shall be made with respect to any matter
as to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the adjudicating court determines that such
indemnification is proper under the circumstances.
The Company maintains a directors' and officers' insurance policy that
covers certain liabilities of directors and officers of the Company, including
liabilities under the Securities Act. The Company maintains a general liability
insurance policy that covers certain liabilities of directors and officers of
the Company arising out of claims based on acts or omissions in their capacities
as directors or officers.
ITEM 16. EXHIBITS
EXHIBIT NO.
- -----------
5.1 Opinion of Foley, Hoag & Eliot LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Foley, Hoag & Eliot LLP (included in Exhibit 5.1)
24.1* Powers of Attorney (included on page II-4 of Registration Statement
on Form S-3 as initially filed)
99.1 Amended and Restated Declaration of Registration Rights dated as of
April 27, 1998, adopted by Aspen Technology, Inc. for the benefit of
former stockholders of Chesapeake Decision Sciences, Inc.
- -----------
* Filed previously.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required to Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the
II-2
<PAGE> 19
aggregate, represent a fundamental change in the information
set forth in the Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3, Form S-8,
or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration, by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference to the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cambridge, Commonwealth of Massachusetts, as of
October 8, 1998.
ASPEN TECHNOLOGY, INC.
By: /s/ LAWRENCE B. EVANS
-------------------------------
LAWRENCE B. EVANS
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities indicated as of October 8, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ LAWRENCE B. EVANS Chairman of the Board and Chief Executive Officer
- ---------------------------- (Principal Executive Officer)
LAWRENCE B. EVANS
/s/ LISA W. ZAPPALA Chief Financial Officer
- ---------------------------- (Principal Financial and Accounting Officer)
LISA W. ZAPPALA
* Director
- ----------------------------
JOSEPH F. BOSTON
* Director
- ----------------------------
GRESHAM T. BREBACH, JR.
* Director
- ----------------------------
DOUGLAS R. BROWN
* Director
- ----------------------------
JOAN C. MCARDLE
* Director
- ----------------------------
ALISON ROSS
*By /s/ LISA W. ZAPPALA
------------------------
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 1
EXHIBIT 5.1
FOLEY, HOAG & ELIOT LLP
One Post Office Square
Boston, Massachusetts 02109-2170
Telephone: (617) 832-1000
Facsimile: (617) 832-7000
Telex 940693
http://www.fhe.com
October 7, 1998
ASPEN TECHNOLOGY, INC.
Ten Canal Park
Cambridge, Massachusetts 02141
Ladies and Gentlemen:
We have acted as special counsel for Aspen Technology, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, of a Registration Statement on Form S-3 (the "Registration Statement")
relating to the offering of up to 321,532 shares (the "Shares") of the Company's
common stock, $.10 par value, by certain stockholders of the Company.
In arriving at the opinion expressed below, we have examined and relied
on: (i) the Registration Statement; (ii) the Certificate of Incorporation of the
Company, as amended; (iii) the By-Laws of the Company; and (iv) minutes of
meetings of the Board of Directors of the Company, including a meeting held on
April 27, 1998. In addition, we have examined and relied on the originals or
copies certified or otherwise identified to our satisfaction of all such other
records, documents and instruments of the Company and such other persons, and we
have made such investigations of law, as we have deemed appropriate as a basis
for the opinions expressed below. We have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to the original documents of all documents submitted to us as
certified or photostatic copies.
We express no opinion other than as to the corporation laws of the State
of Delaware.
Based upon the foregoing, we are of the opinion that the Shares have been
duly authorized and validly issued and are fully paid and non-assessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the prospectus forming a part of the Registration Statement.
Very truly yours,
FOLEY, HOAG & ELIOT LLP
By /s/ MARK L. JOHNSON
-----------------------------------
A Partner
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Amendment No. 1 to Registration Statement on Form S-3 of
our reports included in the Annual Report on Form 10-K of Aspen Technology,
Inc. for the fiscal year ended June 30, 1998 and to the reference to our firm
in this Amendment No. 1 to Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 7, 1998
<PAGE> 1
EXHIBIT 99.1
ASPEN TECHNOLOGY, INC.
AMENDED AND RESTATED DECLARATION OF REGISTRATION RIGHTS
AMENDED AND RESTATED DECLARATION made as of September 23, 1998 (this
"Declaration") by Aspen Technology, Inc., a Delaware corporation ("AspenTech"),
for the benefit of stockholders of Chesapeake Decision Sciences, Inc., a New
Jersey corporation ("Chesapeake"), acquiring shares of common stock of AspenTech
pursuant to the Agreement and Plan of Reorganization dated as of April 28, 1998
among Aspen Technology, Inc., AT Acquisition Corp., Chesapeake and Dr. Thomas E.
Baker (the "Reorganization Agreement").
1. CERTAIN DEFINED TERMS.
Capitalized terms used herein shall have the respective meanings ascribed
to them in the Reorganization Agreement, unless the context requires otherwise.
In addition, as used in this Declaration, the following additional terms have
the following meanings:
"DEMAND UNDERWRITING" has the meaning set forth in Section 2.2.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FOLLOW-ON SHELF" has the meaning set forth in Section 3.2.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any registration form under the Securities Act subsequently
adopted by the SEC that similarly permits inclusion or incorporation of
substantial information by reference to other documents filed by AspenTech with
the SEC.
"HOLDERS" means (a) the record holders of Chesapeake Common to whom
Registrable Shares are issued pursuant to the Reorganization Agreement, (b) any
of such record holders' respective family members and trusts wholly or
principally for the benefit of family members to whom such holders transfer
record ownership of any of the Registrable Shares and (c) any participants of
the ESOP to whom Registrable Shares are distributed under the ESOP and who are
the record holders of those Registrable Shares.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7.3.
"INDEMNIFYING PARTY" has the meaning set forth in Section 7.3.
"INITIAL SHELF" has the meaning set forth in Section 3.1.
"PIGGYBACK UNDERWRITING" has the meaning set forth in Section 2.3.
"PRO RATA SHARE" means, with respect to a Holder wishing to participate in
a proposed registration hereunder, a number equal to the number of Registrable
Shares to be covered by such registration multiplied by a fraction, the
numerator of which shall be the total number of Registrable Shares held by such
Holder and the denominator of which shall be the number of Registrable Shares
held by all Holders.
"PUBLICATION DATE" means the date on which AspenTech initially publishes
financial results reflecting the first thirty days of combined operations of
AspenTech and Chesapeake pursuant to Section 7.4 of the Reorganization
Agreement.
<PAGE> 2
"REGISTRABLE SHARES" means, with respect to a Holder, (a) the shares of
AspenTech Common issued to such Holder as a stockholder of Chesapeake pursuant
to the Reorganization Agreement, (b) any other securities issued by Aspen in
exchange for any of such shares (but, with respect to any particular Registrable
Security, only so long as it continues to be a Registrable Security) and (c) any
shares of AspenTech Common issued as a dividend or distribution on account of
Registrable Shares or resulting from a subdivision of outstanding Registrable
Shares into a greater number of securities (by reclassification, stock split or
otherwise), provided that a security that was at one time a Registrable Security
shall cease to be a Registrable Security when it has been effectively registered
under the Securities Act and has been disposed of pursuant to a registration
statement or (b) it has been transferred and is no longer held of record by a
Holder.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
2. UNDERWRITTEN REGISTRATIONS.
2.1. DEMAND UNDERWRITING. If at any one time from April 1, 1999 to July 30,
1999, the Holders shall request in writing that AspenTech register under the
Securities Act an aggregate of at least 500,000 Registrable Shares held by such
Holders for resale in an underwritten public offering (the "Demand
Underwriting"), AspenTech shall mail written notice to each other Holder of
AspenTech's intention to register under the Securities Act up to a maximum of
1,000,000 Registrable Shares for resale by the Holders in an underwritten public
offering, which notice shall specify the proposed managing underwriter or
underwriters of the Demand Underwriting. Each such Holder may then elect to
participate in the contemplated Demand Underwriting by delivering to AspenTech,
within fifteen days after the date of mailing of AspenTech's notice pursuant to
the preceding sentence, a written notice specifying the number of Registrable
Shares (up to the number of Registrable Shares held by such Holder) such Holder
wishes to have registered for resale in the Demand Underwriting. AspenTech shall
have no obligation to continue with any registration process under this Section
2.1 if the number of Registrable Shares requested to be registered by the
Holders actually included in an underwriting hereunder shall be less than
500,000. In the event that the number of Registrable Shares requested to be
registered by the Holders shall be greater than 1,000,000, a total of 1,000,000
Registrable Shares shall be registrable pursuant to this Section 2.1 and the
number of such Registrable Shares to be registered held by those Holders
requesting registration of greater than their Pro Rata Shares shall be reduced,
in proportion, as nearly as practicable, to each Holder's Pro Rata Share. If at
least 500,000 Registrable Shares are requested to be registered by the Holders
pursuant to this Section 2.1, AspenTech shall use its reasonable best efforts to
prepare, file with the SEC and cause to become effective a registration
statement on Form S-3 covering registration of the resale of all of the
Registrable Shares properly requested to be registered pursuant to this Section
2.1 by the Holders. In no event shall the Demand Underwriting include for resale
by the Holders fewer than 500,000 Registrable Shares or such lesser number of
Registrable Shares as have been properly requested by the Holders to be
registered for resale pursuant to this Section 2.1.
2.2 PIGGYBACK UNDERWRITINGS. If at any time or from time to time after
November 29, 1998, AspenTech determines to register any shares of AspenTech
Common (other than pursuant to a registration undertaken pursuant to Section
2.1), for its own account or the account of a security holder or holders for
sale in an underwritten public offering, then AspenTech shall: (a) promptly give
to each Holder written notice thereof; and (b) include in such registration and
in the underwriting involved therein (a "Piggyback Underwriting") up to a
maximum of 500,000 Registrable Shares, as specified in a written notice or
notices given by any Holders within fifteen days after the date of mailing of
such written notice by AspenTech. In the event that the number of Registrable
Shares requested to be registered by the Holders shall be greater than 500,000,
a total of 500,000 Registrable Shares shall be registrable pursuant to this
Section 2.2 and the
-2-
<PAGE> 3
number of such Registrable Shares to be registered held by those Holders
requesting registration of greater than their Pro Rata Share shall be reduced,
in proportion, as nearly as practicable, to each Holder's Pro Rata Share. The
provisions of this Section 2.2 shall apply only to an underwritten public
offering and shall not apply to (i) a registration on Form S-4 or S-8 (or any
successor form), (ii) an SEC Rule 145 transaction, (iii) a registration on any
form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Shares or (iv) a registration relating solely to securities of
AspenTech convertible into AspenTech Common or as to which AspenTech Common may
be issued upon exercise of rights thereunder and to the AspenTech Common
issuable upon conversion or exercise thereof. The provisions of this Section 2.2
shall terminate (i) if the Demand Underwriting shall have been effected or (ii)
with respect to any Holder, when all of such Holder's Registrable Shares may be
sold at one time pursuant to Rule 144 under the Securities Act.
3. SHELF REGISTRATIONS.
3.1. INITIAL SHELF. AspenTech shall register under the Securities Act (a)
up to 107,532 shares held by all Holders other than Dr. Thomas E. Baker and his
affiliates and (b) 200,000 Registrable Shares held by Dr. Baker and his
affiliates, all pursuant to a registration statement on Form S-3 (the "Initial
Shelf") for an offering to be made on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act (or any similar rule that may be adopted by
the SEC) and permitting sales in ordinary course broker or dealer transactions
not involving an underwritten public offering. On or before September 25, 1998
AspenTech shall deliver to each Holder (other than Dr. Baker and his affiliates)
by overnight courier a written notice of the Initial Shelf. Each such Holder may
then elect to participate in the Initial Shelf by delivering to AspenTech,
within fifteen days after the date on which AspenTech sent such notice, a
written notice specifying the number of Registrable Shares (up to the number of
Registrable Shares held by such Holder) such Holder wishes to have registered
for resale pursuant to the Initial Shelf. In the event that the number of
Registrable Shares requested to be registered by the Holders shall be greater
than 107,532, a total of 107,532 Registrable Shares shall be registrable
pursuant to this Section 3.1 and the number of such Registrable Shares to be
registered held by those Holders requesting registration of greater than their
Pro Rata Shares shall be reduced, in proportion, as nearly as practicable, to
each Holder's Pro Rata Share. AspenTech shall use its reasonable best efforts to
(a) prepare and file with the SEC, as soon as practicable, on or after October
12, 1998 (or such earlier date on which all Holders, other than Dr. Baker and
his affiliates, have returned their participation notices) an amendment to the
registration statement for the Initial Shelf such that the registration
statement, as amended, covers registration of the resale of 200,000 shares held
by Dr. Baker and all of the other Registrable Shares properly requested to be
registered pursuant to this Section 3.1 by Holders other than Dr. Baker and his
affiliates, (b) cause the Initial Shelf registration statement, as amended, to
become effective as soon as practicable thereafter and (c) subject to Section
4.2, keep the Initial Shelf registration statement continuously effective for a
period of 90 days after effectiveness. In no event shall AspenTech have any
obligation, except as provided in Section 4.2, to keep such registration
statement in effect beyond January 4, 1999. If a Holder shall propose to sell
any Registrable Shares pursuant to a registration statement filed pursuant to
this Section 3.1, it shall notify AspenTech of its intent to do so at least
three full business days prior to such sale. AspenTech shall not be required to
effect more than one registration under this Section 3.1.
3.2. FOLLOW-ON SHELF. At any time from December 1, 1998 to January 29,
1999, the Holders may request in writing that AspenTech register under the
Securities Act Registrable Shares held by such Holders for resale pursuant to a
registration statement on Form S-3 (the "Follow-on Shelf") for an offering to be
made on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act (or any similar rule that may be adopted by the SEC) and permitting sales in
ordinary course brokerage or dealer transactions not involving an underwritten
public offering. Within five days after receiving such a request, AspenTech
shall mail written notice to each other Holder of AspenTech's intention to
register under the Securities Act up to a
-3-
<PAGE> 4
maximum of 500,000 Registrable Shares for resale by the Holders pursuant to the
Follow-on Shelf. Each such Holder may then elect to participate in the
contemplated Follow-on Shelf by delivering to AspenTech, within fifteen days
after the date of mailing of AspenTech's notice pursuant to the preceding
sentence, a written notice specifying the number of Registrable Shares (up to
the number of Registrable Shares held by such Holder) such Holder wishes to
have registered for resale pursuant to the Follow-on Shelf. In the event that
the number of Registrable Shares requested to be registered by the Holders
shall be greater than 500,000, a total of 500,000 Registrable Shares shall be
registrable pursuant to this Section 3.2 and the number of such Registrable
Shares to be registered held by those Holders requesting registration of
greater than their Pro Rata Shares shall be reduced, in proportion, as nearly
as practicable, to each Holder's Pro Rata Share. AspenTech shall use its
reasonable best efforts (a) to prepare and file with the SEC, as soon as
practicable, on or after January 4, 1999 (or such later date that is thirty
days after the date of the delivery of written notice to AspenTech pursuant to
the first sentence of this Section 3.2), a registration statement on Form S-3
covering registration of the resale of all of the Registrable Shares properly
requested to be registered pursuant to this Section 3.2 by the Holders, (b)
cause such registration statement to become effective as soon as practicable
after filing and (c) subject to Section 4.2, keep such registration statement
continuously effective through March 31, 1999. In no event shall AspenTech have
any obligation to file a registration statement for the Follow-on Shelf prior
to January 4, 1999 or, except as provided in Section 4.2, to keep such
registration statement in effect beyond March 31, 1999. If a Holder shall
propose to sell any Registrable Shares pursuant to a registration statement
filed pursuant to this Section 3.2, it shall notify AspenTech of its intent to
do so at least three full business days prior to such sale. AspenTech shall not
be required to effect more than one registration under this Section 3.2.
3.3. FINAL SHELF. At any time from March 1, 1999 to April 30, 1999, the
Holders may request in writing that AspenTech register under the Securities Act
Registrable Shares held by such Holders for resale pursuant to a registration
statement on Form S-3 (the "Final Shelf") for an offering to be made on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act (or
any similar rule that may be adopted by the SEC) and permitting sales in
ordinary course brokerage or dealer transactions not involving an underwritten
public offering. Within five days after receiving such a request, AspenTech
shall mail written notice to each other Holder of AspenTech's intention to
register under the Securities Act up to a maximum of 500,000 Registrable Shares
for resale by the Holders pursuant to the Final Shelf. Each such Holder may
then elect to participate in the contemplated Final Shelf by delivering to
AspenTech, within fifteen days after the date of mailing of AspenTech's notice
pursuant to the preceding sentence, a written notice specifying the number of
Registrable Shares (up to the number of Registrable Shares held by such Holder)
such Holder wishes to have registered for resale pursuant to the Final Shelf.
In the event that the number of Registrable Shares requested to be registered
by the Holders shall be greater than 500,000, a total of 500,000 Registrable
Shares shall be registrable pursuant to this Section 3.3 and the number of such
Registrable Shares to be registered held by those Holders requesting
registration of greater than their Pro Rata Shares shall be reduced, in
proportion, as nearly as practicable, to each Holder's Pro Rata Share.
AspenTech shall use its reasonable best efforts to (a) prepare and file with
the SEC, as soon as practicable, on or after April 1, 1999 (or such later date
that is thirty days after the date of the delivery of written notice to
AspenTech pursuant to the first sentence of this Section 3.3), a registration
statement on Form S-3 covering registration of the resale of all of the
Registrable Shares properly requested to be registered pursuant to this Section
3.3 by the Holders, (b) cause such registration statement to become effective
as soon as practicable after filing and (c) subject to Section 4.2, keep such
registration statement continuously effective through June 30, 1999. In no
event shall AspenTech have any obligation to file a registration statement for
the Follow-on Shelf prior to April 1, 1999 or, except as provided in Section
4.2, to keep such registration statement in effect beyond June 30, 1999. If a
Holder shall propose to sell any Registrable Shares pursuant to a registration
statement filed pursuant to this Section 3.3, it shall notify AspenTech of its
intent to do so at least three full business days prior to such sale. AspenTech
shall not be required to effect more than one registration under this Section
3.3.
-4-
<PAGE> 5
4. OBLIGATIONS OF ASPENTECH.
4.1. GENERAL OBLIGATIONS. In connection with registrations pursuant to
Sections 2 and 3, and subject to the limitations of those Sections, AspenTech
shall:
(a) prepare and file with the SEC the registration statements in
accordance with Sections 2 and 3 with respect to Registrable
Shares and use its reasonable best efforts to cause such
registration statements to become effective as promptly as
practicable after filing and, in the case of registrations under
Section 3, to keep such registration statements effective as
provided therein;
(b) prepare and file with the SEC such amendments and supplements to
such registration statements and the prospectuses used in
connection therewith as may be necessary, and comply with the
provisions of the Securities Act with respect to the sale or
other disposition of all Registrable Shares registered in such
registration statements;
(c) furnish to each Holder such number of copies of any prospectus
(including any preliminary prospectus and any amended or
supplemented prospectus) in conformity with the requirements of
the Securities Act, and such other documents, as such Holder may
reasonably request in order to effect the offering and sale of
the Registrable Shares to be offered and sold, but only while
AspenTech shall be required under the provisions hereof to cause
the registration statement to remain current;
(d) use its reasonable best efforts to register or qualify the
Registrable Shares covered by such registration statements under
the securities or blue sky laws of such jurisdictions as each
Holder shall reasonably request (provided that AspenTech shall
not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service
of process in any such jurisdiction where it has not been
qualified); and
(e) in connection with any registration pursuant to Section 2, enter
into an underwriting agreement with reasonable and customary
terms, including appropriate provisions for auditor comfort
letters.
4.2. NOTIFICATION OBLIGATIONS. AspenTech shall promptly notify each Holder
whose shares of Registrable Shares are covered by a registration statement
hereunder:
(a) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to the registration
statements or any post-effective amendment, when the same has
become effective;
(b) of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the
registration statements for amendments or supplements to the
registration statements or related prospectus or for additional
information relating to the registration statements,
(c) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the
effectiveness of the registration statements or the initiation of
any proceedings for that purpose,
-5-
<PAGE> 6
(d) of the receipt by AspenTech of any notification with respect to
the suspension of the qualification or exemption from
qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding
for such purpose; or
(c) of the happening of any event which makes any statement made in
the registration statements or related prospectuses or any
document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or which requires the
making of any changes in the registration statements or
prospectuses so that, in the case of the registration statements,
they will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that
in the case of the prospectuses, they will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
Upon the happening of any event of the kind described in clause (b), (c), (d) or
(e) above or any other event that, in the good faith judgment of AspenTech's
Board of Directors, renders it advisable to suspend use of any prospectus due to
pending corporate developments, public filings with the SEC or similar material
events, AspenTech may suspend use of the prospectuses on written notice to the
Holders (in which case each Holder shall discontinue disposition of Registrable
Shares covered by a registration statement or prospectus until copies of a
supplemented or amended prospectus are distributed to the Holders or until the
Holders are advised in writing by the AspenTech that the use of the applicable
prospectus may be resumed). Subject to the last sentence of this paragraph, any
such suspension or suspensions shall be for no more than ninety days in the
aggregate but no more than forty-five continuous days, provided that such time
restrictions shall not apply if the happening is beyond AspenTech's reasonable
control and provided further that AspenTech may suspend such use for up to
thirty additional days in connection with a then-proposed underwritten public
offering. AspenTech shall use its reasonable best efforts to ensure that the use
of the prospectuses may be resumed as soon as practicable. AspenTech shall use
its reasonable best efforts to obtain the withdrawal of any order suspending the
effectiveness of a registration statement, or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the securities for
sale in any jurisdiction, at the earliest practicable moment. AspenTech shall,
upon the occurrence of any event contemplated by clause (E) above, prepare a
supplement or post-effective amendment to the registration statements or a
supplement to the related prospectuses or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Shares being sold thereunder, such
prospectuses will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. In addition to the foregoing, AspenTech may terminate the
Initial Shelf, the Follow-on Shelf or the Final Shelf (as the case may be) on
written notice to the Holders of Registrable Shares registered thereunder, in
which case each such Holder shall discontinue dispositions of such Registrable
Shares and AspenTech shall de-register any shares registered but unsold
thereunder.
4.3. REPORTS UNDER EXCHANGE ACT. AspenTech agrees (a) to use its reasonable
best efforts to file with the SEC in a timely manner all reports and other
documents required of AspenTech under the Securities Act and the Exchange Act
and (b) furnish to each Holder forthwith upon request (i) a written statement by
AspenTech that it has complied with the reporting requirements of the Securities
Act and the Exchange Act or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3 (at any time that it so qualifies), (ii) a
copy of the most recent annual report of Chesapeake and (iii) such other
information as may be reasonably requested in availing each Holder of any rule
or regulation of the SEC which permits the selling of any such securities
pursuant to Form S-3.
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<PAGE> 7
5. OBLIGATIONS OF HOLDERS.
5.1 RELATING TO UNDERWRITTEN OFFERINGS. In order for any Registrable
Shares of a Holder to be included in any underwritten registration pursuant to
Section 2, each Holder shall provide all such information and materials to
AspenTech and take all such action as may be required in order to permit
AspenTech to comply with all applicable requirements of the SEC and any state
securities commission and to obtain the effectiveness of and any desired
acceleration of the effective date of such registration statement. Such
provision of information and materials is a condition precedent to the
obligations of AspenTech pursuant to Section 2, provided that AspenTech shall
have used its reasonable best efforts to provide reasonable advance notice of
the need for such information, materials or action and shall have afforded such
Holder a reasonable opportunity to provide such materials and to take such
action. Also as a condition precedent to AspenTech's obligations under Section
2, each of the Holders participating in a registered offering pursuant to
Section 2, shall enter into an underwriting agreement with the underwriter or
underwriter of such offering containing representations, warranties,
indemnities and agreements then customarily included by selling stockholders in
underwriting agreements with respect to secondary distributions. If any Holder
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to AspenTech and the underwriter, but shall have no
further rights under Section 2.
5.2. RELATING TO SHELF OFFERINGS. In order for any Registrable Shares of a
Holder to be included in any shelf registration pursuant to Section 3, each
Holder shall provide all such information and materials to AspenTech and take
all such action as may be required in order to permit AspenTech to comply with
all applicable requirements of the SEC and any state securities commission and
to obtain the effectiveness of and any desired acceleration of the effective
date of such registration statement. Such provision of information and materials
is a condition precedent to the obligations of AspenTech pursuant to this
Section 5.2; provided that AspenTech shall have used its reasonable best
efforts to provide reasonable advance notice of the need for such information,
materials or actions shall have afforded such Holder a reasonable opportunity
to provide such information and materials and to take such action.
5.3. GENERAL. By exercising any rights hereunder, each Holder shall be
deemed to assume all obligations of a Holder hereunder as though such Holder
were a signatory hereto. AspenTech may require any Holder to execute an
instrument whereby such Holder expressly assumes all obligations of such Holder
hereunder as a condition precedent to any obligations of AspenTech to such
Holder hereunder.
6. EXPENSES.
AspenTech shall pay all expenses incident to its performance of or
compliance with this Declaration, regardless of whether any registration
becomes effective, including (a) all registration and filing fees of the SEC,
the National Association of Securities Dealers, Inc. and the Nasdaq Stock
Market, Inc., (b) all fees and expenses incurred in complying with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Shares), (c) all
printing, messenger and delivery expenses, (d) all fees and expenses of
AspenTech's transfer agent and registrar, (e) all fees and disbursements of
AspenTech's independent public accountants and counsel and (f) all fees and
expenses of any special experts retained by AspenTech in connection with any
registration pursuant to the terms of this Declaration; provided, however, that
the Holders shall be liable for (A) any fees or commissions of brokers, dealers
or underwriters, (B) any transfer taxes and (C) any fees or expenses of
consultants, financial advisors, counsel and other professionals acting on
behalf of the Holders in connection with any registration pursuant to the terms
of this Declaration.
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7. INDEMNIFICATION.
In the event of any offering registered pursuant to this Declaration:
7.1. AspenTech will indemnify each Holder and each person controlling a
Holder (within the meaning of Section 15 of the Securities Act), against all
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, or any amendment or supplement thereto, incident to any
offering registered pursuant to this Declaration, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading, or any violation by AspenTech of any rule
or regulation promulgated under the Securities Act, or state securities laws
applicable to AspenTech in connection with any such registration, and subject to
Section 8c, will reimburse each such Holder, and each person controlling such
Holder, for any legal and any other out-of-pocket expenses reasonably incurred
in connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that AspenTech will not be liable in any
such case to the extent that any such claim, loss, damage, or liability arises
out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to AspenTech by such Holder or controlling person and
stated to be specifically for use therein.
7.2. Each Holder will, if Registrable Shares held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify AspenTech, each of its directors and
officers and its legal counsel and independent accountants, each underwriter, if
any, of AspenTech's securities covered by such a registration statement, each
person who controls AspenTech or such underwriter within the meaning of Section
15 of the Securities Act, and each other such Holder, and such Holder's legal
counsel and independent accountants, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) or a material fact contained in
any such registration statement, prospectus, offering circular or any amendment
or supplement thereto, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse AspenTech, such Holders, such
directors, officers, legal counsel, independent accountants, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or any amendment or supplement thereto in reliance upon and in conformity with
written information furnished to AspenTech by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of such
Holders hereunder shall be several and shall be limited to an amount equal to
the respective net proceeds after expenses and commissions to each such Holder
of Registrable Shares sold as contemplated herein.
7.3. Each party entitled to indemnification under this Section 7.3 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
receives written notice of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
Indemnified Party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Declaration, except to the
extent, but only to the extent, that the
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<PAGE> 9
Indemnifying Party's ability to defend against such claim or litigation is
impaired as a result of such failure to give notice. Notwithstanding the
foregoing sentence, the Indemnified Party may retain its own counsel to conduct
the defense of any such claim or litigation, and shall be entitled to be
reimbursed by the Indemnifying Party for expenses reasonably incurred by the
Indemnified Party in defense of such claim or litigation, in the event that the
Indemnifying Party does not assume the defense of such claim or litigation
within sixty days after the Indemnifying Party receives notice thereof from the
Indemnified Party. Further, an Indemnifying Party shall be liable for amounts
paid in settlement of any such claim or litigation only if the Indemnifying
Party consents in writing to such settlement (which consent shall not be
reasonably withheld). No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party a release from all liability in respect to such claim or
litigation.
7.4. The obligations of AspenTech and each Holder under this Section 7.4
shall survive the completion of any offering of stock in a registration
statement under this Declaration and otherwise.
8. MISCELLANEOUS.
8.1. EFFECTIVENESS. This Declaration shall become effective upon the
consummation of the Merger pursuant to the Reorganization Agreement.
8.2. AMENDMENT; WAIVER. This Declaration, or any provision of this
Declaration, may be amended or waived from time to time only upon the mutual
written agreement of AspenTech and Holders who then owning of record a majority
of the Registrable Shares. No delay or omission by any party to exercise any
right or power hereunder shall impair such right or power or be construed to be
a waiver thereof. A waiver by any of the parties hereto of any of the covenants
to be performed by the other or any breach thereof shall not be construed to be
a waiver of any subsequent breach or of any other covenant contained in this
Declaration.
8.3. NOTICES. Notices and other communications by a party under this
Declaration shall be in writing and hand-delivered, deposited with an overnight
carrier for next- or second-day delivery, or transmitted by facsimile (with
receipt confirmed), addressed to the parties as follows (or to such other
addresses as any party may designate from time to time in writing):
To AspenTech: Aspen Technology, Inc.
Ten Canal Park
Cambridge, Massachusetts 02141-2201
Facsimile: (617) 949-1722
Attention: Chairman and Chief Executive Officer
with a copy to: Aspen Technology, Inc.
Ten Canal Park
Cambridge, Massachusetts 02141-2201
Facsimile: (617) 949-1717
Attention: Vice President and General Counsel
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<PAGE> 10
To the Stockholders: Chesapeake Decision Sciences, Inc.
200 South Street
New Providence, New Jersey 07974
Facsimile: (908) 464-4134
Attention: Thomas E. Baker
With copies to: J. Gregory Milmoe, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Facsimile: (212) 735-2000
John F. Kuntz, Esq.
Bourne, Noll & Kenyon
382 Springfield Avenue
Summit, New Jersey 07901
Facsimile: (908) 277-6808
and shall be deemed given when received.
8.4. ASSIGNMENT OF RIGHTS. The rights of any Holders to cause AspenTech to
register Registrable Shares pursuant to this Declaration may not be assigned by
the Holders to any person or entity, except that a Holder may transfer its
rights hereunder in connection with a transfer to any of such record holders'
respective family members and trusts wholly or principally for the benefit of
family members to whom such holders transfer record ownership of any of the
Registrable Shares.
8.5. CONSTRUCTION.
(a) References herein to "200,000," "500,000" and "1,000,000"
Registrable Shares are subject to equitable adjustment for shares of
AspenTech Common issued as a dividend or distribution on account of
Registrable Shares and for any combination or subdivision of outstanding
Registrable Shares into a less or greater number of securities (by
reclassification, stock split or otherwise). In the event shares of
AspenTech Common included in the Registrable Shares are exchanged for any
other securities issued by AspenTech, such other securities shall
constitute Registrable Shares in accordance with clause (b) of the
definition of "Registrable Shares" in Section 1 and the provisions of this
Declaration of Registration Rights shall be interpreted and construed in
order to provide registration rights with respect to such other securities
constituting Registrable Shares that are substantially identical to the
registration rights granted hereunder with respect to the exchanged shares
of AspenTech Common.
(b) Titles or captions of Sections contained in this Declaration are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Declaration or the
intent of any provision of this Declaration. The words "herein" and
"hereof" and other words of similar import refer to this Declaration as a
whole and not to any particular part of this Declaration. The word
"including" as used herein shall not be construed so as to exclude any
other thing not referred to or described. All references herein to Sections
shall be deemed references to sections of this Declaration, except as
otherwise provided.
* * *
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IN WITNESS WHEREOF, the Declaration of Registration Rights made as of April
27, 1998 by the Board of Directors of Aspen Technology, Inc. is hereby amended
and restated as set forth in this Declaration, in acknowledgment of which this
Declaration has been executed as of September 23, 1998 (i) on behalf of
AspenTech, by Lawrence B. Evans, a duly authorized officer of AspenTech, and
(ii) on behalf of the Holders, by Dr. Thomas E. Baker, the Holder of a majority
of the Registrable Shares.
ASPEN TECHNOLOGY, INC.
By: /s/ LAWRENCE B. EVANS
-------------------------------
Chief Executive Officer
HOLDERS:
By: /s/ THOMAS E. BAKER
------------------------------
Dr. Thomas E. Baker
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